2010 AnnualBudget

Table of Contents

Organizational Information

Board of Directors and Tampa Bay Water Executives i

Organizational Chart ii

Agency Profile iii

º Map-Tampa Bay Water Service Areas iii

º Map-Tampa Bay Water Facilities iv

General Manager’s Budget Message 1

º Policy Goals Used in Budget Development 2

º Key Factors Affecting the 2010 Budget 3

º Water Demand Used in the 2010 Budget 3

º Operational Highlights of the 2010 Budget 4

º Analysis of Costs in the 2010 Budget 6

º Future Supply 7

º Reserve Funds 7

º Summary 7

º Budget Schedule 9

Annual Budget Development

Budget Format 10

Budget Basis 13

Annual Budget Requirements 14

Annual Budget Process 15

Major Responsibilities 17

Budget Implementation 19

Budget Amendments 20

Financial Management Policies

Utility Reserve Fund (Fund Balance) Policy 21

Rate Stabilization Account Policy 21

Fixed Asset Policy 22

Debt Policy 22

Investment Policy 23

Accounting, Auditing and Financial Reporting Policies 23

º Auditing 23

º Basis of Accounting and Accounting Systems 23

º Performance Audit 24

Financial Plan

Funds Structure Overview 25

º Fund and Accounts Flowchart 25

Reserves and Restricted Funds 26

Projected Changes in Fund Equity Schedule 28

Financial Planning and Trends 29

Revenues 30

Expenditures 31

Sources and Uses of Funds – 2008 Actual, 2009 Approved, 2010 Approved 32

Sources and Uses of Funds – 2010 Approved, Budget Projections 2011-2015 33

Capital Improvements Planning and Financing 34

Chart – Funding Sources for Capital Projects in Fiscal Year 2010 35

Capital Project List Fiscal Year 2010 36

Annual Rate Setting and Member Costs

Overview 37

Rate Setting 38

Uniform Rate Elements 39

º Fixed Costs 39

º Variable Costs 39

º Rate for Surface Water Sources 40

Other Budget Factors 40

Uniform Water Rates – Approved 2010, Projected 2011-2015 41

Projected Water Demand for Fiscal Year 2010 – Chart 42

Estimated Annual Member Costs for Fiscal Year 2010 – Detail 43

Estimated Net Member Costs for Fiscal Year 2010 – Chart 44

Estimated Member Costs – Hillsborough County 45

Estimated Member Costs – City of Tampa 46

Estimated Member Costs – Pasco County 47

Estimated Member Costs – City of New Port Richey 48

Estimated Member Costs – Pinellas County 49

Estimated Member Costs – City of St. Petersburg 50

Debt Service

Bonds 51

Rate Covenant 52

Facility Acquisition Credits 53

Summary of 2010 Debt Service 53

Rating Agency Analysis 54

Future Borrowing 55

Capital Improvement Program

Introduction 56

Long-Term and Master Water Supply Planning 57

System Configuration II Projects 58

º System Configuration II Supply Project Elements 58

º System Configuration II Interconnects Project Elements 59

º System Configuration II Projects-Project Location Map 60

2025 Capital Improvement Program 61

2025 Capital Improvement Program – Project Location Map 62

2025 Capital Improvement Program Category Table 62

Other Capital Improvement Program Projects 63

Master Water Plan Projects 65

Renewal and Replacement Projects 66

Fiscal Year 2010 Uniform Rate Projects 67

Funding Sources 67

Funding Recommendations for Unfunded Projects 68

Cost and Funding Sources for Capital Improvement Program 69

Budget – Capital Improvement Projects (Bonds) 70

Budget – Capital Improvement Projects (Capital Improvement Fund) 70

Budget – Capital Improvement Projects (Uniform Rate) 71

Budget – Capital Improvement Projects (Renewal and Replacement Fund) 71

Budget – Capital Improvement Projects (Un-Funded) 71

Divisional Operating Budget Detail

Tampa Bay Water’s Divisional Organization 72

Staffing 73

Staffing Comparison by Department in Full Time Equivalents 73

New Positions for Fiscal Year 2010 74

Total Operations – 2010 Approved Budget ______ 76

Projected Operating Expenses for Fiscal Year 2010 – Chart 78

General Manager – 2010 Approved Budget 79

General Counsel – 2010 Approved Budget 80

Operations & Facilities Division – 2010 Approved Budget 81

Science & Engineering Division – 2010 Approved Budget 83

Finance & Human Resources Departments – 2010 Approved Budget 84

Information Services & Board Records Departments – 2010 Approved Budget 86

Summary of Contracts and Resolutions

Amended and Restated Interlocal Agreement 87

Master Water Supply Contract 89

Master Bond Resolution 92

Appendix

Member Water Demand and Potential True up as of July 31, 2009 95

Budget Development Schedule for Fiscal Year 2011 96

Glossary

Definitions 98

Acronyms 103

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Tampa Bay Water Board of Directors

2009-2010

Mark Sharpe _______________________________Chairman Commissioner - Hillsborough County Ann Hildebrand ________________________ Vice Chairman Commissioner - Pasco County Al Higginbotham ____________________________ Member Commissioner - Hillsborough County Ted Schrader _______________________________ Member Commissioner - Pasco County Susan Latvala _______________________________ Member Commissioner - Pinellas County Karen Seel _________________________________ Member Commissioner - Pinellas County Scott McPherson ____________________________ Member Mayor - City of New Port Richey James Bennett ______________________________ Member Councilmember - City of St. Petersburg Charlie Miranda _____________________________ Member Councilmember - City of Tampa

Tampa Bay Water Executives Gerald Seeber Richard Lotspeich General Manager General Counsel

Koni Cassini, Director of Finance and Administration

Charles Carden, Director of Operations and Facilities

Donald Polmann, Director of Science and Engineering

General Manager

Gerald Seeber

FTE’s (3)

Co-Op (1)

Director of Finance &

Administrations

Koni Cassini, CPA

FTE’s (30)

Proposed (3)

Director of Science &

Engineering

Donald Polmann, Ph.D., P.E.

FTE’s (36)

Co-ops (3)

Proposed (1)

Director of Operations &

Facilities

Charles Carden

FTE’s (52)

Operations Dept.

FTE’s (19)

WPO Shift Lead (2)

Water Plant Operators (13)

Infrastructure

Management Dept.

FTE’s (23)

Contracts & Mitigation

Dept.

FTE’s (4)

Project Supervisor (2)

Contract Admin

Maintenance Coord

Service Coordinators (4)

Maintenance Techs (5)

Electricians (3)

Maintenance Support

Specialist

Operations Coordinator (2)

Mitigation Specialist

Finance Dept.

FTE’s (8)

Information Systems Dept.

FTE’s (13)

Proposed (3)

Human Resource Dept.

FTE’s (2)

Sr. I&C Tech

I&C Techs (5)

Fin Compliance Analyst

Fin Mgmnt Analyst

Budget Analyst

Bookkeeper (4)

Sr. Apps Dev (2)

Programmer

Web Programmer

Multimedia Spec (2)

SCADA Admin

Network Systems

Admin

Network/PC Specialist (2)

Human Resource Manager

Records Dept.

FTE’s (6)

Records Info Analyst

Records Techs (3)

Front Desk Admin

Evaluation & Permits Dept.

FTE’s (8)

Sr. Wtr Res Analyst (1)

Envir & Proj Sup

Sr. Environ Analyst (4)

Hydrogeologist

Source Rotation &

Environmental Protection

Dept.

FTE’s (5)

Co-Op (1)

OROP & Modeling Prog Supv

Sr. Water Resource Analyst

Water Resouce Engineer

Planning & Engineering

Dept.

FTE’s (7)

Co-Op (1)

Staff Assistant

Engineer (2)

Project Supervisor

Planning

Planner I

Co-Op Student

Demand Management Coord

Co-Op Student

Staff Assistant

Laboratory Supervisor

Chemist (4)

Lab Techs (2)

Hydrologic Coord

Hydro Techs (4)

Sr. Mgr. Laboratory & Monitoring

FTE’s (14)

Co-op (1)

Proposed (1)

Real Estate Coord

Construction Dept.

FTE’s (3)

General Counsel

Richard Lotspeich

FTE’s (3)

Safety Coordinator

Co-Op Student

Staff Assistsant

Sr. Asst. General Counsel

Sr. Legal Asst.

Executive Asst.

Tampa Bay Water

Board of Directors

Public Affairs Officer

Co-Op Student

Sr. Manager

Infrastructure

Maintenance Sect.

Maintenance Mgr.

Instrumentation &

Controls Sect.

I&C Manager

Sr. Manager Operations

Operations Manager

Sr. Manager Construction

Sr. Mgr. Contracts

Water Quality Officer

Staff Assistant

Applications Manager

IS Systems Manager

Records Manager

Human Resource Tech

Sr. Manager Finance

Sr. Mgr. Information Sys.

Applications Sect.

IS Systems Sect.

Sr. Mgr. Evaluation and Permits

Sr. Mgr. Source Rotation &

Environmental Protection

Sr. Mgr. Planning and

Engineering

Sr. Apps Developer

Proposed (3)

Hydro Tech Proposed (1)

Sr. Mgr. Laboratory & Monitoring

FY 08-09 FTE ‘s 124

Co-Ops 4

FY 09-10 FTE’s 124

Co-Ops 4

Approved New FTE’s 4

Tampa Bay Water

Organizational Chart

FY 2009- 2010

05/18/09ii

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Tampa Bay Water Agency Profile

Tampa Bay Water, A Regional Water Supply Authority (the Agency), formerly West Coast Regional Water Supply Authority (the Predecessor Authority), was created on October 25, 1974, by enabling state legislation under Florida Statute Sections 163.01, 373.1962, and 373.1963. Hillsborough, Pasco, and Pinellas counties and the cities of St. Petersburg, Tampa, and New Port Richey comprise the Member Governments of the Agency. A Governance Study was adopted by the Florida Legislature in 1997 (the 1997 Legislation) amending Section 373.1963, Florida Statutes.

As part of the 1997 Legislation, the Agency entered into the Interlocal Agreement and the Master Water Supply Contract with its Member Governments for a term of 40 years. Pursuant to the Amended and Restated Interlocal Agreement and Master Water Supply Contract, the Agency is required to meet the Quality Water needs of the Member Governments and to charge a uniform per-gallon wholesale rate to Member Governments for the wholesale supply of drinking water; with one exception for the City of Tampa. The Agency will charge a separate rate to the City of Tampa for water delivered from the Tampa Bypass Canal. (See Summary of Contracts and Resolutions.)

The Agency provides quality drinking water to its six member governments whose water service areas serve approximately 2.5 million residents in the Tampa Bay region.

Tampa Bay Water Service Areas

Pasco CountyNew Port

Richey

Pinellas

County

St. Petersburg

Tampa

South-Central

Hillsborough

NW

Hillsborough

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The Agency’s administrative offices are located in Clearwater, Florida. The Agency’s operations, maintenance, and laboratory staff are located primarily at its Infrastructure Management and Laboratory facilities at the Cypress Creek Wellfield in Land O’ Lakes, Florida. The Agency’s diverse water system includes the following facilities located in Pasco, Pinellas and Hillsborough Counties:

Cypress Creek Wellfield and Pump Station Eldridge-Wilde Wellfield

Cross Bar Wellfield Morris Bridge Wellfield

Cypress Bridge Wellfield Brandon Dispersed Wells

Northwest Hillsborough Wellfield South Central Hillsborough Wellfield

Cosme-Odessa/Section 21 Wellfields Starkey/N. Pasco Wellfield

South Pasco Wellfield Carrollwood & Eagles Wells

Keller Hydrogen Sulfide Treatment Facility Alafia River Pumping Station

Tampa Bay Regional Water Treatment Facility C. W. Bill Young Regional Reservoir

Tampa Bypass Canal/Hills River Pumping Stations Seawater Desalination Facility

The water system also includes various booster stations, water treatment facilities, and approximately 200 miles of raw water collection mains and large-diameter potable water transmission mains.

Tampa Bay Water is subject to regulation by the Florida Department of Environmental Protection, the Florida Department of Health and Rehabilitation Services, and the United States Environmental Protection Agency (USEPA) for matters related to the quality of water and the construction of its facilities. In addition, the Southwest Florida Water Management District (SWFWMD) regulates consumptive uses of water via permit.

GENERAL MANAGER’S BUDGET MESSAGE

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Policy Goals Used in Budget Development The recommended budget for the upcoming fiscal year was developed to insure that the policy goals established by the Board of Directors can be met. These policy objectives include the following:

Meeting the performance requirements of the Master Water Supply Contract in providing service to our six member government customers.

Achieving the objectives of the Partnership Agreement with the Southwest Florida Water Management District (SWFWMD) through the planning, design, construction and operation of water production and transmission facilities to improve both supply delivery and environmental stewardship. Among these objectives, the goal of achieving and maintaining compliance with regulatory requirements is paramount.

Safeguarding the public investment of $1.854 billion in potable water supply to ensure both water quality and quantity to meet the needs of the 2.5 million residents of our region. Protecting the public investment includes: º Advocating for water resource protection and water quality by providing technical

recommendations on water body classifications of our surface water systems and by advocating for source water protection on rezoning and development proposals, including Developments of Regional Impact, that are located within our three- county area.

º Focusing on emergency preparedness by establishing procedures for the preparation, staffing and operation of Tampa Bay Water’s diverse and geographically dispersed water production facilities during disaster events.

º Focusing on the upgrade or repair of existing production facilities to ensure continued optimal operation at all facilities over time.

º Continuing the Source Water Protection Grant Program that will award community groups, environmental or educational organizations for initiatives, activities, programs, or projects that promote Source Water Protection of our drinking water supply.

Improving the long-term demand forecasts to optimize the planning, timing, and development of new supply to meet future demand and to more accurately predict future water rates so that the financial stability and integrity of the Agency is enhanced.

Continuing the examination of tools to develop a “best mix” of supply choices for meeting the members’ aggregate demand and to enhance the budget decision-making process.

Continuing the evaluation and selection of water supply projects that will meet production goals and the Board’s priorities on Environmental Stewardship, Cost, and Source Reliability.

Continuing the focus on connecting the isolated water supply facilities in south-central Hillsborough County to our regional system in order to achieve the environmental benefits associated with rotational capacity.

Continuing the practices of outsourcing to meet the Agency’s immediate staffing needs efficiently and evaluating staffing needs against existing human resources within the Agency to ensure that new positions are created and budgeted to best achieve efficient operation, protection, and administration of the potable water supply system.

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Key Factors Affecting the 2010 Budget I wish to call the Board’s attention to several factors that have an influence on the upcoming budget and which may foretell of challenges in future years:

Economic Uncertainty & Cutback Budgeting Due to the current economic conditions in our region and the resulting budgeting constraints that the six member governments are enduring, the staff members at Tampa Bay Water budgeted controllable expenditures for next year (FY 2010) at a level equal to or less than the actual expenses for last year (FY 2008), while still meeting the policy goals established by the Board of Directors. The uncontrollable costs for power and chemicals used in the water treatment processes have wreaked havoc on the operations budget, even to the extent of forcing a greater level of reduction on the controllable areas of the budget.

Energy Market Fluctuations Variable expenses calculated directly upon the volume of water treated and sold by the Agency comprise 23% of the Agency’s total annual budget for 2010. These costs, which sum to almost $40 million, are increasing by $10 million over the current year. That amounts to a 34% increase for market driven commodities used in water treatment and distribution.

Source Reliability The budget also reflects our continuing efforts to properly maintain the reservoir facility to ensure that it can be used to its maximum practical capacity during the next two years while a permanent fix to the surface plate soil cement problem is fully identified, designed, permitted and constructed. These ongoing expenses are critical to resolving the performance of the reservoir as a key element in our regional surface water system to achieve the intended and needed long-term reliability.

Regional Demand The impact of a slowing economy has had a dramatic impact on water demands in the region. Besides the changes in growth projections affecting future demands and the scheduling of future water supply projects, the Agency has experienced a reduction in quantities treated and distributed in the current year, reflecting a slack construction market, the abandonment of some residential units, the impact of conservation practices among remaining customers, and an increase in the utilization of reclaimed water. Water Demand Used in the 2010 Budget The forecast of expected water sales to the six member governments is based on a multi-step process that takes into account the total water demand for each member government and for the region, as reflected in the probabilistic water demand forecasting model. This model produces a family of curves representing a range of forecasted potential demand which is then compared with each member government’s annual report. Several member governments (City of Tampa, Pasco County, and City of New Port Richey) supply water through their own facilities to meet a portion of their total water needs and the total regional water demand is reduced by the amount of water these members supply to themselves, resulting in the aggregate expected water demand for budget and planning purposes. This final value forms the basis of the budgeted uniform rate for fiscal year 2010. The forecasted demand for fiscal year 2010 is 176.6 MGD.

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The forecast of expected demand is significantly affected by the amount of water purchased by the City of Tampa, an uncertainty that is directly related to the amount of rainfall experienced in the Hillsborough River basin and which has a direct impact on the amount of ground water used. For example, 2003 was a very wet year and the City needed Tampa Bay Water to provide only 90,000 gallons per day on an annual average basis. Total regional production that year was the lowest of the last 12 years: 151 MGD on an annual average basis. 2005 was also a wet year and the City purchased no water at all from the Agency that year. By contrast, 2000 was a dry year and total production was 181 MGD, with the City of Tampa buying almost 13 MGD. In a very real sense, the Agency must develop a budget for expected rainfall each year, so that operational scenarios can be developed to maximize the use of surface water and manage the ground water resource in a way to meet recovery objectives and comply with permits. Like the current year, the 2010 budget assumes the purchase of excess surface water from the City of Tampa during the wet weather months to achieve and maintain compliance with regulatory requirements governing the consolidated wellfield permit. Besides the uncertainty of predicting the weather and the amount of rainfall in the region, one other noteworthy uncertainty should also be considered as the Board reviews the budget for the 2010 fiscal year. The economic conditions experienced this past year are expected to continue through the remainder of this fiscal year and into 2010. The slow pace of the economy and the glut of available housing mean that the Agency does not anticipate any growth in demand for water for the upcoming year. Today the forecasted demand of 176.6 MGD for 2010 is 6% less than what was predicted one year ago. Going forward, the long term demand forecast model predicts only modest growth beginning in 2011. The financial impact of reduced demand is clear; the sale and delivery of fewer gallons means that unit costs per gallon will be higher as the Agency must recover its fixed costs over a smaller sales base. The prospect of managing financial performance in successive dry years with slackening demand presents a significant long term rate challenge to the Agency. Agency reserves must be sufficient to withstand unexpected changes in demand that can militate in favor of undesirable mid-year rate increases. Operational Highlights of the 2010 Budget Total funding required to meet fixed and variable expenses in the 2010 budget is $176,136,674. After application of available funds from other sources, the net revenue requirement for calculation of the uniform rate charged to the six member government customers is $154,575,895. This represents a uniform rate of $2.3980 per 1000 gallons that will be assessed to Members before credits. Some of the key features of the 2010 budget are as follows:

Continued operation of the surface water treatment plant and the three sources that supply it, six groundwater treatment plants, thirteen regional wellfields, the seawater desalination plant, the regional reservoir and almost 200 miles of pipeline.

Continued operation of the Tampa Bay Seawater Desalination Facility at an annual average for 2010 of 19.7 mgd. The aggressive use of the desalination facility is budgeted so that the agency can reduce the use of ground water and maintain compliance with wellfield water use permit requirements. Aggressive operation of the desalination

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facility presents a direct budget impact on the variable costs incurred for power and chemicals. To the extent that additional surface water is available for use in 2010, desalination production may be reduced proportionately to reduce overall operating expenses while still achieving ground water pumping objectives.

Utilization of 40 MGD annual average production from the Surface Water Treatment Plant, including the use of water stored during the upcoming 2009 wet season for use in the 2010 dry season. The plant can be used at or near its design capacity (72 MGD) during the wet weather months when river flows are highest; lower rates of production are anticipated when only the stored water in the reservoir is available. Like the desalination facility, to the extent that additional river flows are available for use in 2010, Surface Water Treatment Plant production may be increased proportionately to achieve ground water pumping objectives.

The purchase of 5 MGD annual average from the City of Tampa, with most of that coming into the regional system during the 2010 wet season. This purchase is budgeted to provide the flexibility to reduce, as needed, the annual average production in the 11 wellfields governed by the Consolidated Permit.

Utilization of 85.9 MGD on an annual average basis from the consolidated permit well fields. This anticipated usage is less than the permit limit of 90 MGD, in recognition of the fact that we anticipate making a greater use of ground water in the current year and we will need to reduce the 12 month running average to the regulatory requirement.

Utilization of the Rate Stabilization account in the amount of $3,680,012 to alleviate the impact that the lower demand has on the rate. In addition, an estimated $4,600,881 of unencumbered funds from 2009 will be carried over to fiscal year 2010 and applied to reduce the upward rate impact.

Utilization of the interest accrued from SWFWMD for the Desalination Plant Funding Agreement. Tampa Bay Water will use the interest received, estimated to be $10 million, to pay a portion of the annual debt service coming due in 2010.

Continued cooperation with Hillsborough County, Pasco County, and the City of Tampa to achieve the infrastructure improvements required to increase water pressure and supply capacity to satisfy anticipated future increased demand in their respective service areas.

Increased use of Renewal and Replacement funds to finance projects in FY 2010. The replacement of aging and failing pumps at the South Central Hillsborough Wellfield at a projected cost of $400,000 is recommended, as well as a $150,000 reimbursement to Renewal and Replacement Fund for projects funded in 2009.

The budget of $176.1 million includes $74.2 million for debt service, $39.9 million for variable costs (power, chemicals & purchased water), $12.5 million for water plant contract operations, and $1.8 million for required reserves. These costs, when coupled with costs for permit-required hydrological and ecological monitoring, comprise 83% of the Agency’s annual budget. When focusing on the remaining 17% of the budget, overall, costs are declining by $4.6 million or 13%, reflecting the efforts by Agency staff to hold expenses to the levels approved two years ago. While the budget reflects a slight increase in Personnel Services and in Repairs & Services, there are significant reductions in materials, professional services, capital outlay and legal services. The increase in Personnel Services reflects a shift from contracting for services from outside consultants to a utilization of in-house staff in both information services and in ecological monitoring. This shift results in a net DECREASE in overall expenses of $350,000 per year.

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Analysis of Costs in the 2010 Budget

Approved Approved Variance

FY 2009 FY 2010 + / -

Total Personnel Services $ 11,918,422 $ 12,239,395 $ 320,973

Materials & Supplies 2,206,474 2,040,963 (165,511)

Professional Services 30,243,865 26,870,442 (3,373,423)

Repairs & Other Services 3,557,881 4,413,771 855,890

Rent & Insurance 1,597,670 1,568,315 (29,355)

Legal Services 1,560,000 931,000 (629,000)

Capital Expenditures 2,061,500 1,550,526 (510,974)

Annual Debt Service 138,995,710 74,250,624 (64,745,086)

Acquisition Credits to Members 10,338,935 10,231,557 (107,378)

Water Quality Credit Expense 292,000 292,000 0

Water Treatment Chemicals 12,771,680 16,220,170 3,448,490

Power and Light 15,948,636 19,285,074 3,336,438

Water for Resale-Variable 1,154,250 4,418,050 3,263,800

Reserve Funding 1,062,573 1,824,787 762,214

$ 233,709,596 $ 176,136,674 $ (57,572,922)

Utilization of Rate Stabilization Account (7,340,000) (3,680,012) 3,659,988

Transfer In-Renewal & Replacement Fund (150,000) (400,000) (250,000)

Estimated unencumbered funds from Prior Year (2,131,619) (4,600,881) (2,469,262)

Estimated Interest Income (6,394,023) (2,298,626) 4,095,397

Estimated Revenue from Tampa By-pass Canal (581,260) (581,260) 0

SWFWMD Grant for Capital Program (63,750,000) (10,000,000) 53,750,000

Total Net Revenues Required $ 153,362,694 $ 154,575,895 $ 1,213,201

Rate $ 2.2451 $ 2.3980 $ 0.1529

Demand 187.15 176.6 -10.55

The following items are the significant components of the approved 2010 rate and the table set forth above:

Rate Increase Description

$0.1341 10.55 MGD Decrease in Estimated Demand

$0.0635 Reduction in Interest Income

$0.0568 Reduced Contribution from Rate Stabilization Account

$0.0535 Water Treatment Chemicals Cost Increase

$0.0518 Electrical Power Rate Increases

$0.0506 Water for Resale Purchased from Tampa

$0.0133 Increase to Repairs and Other Services

$0.0118 Required Contributions to Reserve Funding

Increases in the wholesale water rate have been offset by the following reductions in operating costs or increases in other revenues:

Rate Decreases Description

($0.1705) Reduction in Annual Debt Service For Desalination

($0.0523) Reduction in Professional Consulting Services

($0.0383) Increase in Funds Carried Forward from Current Yr.

($0.0264) Cost Reductions in Legal, Capital Outlay, R & R, Materials and Property Insurance

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Future Supply In September 2003, the Board of Directors approved its Demand Forecasting System and completed a detailed Probabilistic Forecast of future water demands. These forecasts were used to determine the needed future capacity and the timing of future water supply projects. The results of these forecasts indicate that an additional 8-12 mgd of new water supplies will be needed by 2012. In October of 2006, the Board approved System Configuration II, comprised of the Downstream Enhancements Project Phases A/B and the associated System Interconnects to meet that need. These projects will be on-line prior to 2012. System Configuration II also includes the continued investigation and feasibility analysis of the System Configuration III Water Supply Program which is described further in the Capital Improvement Program section of this document. The Long-term Water Supply Plan is updated by the Board of Directors every five years to assure that the 20-year water supply demand of the Member Governments can be met. The last update was completed in the fall of 2008 and adopted by the Board in December, 2008. From these long-term planning efforts, any projects required to meet demand projections can be added to the Master Water Plan by the Board. The budget reflects continuing exploration of the seven projects selected by the Board as part of the Master Water Plan to meet future water needs on a timely basis. To assist the Board in its selection of an appropriate array of projects, the budget also anticipates continued work on the renewed initiatives in Source Water Protection and Demand Management, as well as efforts to foster regional cooperation on Reclaimed Water.

Reserve Funds

Tampa Bay Water maintains various Reserve Funds to comply with Bond requirements associated with the issuance of approximately $1.1 billion in bonded debt and the Master Water Supply Contract. The 2010 budget includes additions to the required reserves of $1,824,787. A Funds Summary with information for all funds can be found in the Budget Summary section of this document. A further detailed description of the various debt service and reserve funds is provided in the Debt Service and Reserve Section of this document.

In Summary The rate of $2.3980 for fiscal year 2010 is $.1182 above our targeted estimated projection of $2.2798 presented in the 2009 budget document. Measured against the current year rate of $2.2451, the recommendation is a $.1529 or 6.8% increase. As the members of the Board will recall, the rate for the current year was the same as the rate used in 2008; no increase was recommended last year so the change in rate for 2010 reflects 2 years of changed conditions. Some of these changed conditions are mentioned above but bear repeating:

Demand for water from the six member governments is falling, not increasing, and reflects both the decline in construction and the impact of several years of water shortage regulations. The approved budgeted daily production for FY 2010 is estimated at 176.6 MGD. The current year budget document anticipated that production would climb to 188.85 MGD. The 2010 demand projections reflect

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current economic conditions and a decline in the number of residential accounts among our six member governments.

The desalination facility is being operated at its maximum practical capacity; an annual average of almost 20 MGD is planned for next year. This is 5 MGD more than expected when the budget was prepared last year and the increased power purchase and increased chemical usage are reflected in the new rate.

To achieve and maintain compliance with ground water pumping permits, the Agency proposes to purchase significant quantities of surface water (5 MGD annual average) from the City of Tampa during the wet weather months.

Variable costs have increased 33.6% over 2009 and the higher power and chemical costs are reflected in the new rate. The 2009 budget estimated fixed operating costs in 2010 to be $55,091,113 and variable operating costs to be $30,836,833. As a result of actions taken to maintain controllable operating costs at a level equal to 2008 actual expenditures, the 2010 approved budget for fixed operating costs is $49,614,412, a reduction of $5,476,701 from last year’s estimate. However, variable costs, which include water treatment chemicals, power, and water for resale increased $9,086,461 from last year’s estimate for 2010. This increase is due to higher chemical costs, rate increases from electricity providers, and an increase in the amount of surplus water we are budgeting to purchase from the City of Tampa.

Significant reservoir maintenance costs are reflected in the 2010 rate, in anticipation of optimizing the use of the facility in 2010 and 2011.

Interest income will decline by approximately $4.1 million, reflecting the drastic reduction in available investment yields and the changes in portfolio composition that have occurred this past year

Tampa Bay Water is anticipating receipt of $10 million in interest earned on the desalination facility grant from SWFWMD. The Agency will use these funds to pay a portion of its annual debt service costs to in FY 2010.

At the end of the current fiscal year, we have estimated that funds equal to three percent of 2009 water sales revenue will remain unencumbered. These unencumbered funds, estimated to be $4,600,881, will be brought forward to offset 2010 budgeted expenses. The use of these funds will reduce the 2010 rate by $0.0714.

Tampa Bay Water will continue to implement the Board’s policy direction for effectively relieving stressed environmental conditions through the use of wellfield rotation, source mix and the implementation of new projects to achieve best practices. While dry conditions, continued development, altered drainage, and reliance on groundwater in the past have stressed the environmental systems, the use of rotational capacity and supply mix with the reservoir are now important components in restoring the aquifer and wetland systems. The approved budget includes the conversion of four contract service positions to agency employees in 2010. These positions have been outsourced for many years, reflecting the need for the agency to forestall adding staff positions to the Agency work force until the pattern of task assignments stabilized and long term needs could be properly quantified. The additional costs associated with adding these staff positions are more than offset by the resulting reductions in professional consulting fees used for software program development and support and for permit-required ecological monitoring. Annual savings of $350,000 are anticipated by supplanting outsourced services with full-time staff.

ANNUAL BUDGET DEVELOPMENT

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TAMPA BAY WATER ANNUAL BUDGET DEVELOPMENT

Budget Format

The summary and layout of the annual budget document is as follows:

A. The General Manager’s Budget Message is designed to provide a summary of Tampa Bay Water’s financial plan by highlighting major issues to be addressed in fiscal year 2010.

B. The Annual Budget Development section provides an overview of the key requirements for

the annual budget development and of the approval process. C. The Financial Management Policies section provides a summary of Tampa Bay Water’s

primary financial policies. D. The Financial Plan section provides an overview of Tampa Bay Water’s budgetary fund

structure and information on revenue and expenditures, as well as capital spending for the budget year.

E. The Annual Rate Setting and Member Costs section provides summarized information and schedules including current and projected rates and Member Costs. Charts and graphs are provided that depict the components of the budget and the rate impacts. Separate charts and schedules are provided for each Member Government to assist them in planning and coordination of their budgets and financial obligations associated with Tampa Bay Water’s contractual commitments.

F. The Debt Service section provides a listing of the outstanding debt of the Agency, the Agency’s bond ratings, and the details of the debt requirements shown in the Financial Plan section. The section also provides information on debt coverage requirements and future Debt Service.

G. The Capital Improvement Program section provides summary information about the Agency’s capital projects. This includes projects in the feasibility, design and construction phases.

H. The Divisional Operating Budget Detail section provides information on Tampa Bay Water’s office and divisional organization and responsibilities. It also includes the 2009-2010 budgets for each division and historical budget trends of the divisions for the preceding four years.

I. The Summary of Contracts and Resolutions section provides key contractual requirements of the Master Water Supply Contract, the Amended and Restated Interlocal Agreement, and the Master Bond Resolution.

J. The Appendix includes a schedule of key dates for the budget process for fiscal year 2010 and fiscal year 2011. It also provides statistical reports to assist the Member Governments in the planning of their annual budgets.

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K. The Glossary includes an alphabetical list of terms used in the budget document and defined by the Amended and Restated Interlocal Agreement, the Master Water Supply Contract, and/or the Master Bond Resolution.

For budgetary purposes, Tampa Bay Water is organized into two offices and three divisions as listed below:

Office of the General Manager - Office of the General Manager - Office of Public Communications

Office of the General Counsel

Operations and Facilities Division - Operations and Facilities Division Director - Operations Department - Infrastructure Management Department

o Maintenance Department o Instrumentation and Control Department

- Construction Department - Contracts and Mitigation Department

Science and Engineering Division - Science and Engineering Division Director - Evaluation and Permitting Department - Monitoring and Laboratory Services Department - Source Rotation and Environmental Protection - Planning and Engineering Department

Finance and Administration Division - Finance Department (includes Finance and Administration Director) - Human Resources Department - Information Systems Department - Records Management Department

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Tampa Bay Water’s annual budget development process utilizes a budget format that organizes the annual operating costs and other financial requirements of divisions, departments and offices, into twelve major expense categories and approximately 60 sub-categories.

The major expense categories for budgetary and accounting purposes include the following:

Personnel Services

Materials and Supplies

Professional Services

Repairs and Other Services

Rent and Insurance

Legal Services

Capital Expenditures

Debt Service

Water Quality Credits

Water Treatment Chemicals

Water for Resale

Reserve Funding

The major expense categories consist of sub-categories to allow Tampa Bay Water’s divisions, departments and offices to estimate the projected expenses at the sub-category level. For example, the Personnel Services category includes the following sub-categories: Regular Salaries, Other Salaries and Wages, Overtime, Shift Differential, On-call Pay, FICA, FRS, Life and Health Insurance, Workers’ Compensation, Unemployment Compensation, and Auto Allowance.

As part of the annual budget development process, each of Tampa Bay Water’s divisions, departments and offices are required to prepare their initial annual budget requirements by major categories and sub-categories, using the budget model. These initial budget requirements are reviewed, evaluated, and modified, as needed, at the department, division, and agency levels to ensure that budgets are appropriate to planned operating levels and proposed project activity. The proposed budget is presented at a Board workshop for further review by the Board. Meetings are also held with the staff of the six member governments to review the proposed budget.

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Budget Basis

The basis for developing and adopting the annual budget for Tampa Bay Water is established by the Amended and Restated Interlocal Agreement. This requires that the budget be prepared primarily on an accrual basis, which is similar to the Agency’s annual financial statements. Notable differences between the budget basis and the GAAP basis used for financial reporting are as follows:

Principle payments on long-term debt are treated as current expenditures for the budget basis, as opposed to being recorded as a reduction of outstanding liabilities for the GAAP basis.

Capital expenditures funded from the rate are treated as current expenditures under the budget basis, but are treated as acquisition of capital assets under the GAAP basis.

Capital expenditures funded from debt proceeds are not reflected under the budget basis and are capital asset acquisitions under the GAAP basis.

The budget basis includes only that interest income which is available for use for budgetary purposes. The GAAP basis reflects all interest income, including that restricted as to purpose, and as adjusted for interest income which is offset against interest costs allocated to construction projects in accordance with GAAP.

The budget basis includes only interest expense that is to be paid from the rate and budgeted revenue sources. Interest expense under the GAAP basis may also include interest costs being paid from bond proceeds (capitalized interest) and will exclude any interest costs that are treated as a cost of assets in the construction phase.

The budget basis also reflects transfers to and from various reserves, which are not revenue and expense under the GAAP basis.

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Annual Budget Requirements

This section briefly describes the key requirements of the annual budget development and approval process, as outlined in the Interlocal Agreement.

Section 2.08. Article II, Creation and Governance, of the Amended and Restated Interlocal Agreement establishes the procedures and requirements for the development of an annual budget for Tampa Bay Water. The requirements are as follows:

Prior to July 1 of each year, the General Manager shall prepare and deliver to the Board a balanced tentative budget for Tampa Bay Water covering its proposed operating and other financial requirements for the ensuing fiscal year. The tentative budget shall identify:

o The rate at which Quality Water will be sold to Member Governments during such fiscal year; and

o The rate to be charged to the City of Tampa for water provided through the Tampa Bypass Canal pumping facility during such fiscal year.

The Board shall publish a notice of its intention to adopt the budget and shall provide copies of the notice and tentative budget to each Member Government on or before the first publication date. The notice shall include a summary of the tentative budget; specify the rates at which Quality Water will be sold to the Member Governments; and identify the time, date, and place at which the public may appear before the Board and state their objections to or support of the budget and rates. The notice shall be published once a week for two consecutive weeks within thirty (30) days of the public hearing, in any newspaper qualified to accept legal advertisements in each county in the jurisdiction of Tampa Bay Water, the last insertion of which shall appear not less than one week prior to the date set by the Board for the hearing on the proposed budget and rates.

At the time, date and place specified in the notice, the Board shall conduct a public hearing and thereafter may consider adoption of the budget and rates with any amendments it deems advisable. Unless otherwise authorized by the Board, the final budget and rates shall be adopted by August 1.

The adopted budget shall be the operating and fiscal guide for Tampa Bay Water for the ensuing fiscal year. The Board may amend the budget at any regular or special meeting; provided however, that prior to approving any budget amendment that increases the total budget for any fiscal year (other than a budget amendment appropriating grant funds or the proceeds of debt obligations), the Board shall provide notice and conduct an additional public hearing in the manner described above.

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Annual Budget Process

The Budget Analyst has the overall responsibilities of coordinating and managing the annual budget development process. Typically, Tampa Bay Water’s annual budget development and approval process (for the ensuing fiscal year) runs from November to July of the current fiscal year – essentially, the annual budget development process starts approximately eleven (11) months prior to the beginning of the fiscal year for which the budget is being developed.

Key milestones for the annual budget development and approval process are presented below:

Month Key Activities Responsible Entity

2nd

week of

November

Initiate the annual budget development process

Request any changes (+/-) in the annual budget request for

the ensuing Fiscal Year (compared to the current Fiscal

Year budget)

Request any changes (+/-) in the annual budget request

and/or format for the ensuing Fiscal Year from Tampa

Bay Water’s Member Governments

Tampa Bay Water Budget

Analyst

Tampa Bay Water – Office

Managers, Division

Directors and Department

Managers

Tampa Bay Water’s

Member Governments

1st week of

December

Receive and incorporate information regarding potential

changes (+/-) in the annual budget request and/or format

for the ensuing Fiscal Year

Tampa Bay Water Budget

Analyst

2nd

week of

December

Request Member Governments to provide

information/cost estimate regarding any special or unusual

program need(s) for the ensuing Fiscal Year

Tampa Bay Water Budget

Analyst

2nd

week in

December

Distribute the annual budget packet to Division Directors

and Department Managers for review

Tampa Bay Water Budget

Analyst

4th week of

December

Identify special program needs, if any, and provide cost

estimate for special program needs for the ensuing Fiscal

Year

Receive and incorporate information regarding special

program needs as submitted by the Member Governments

Tampa Bay Water Member

Governments

Tampa Bay Water Budget

Analyst

2nd

week of

January

Submit the annual budget request for the ensuing Fiscal

Year to the Finance and Administration Department

Tampa Bay Water

Divisions, Departments,

and Offices

4th week of

January

Distribute the preliminary draft budget for the ensuing

Fiscal Year to all Division Directors, Department

Managers, and Offices of General Manager and General

Counsel for their review and comment

Tampa Bay Water Budget

Analyst

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Month Key Activities Responsible Entity

1st week of

February

Provide Tampa Bay Water with an updated Annual

Report, in the form provided in Exhibit K of the Amended

and Restated Interlocal Agreement, setting forth the next

five Fiscal Years of projected Water service demand for

their respective service area.

Tampa Bay Water Member

Governments

2nd

week of

February

Request an update from Member Government regarding

any project and/or program related changes, if any, since

the last update in December

Tampa Bay Water Budget

Analyst

Tampa Bay Water Member

Governments

2nd

week of

February

Meet with Division Directors, Department Managers and

staff from the Offices of General Manager and General

Counsel to review the annual budget requirement for the

ensuing Fiscal Year

Tampa Bay Water Budget

Analyst

Tampa Bay Water

Divisions, Departments,

and Offices

3rd

week of

February

Incorporate any changes (+/-) to the annual budget request

which resulted from meetings with Division Directors,

Department Managers, and staff from the Offices of

General Manager and General Counsel

Tampa Bay Water Budget

Analyst

4th week of

February

General Manager meets with Division Directors and

General Counsel to review program plans and outstanding

issues regarding the annual budget for the ensuing Fiscal

Year

Tampa Bay Water General

Manager, Division

Directors, General Counsel

and Senior Manager,

Finance

1st week of

March

Finalize any changes (+/-) to the annual budget request for

the ensuing Fiscal Year based on feedback received from

the Office of General Manager

Tampa Bay Water Budget

Analyst

2nd

week of

March

Prepare and distribute the bound copies of the annual

budget for the ensuing Fiscal Year to Tampa Bay Water

staff, Member Governments and Board

Tampa Bay Water Budget

Analyst

1st and 2

nd

week of

April

Meet with Member Governments representatives to

discuss the proposed annual budget for the ensuing Fiscal

Year

Incorporate comments/suggestions regarding the annual

budget which resulted from meetings with Member

Governments

Prepare documents for Board workshop

Tampa Bay Water Budget

Analyst; Senior Manager,

Finance

Tampa Bay Water Budget

Analyst

Tampa Bay Water Budget

Analyst

3rd

week of

April

Conduct a Board workshop to discuss the annual budget

proposal for the ensuing Fiscal Year

Tampa Bay Water General

Manager

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Month Key Activities Responsible Entity

2nd

or 3rd

week of

May

Present the preliminary annual budget for Tampa Bay

Water for the ensuing Fiscal Year

Schedule and issue a notice for the public hearing for the

final budget approval

Tampa Bay Water General

Manager

Tampa Bay Water –

Finance and

Administration Division

Director, Budget Analyst

2nd

or 3rd

week of

June

Obtain Board’s approval for the final annual budget for

Tampa Bay Water for the ensuing Fiscal Year

Tampa Bay Water General

Manager

Major Responsibilities

The annual budget development process for Tampa Bay Water is a group effort that relies on regular interactions between division directors, department managers, representatives from the Offices of General Manager and General Counsel, and the Budget Analyst. Additionally, the Budget Analyst works closely with representatives of Member Governments to seek their input during the annual budget development process.

A high level summary of major roles and responsibilities of various entities involved in the annual budget development process is presented below.

Tampa Bay Water – Budget Analyst

The Budget Analyst has the overall responsibility for coordinating and managing the annual budget development process. The major responsibilities of the Budget Analyst include:

o Prepare the necessary summary reports of prior fiscal year budget allocations and year-to-date actual expenses by major categories for all divisions, departments and offices – information provided in these summary reports serve as a basis for developing budgetary estimates for the ensuing fiscal year.

o Distribute the relevant summary reports to divisions, departments and offices.

o Set up and maintain the budget model to collect and process the annual budget data/information by categories for the ensuing fiscal year as received from divisions, departments and offices.

o Review the annual budgetary estimates prepared by divisions, departments and offices for the ensuing fiscal year.

o Identify and document a list of potential modifications to the annual budgetary requirements for divisions, departments and offices for the ensuing fiscal year based on prior fiscal year budget allocations, actual expenses, and guidelines established by the Finance and Administration Division Director Senior Manager Finance and General Manager (e.g., impact on Member Governments of potential rate increase, keeping the total increase in the annual budget to a manageable level, etc.).

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o Meet with the department managers and staff to review the annual budgetary estimates for the ensuing fiscal year for their respective division/department/office.

o Meet with the division directors, Senior Manager Finance, General Counsel and General Manager to review the proposed budget requirements for the ensuing fiscal year.

o Revise the budget estimates, as necessary, based on the feedback received from the executive leadership and senior management of Tampa Bay Water.

o Prepare and distribute the bound copies of the annual budget estimate for the ensuing fiscal year to Tampa Bay Water management, Member Governments and the Board.

o With the Senior Manager, Finance meet with the representatives of Member Governments to review the annual budget estimates for the ensuing fiscal year.

o Review potential concerns/comments/suggestions expressed by Member Governments regarding the annual budget estimate for the ensuing fiscal year with the Finance and Administration Division Director and General Manager, as necessary.

o Incorporate all changes to the preliminary budget estimate for the ensuing fiscal year that are approved by the General Manager and/or the Finance and Administration Division Director.

o Verify the annual budget’s compliance with the terms specified in the Master Water Supply Contract, the Amended and Restated Interlocal Agreement, and provisions of the Financing Documents.

o Prepare and distribute the final budget for the ensuing fiscal year.

Tampa Bay Water – Senior Management and Staff

The division directors, department managers and the representatives from the Offices of General Manager and General Counsel are responsible for the following activities for their respective division/department/office:

o Review the current fiscal year budget allocation against the year-to-date actual expenses by major categories.

o Identify, estimate and document anticipated changes (+/-) in the annual budgetary requirements (both capital and operating budget) for the ensuing fiscal year due to change in program(s) and/or project(s) requirements.

o Estimate and document potential changes (+/-) in the annual budgetary requirements for the ensuing fiscal year due to anticipated changes in operations, costs and/or quantities of materials/supplies required, consulting support services, etc.

o Prepare a preliminary budget estimate (both capital and operating budget) for the ensuing fiscal year.

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o Input the annual budget estimates for the ensuing fiscal year by budget category and sub-category in the budget model.

o Meet with the Budget Analyst to discuss the annual budget requirements for the ensuing fiscal year.

o Support the Budget Analyst and the Finance and Administration Department in their efforts to prepare the final budget for the ensuing fiscal year.

Member Governments

Tampa Bay Water’s Member Governments have the following responsibilities in the annual budget development process:

o Provide the next five fiscal years of projected water services demand for their respective service area to Tampa Bay Water (use the form provided in Exhibit K of the Amended and Restated Interlocal Agreement).

o Identify and communicate any special program needs, which could have an impact on the annual budget request, for the ensuing fiscal year to Tampa Bay Water.

o Review the preliminary annual budget request for the ensuing fiscal year, and provide any comments/suggestions to the Budget Analyst.

Tampa Bay Water – Board

Tampa Bay Water Board has the final authority to approve the annual budget request. The Board has the following responsibilities in the annual budget development and approval process:

o Review the tentative budget for Tampa Bay Water covering its operating and financial requirements for the ensuing fiscal year.

o Provide comments/suggestions, as necessary, to Tampa Bay Water executive leadership and senior management regarding the annual budget request for the ensuing fiscal year.

o Publish a notice of its intention to adopt the budget for the ensuing fiscal year during the scheduled public meeting.

o Conduct a public hearing and adopt the final budget and rates with any amendments it deems advisable.

Budget Implementation

The approved annual budget is input to the Agency’s financial accounting system at the beginning of each fiscal year. The system provides accountability and reporting of purchase order encumbrances and actual expenditures versus the approved budget. Agency staff, together with the Budget Analyst, monitor compliance with the budget. At year end, encumbrances which represent on-going contractual commitments are carried over to the succeeding fiscal year until the commitment is completed. Encumbrances which terminate at the end of the fiscal year are closed out at year end.

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Budget Amendments

Agency policy allows the transfer of budget between sub-categories within a single budgetary category (e.g. within Professional Services from Hydrological Services to Ecological Services) with the approval of the General Manager. Transfers of budget between major categories (e.g. from Professional Services to Rent and Insurance or to Electric) must be submitted to the Agency’s board for approval regardless of dollar amount. Any increase to the total budget also requires Board approval and a public hearing.

FINANCIAL MANAGEMENT POLICIES

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TAMPA BAY WATER FINANCIAL MANAGEMENT POLICIES

The financial policies are intended as a guide to financial stewardship of Tampa Bay Water. The policies will guide essential decisions affecting budget and financial matters to ensure the Agency is financially prepared to meet the Board’s immediate and long-term service objectives.

Utility Reserve Fund (Fund Balance) Policy

To provide adequate operating capital at all times, Tampa Bay Water shall maintain, at a minimum, a Utility Reserve Fund sufficient to cover 10% of yearly budgeted Gross Revenue (as defined in Tampa Bay Water’s bond covenants), exclusive of revenue from government grants, whether such grants are received for capital improvement or operating purposes. The balance in the Utility Reserve Fund shall also be maintained at levels sufficient to insure that Tampa Bay Water complies with its bond covenant requirements including a requirement that Net Revenues plus Fund Balance (unencumbered monies on deposit in the Utility Reserve Fund on the preceding September 30th) be equal to or greater than 125% of annual debt service coming due in the fiscal year. A higher coverage may be established by the Board if circumstances warrant such coverage.

To insure compliance with Master Water Supply requirements, any Gross Revenues which remain on deposit at the end of the fiscal year and which are not required to pay liabilities existing at the end of the fiscal year (unexpended funds) shall be deposited to the Utility Reserve Fund. The Director of Finance & Administration will evaluate the adequacy of the Utility Reserve Fund balance as it relates to both the current year and the succeeding budget year debt covenant calculations. Monies deposited to the Utility Reserve Fund will remain in the Utility Reserve Fund to the extent they are needed to maintain compliance with bond covenants and as required by the Utility Reserve Fund Policy.

Rate Stabilization Account Policy

The Master Water Supply Contract allows the Board to establish a Rate Stabilization account. After meeting the Utility Reserve Fund requirements, any additional funds deposited to the Utility Reserve Fund at the end of the fiscal year shall be transferred to the Rate Stabilization Account and accounted for as deferred revenues of the fiscal year in which the revenues were accrued. Such transfer and accounting must be made no later than 90 days after the end of the fiscal year in which the funds were accrued and must be approved by the General Manager.

The lesser of (a) 3% of budgeted revenue of the year just ended or (b) the amount of encumbrances being carried forward or (c) the amount of monies deposited to the Rate Stabilization Account may be applied as Revenue in the first succeeding fiscal year, with the approval of the General Manager. Such funds are to be used for purposes of funding encumbrances carried forward and/or other approved activities. Encumbrances which exist at the end of the fiscal year just ended and which are being funded from the Uniform Rate may also be carried to the first succeeding fiscal year with the approval of the General Manager to allow for completion of tasks that were budgeted and approved in the fiscal year just ending.

Any monies placed in the Rate Stabilization Account in excess of the 3% of budgeted revenue amount will be applied to the first succeeding fiscal year either to pay expenditures of the first

22

succeeding fiscal year for which rates are collected or to remain in the Rate Stabilization Account for use in a subsequent year. Any application of these monies in excess of 3% requires approval of the Board of Directors.

To the extent that any monies are utilized from the Rate Stabilization Account to fund expenditures currently provided for in the Uniform Rate, the rate being charged will be modified to take this funding into account.

Fixed Asset Policy

The Director of Finance is responsible for establishing the policies and procedures necessary to provide adequate internal control over Fixed Assets. Policies and procedures shall be approved by the General Manager. Statements of policy shall be submitted to the Board of Directors for review. All Fixed Assets acquired by the Agency shall be titled to the Agency and recorded in the Fixed Assets records system. At a minimum, the Fixed Assets records system shall contain the applicable information required by regulatory bodies. (Reference: Fla. Statutes, Chap. 274.02; Rules of the Auditor General, Chap. 10.450). An annual physical inventory of all movable equipment shall be taken under the direction of the finance department and reconciled to the fixed asset records and general ledger control accounts in accordance with Fla. Statutes, Chap. 274.02 and Rules of the Auditor General, Chap. 10.480).

Debt Policy

The Agency’s debt policy permits the following: (a) issuance of debt obligations on behalf of Tampa Bay Water to finance the construction or acquisition of infrastructure and other assets for the purpose of meeting its water supply obligations to the member governments; and (b) issuance of debt obligations to refund outstanding debt when market conditions indicate at least a 3% present value savings or when other management considerations, as recommended by the agency’s financial advisors, indicate the refunding is appropriate. The debt policy requires that debt obligations be issued and administered in such a manner as to insure and sustain the long-term financial integrity of Tampa Bay Water and to achieve the highest possible credit rating for the Agency. Debt obligations must be consistent with the Board’s Derivative Policy. Also, Debt obligations shall not be issued and debt proceeds shall not be used to finance current operations without specific action of the Board and concurrence of the Agency’s Bond Counsel as to the appropriateness of that action.

There is no legal limitation on the amount of debt that the Agency can issue. However, the Agency must be able to demonstrate that it can repay the debt from the revenues generated from water sales or other approved sources.

Tampa Bay Water’s procedures for effective management of debt are as follows:

Comply with all debt covenants and requirements of the bond resolution

Evaluate potential refinancing of debt when present value savings equal or exceed 3% of current debt service

Issue new debt at the most beneficial interest rates and only when required for financing of the Capital Improvement Program

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Maintain favorable bond ratings by effectively communicating the financial condition of Tampa Bay Water to rating agencies, bond holders and the public

Utilize cooperative funding through grant programs whenever possible to reduce borrowing

Schedule debt service payments to provide for gradual impacts on the uniform rate charged to the member governments over a period not to exceed the lesser of the useful life of the project or thirty years

Investment Policy

The objectives of the Agency’s investment policy are safety, liquidity and return on investment. The primary objective is safety, i.e. the minimization of risk and the preservation and protection of investment principal. The second objective is to maintain sufficient liquidity at all times to meet all cash requirements that can reasonably be anticipated. The third objective is to maximize investment return, but only within the constraints of the first two objectives. The investment policy also establishes allowable investments, investment providers, and investment concentrations in furtherance of these objectives. The Agency currently maintains all of its deposit accounts in accounts that qualify as Public Deposit accounts under Florida Statutes.

Accounting, Auditing and Financial Reporting Policies

Tampa Bay Water maintains a system of financial monitoring, control, and reporting for its operations and resources to provide an effective means of insuring that Agency goals and objectives are met.

Auditing:

Each year the Agency has an annual financial audit performed by an independent certified public accounting firm. The results of this audit are included with the Agency’s annual financial statements and are reported to the Board no later than March 1st of the subsequent year. The audited financial statements are available on the Tampa Bay Water website.

The Agency’s independent auditors are selected in accordance with the Agency’s Auditor Selection Policy and applicable Florida Statutes.

Basis of Accounting and Accounting Systems:

The Agency’s financial records and the annual financial statements are maintained on the accrual basis of accounting, consistent with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) pronouncements applicable to an enterprise fund. In addition, the Agency follows the rules of the Auditor General of the State of Florida which are applicable to the Agency and utilizes the State of Florida Uniform Accounting System. The Agency’s accounting system also includes an encumbrance system for tracking purchase commitments.

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Performance Audit:

The Agency is required to have a performance audit and management study of its operations at five year intervals. The performance audit and management study reviews program results and makes recommendations regarding the Agency’s governance structure and the proper, efficient, and economical operation and maintenance of the Agency’s water supply facilities. The next performance audit is scheduled for fiscal year 2010.

FINANCIAL PLAN

25

TAMPA BAY WATER FINANCIAL PLAN

Funds Structure Overview

Tampa Bay Water consists of one major Enterprise Fund. For accounting purposes the Enterprise Fund is further broken down into additional funds and accounts.

1. The Revenue Fund is the initial depository for all Agency revenue. Revenue is transferred to other funds as required.

2. The Operation, Maintenance and Administration Fund is used to pay all operating and administrative costs of the Agency. The Operation, Maintenance and Administration Fund includes the Operating Reserve Fund.

3. The Renewal and Replacement Fund is used for repairs and replacement of the System as the need arises.

4. The Capital Improvement Fund is used to pay costs of various capital projects as designated by the Board.

5. The Sinking Fund holds all Agency funds restricted to payment of Agency debt. The Sinking Fund consists of four (4) accounts: Interest Account, Principal Account, Redemption Account, and Reserve Account. The Interest, Principal, and Redemption Accounts are funded annually from Revenues and are used annually to pay debt service. The Reserve Account is fully funded from bond proceeds and generally changes only when new debt is issued or an outstanding bond issue is redeemed.

ENTERPRISE FUND

REVENUE FUND

OPERATION, MAINTENANCE, AND

ADMINISTRATION FUND

OPERATING AND RESERVE

FUND

RENEWAL AND REPLACEMENT

FUND

CAPITAL IMPROVEMENT

FUND

SINKINGFUND

INTEREST ACCOUNT

PRINCIPALACCOUNT

REDEMPTIONACCOUNT

RESERVE ACCOUNT

UTILITY RESERVE

RATE STABILIZATION

ACCOUNT

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6. The Utility Reserve Fund is used for transfers in of any unexpended funds remaining at the end of a fiscal year. The fund balance is maintained at a balance sufficient to meet bond coverage requirements and operating capital needs. The Utility Reserve may be used for any lawful purpose relating to the System, including funding of the Rate Stabilization Account

Reserves and Restricted Funds

Tampa Bay Water maintains the following funds and accounts to comply with requirements of financing documents and the Master Water Supply Contract.

Operating Reserve – Tampa Bay Water is required to maintain an amount equal to two times the monthly average Variable Costs as provided in Tampa Bay Water’s annual budget.

Investment earnings on the Operating Reserve remain in the account until the funding requirement is fully met and then may be used for any lawful purpose.

The Operating Reserve balance at September 30, 2008 is estimated to be $4,979,094. Variable costs for fiscal year 2010 are estimated to be $39,923,294. Two months of variable costs will equal $6,653,881. Therefore; $1,674,787 of additional funding is required.

Renewal and Replacement Fund – Tampa Bay Water is required to maintain an amount equal to five (5) percent of the prior fiscal year’s Gross Revenues or such other amount as is certified by the Consulting Engineer. These funds are available to be used for repair and/or replacement of the System as the need arises. The Renewal and Replacement fund provisions are reviewed annually by the System Engineer.

Investment earnings in the Renewal and Replacement Fund remain in the fund until the funding requirement is met. Investment earnings in excess of the funding requirement are deposited into the Revenue Fund and are available for any lawful purpose.

The Renewal and Replacement fund balance at October 1, 2009 is estimated at $10,596,307. During the development of the 2010 budget, staff identified a project to be funded from the Renewal and Replacement Fund. The project will replace aging and failing pumps at the South Central Hillsborough Wellfield at a projected cost of $400,000. In addition, $150,000 used for a project undertaken in 2009 will be reimbursed to the Renewal and Replacement Fund in 2010. Therefore, at September 30, 2010 the new balance is expected to be $10,473,463.

Capital Improvement Fund – Capital Improvement charges collected or other funds received which are designated by the Board as Capital Improvement Funds are deposited to this fund. These funds are budgeted in conjunction with the Capital Improvement Budget.

Sinking Fund Debt Service Accounts – Funds collected to pay annual interest and principle on debt are deposited into the Debt Service Accounts and expended for debt service payments as they come due. Debt service budgeted for 2010 is $74,250,624. Investment earnings on the Debt Service Accounts remain in the accounts and are used to pay debt

27

service. Funds in the account at the end of the fiscal year are used to pay debt service due on October 1st of the new fiscal year.

Debt Service Reserve Account – Tampa Bay Water is required to fund and maintain an amount equal to the lesser of maximum annual aggregate debt service coming due in any fiscal year or the average annual debt service over the life of the Bonds outstanding. These funds may be used only to satisfy an insufficiency in the Debt Service Account until such time as the Bonds are paid off. When the amount of cash in the Reserve Account together with other amounts in the Debt Service Accounts, are sufficient to fully pay all outstanding Bonds in accordance with their terms, the funds on deposit in the Reserve Account may be used for payment of the Bonds. This reserve is fully funded.

Investment earnings on the Reserve Account remain in the account until the Reserve Requirement is fully met. Investment earnings in excess of the Reserve Requirement are deposited into the Revenue Fund and are available for any lawful purpose.

Utility Reserve Fund – Tampa Bay Water is required to transfer any unexpended funds remaining at the end of each fiscal year to the Utility Reserve Fund. The fund is maintained at balances sufficient to meet bond coverage requirements and operating capital needs. The Utility Reserve Fund may be used for any lawful purpose relating to the System.

Investment earnings in the Utility Reserve Fund remain in the fund and may be applied for any lawful purpose.

Rate Stabilization Account – The Rate Stabilization Account is funded from amounts established by the annual budget or approved by the Board. The fund is used to maintain changes in the Uniform Rate at more consistent levels.

Investment earnings in the Rate Stabilization Account remain in the account and may be applied for any lawful purpose.

The Rate Stabilization account balance at October 1, 2009 is $16,660,290 and is available for reduction of current and future year rates to the extent that it has not been designated by the Board for specific purposes including unanticipated legal and mitigation costs. A total withdrawal of $8,280,893 from the Rate Stabilization fund is planned in 2010. Inclusive of $4,600,881 of unexpended 2009 funds planned for carry-forward into fiscal year 2010.

Rebate Fund – Interest earned on Construction Funds which exceeds allowable earnings under IRS arbitrage regulations may result in rebatable arbitrage to the IRS. When a liability for rebatable arbitrage is incurred, funds owing to the IRS are placed in the Rebate Fund. These funds and interest earned thereon remain in the fund until the liability to the IRS is satisfied.

TAMPA BAY WATERPROJECTED CHANGES IN FUND EQUITY

OPERATIONS

OPERATING

RESERVE

RENEWAL &

REPLACEMENT

FUND

CAPITAL

IMPROVEMENT

FUND

INTEREST AND

PRINCIPAL

ACCOUNTS

DEBT SERVICE

RESERVE

ACCOUNT

UTILITY RESERVE

FUND

RATE

STABILIZATION

ACCOUNT

REBATE

FUND

TOTAL

ENTERPRISE

FUNDS

BEGINNING FUND BALANCE 10/01/2009 10,966,575$ 4,979,094$ 10,596,307$ 25,216,044$ 49,167,855$ 74,257,841$ 23,878,280$ 16,660,290$ 100,307$ 215,822,593$

REVENUES:

Water Sales 154,575,895 154,575,895 Water Sales - Tampa Bypass Canal 581,260 581,260 Interest Earned 301,663 75,813 127,156 254,718 590,014 1,757,712 286,539 163,438 1,204 3,558,257

EXPENDITURES:

Fixed Costs (49,614,412) (49,614,412) Variable Costs (39,923,294) (39,923,294) Debt Service - bonds (74,315,667) (74,315,667) Debt Service - acquisition credits (10,231,557) (10,231,557) Water Quality Credits (292,000) (292,000) CAPITAL PROJECT EXPENDITURES: 2025 Plan Projects (4,834,284) (4,834,284)

GRANTS SWFWMD desal trust proceeds 10,000,000 10,000,000

INTERFUND TRANSFERS: Transfer interest available for operations 1,996,963 (75,813) (1,757,712) (163,438) - Transfer to Operations for R & R projects 400,000 (400,000) - Transfer from Operations to Sinking Fund (74,250,624) 74,250,624 - Transfer from Rate Stabilization Account 8,280,893 (8,280,893) - Transfer from Operations (1,824,787) 1,674,787 150,000 -

ENDING FUND BALANCE 10,966,575$ 6,653,881$ 10,473,463$ 20,636,478$ 49,692,826$ 74,257,841$ 24,164,819$ 8,379,397$ 101,511$ 205,326,791$

SINKING FUNDS

28

29

Financial Planning and Trends

The Master Water Supply Contract requires Agency Members to annually provide a five-year estimate of projected water service demand for their respective service areas. Additionally, the Agency utilizes various demand forecasting tools to provide five-year water service demand projections for its Members’ service areas. These projections take into consideration relevant factors such as historical rainfall patterns, demographics, population growth, and conservation measures. This information is utilized by management in developing the annual budget and five-year budget projections.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

FY 2010 176.6mgd

FY 2011 179.5mgd

FY 2012 182.1mgd

FY 2013 184.3 mgd

FY 2014 186.7mgd

FY 2015 189.3mgd

MEMBER DEMAND PROJECTIONS FY 2010 - FY 2015

Pinellas County

St. Petersburg

Hillsborough County

Tampa (long term avg. demand)

Pasco County

New Port Richey

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

FY 2004 162.68mgd

FY 2005 168.43 mgd

FY 2006 182.64 mgd

FY 2007 186.68mgd

FY 2008 176.34mgd

A LOOK BACK...ACTUAL MEMBER DEMAND FY 2004 -2008

Pinellas County

St. Petersburg

Hillsborough County

Tampa

Pasco County

New Port Richey

30

Revenues

The Agency’s primary revenue source is sale of water to its six member governments. The Master Water Supply Contract establishes a budget process through which the Agency establishes an annual Uniform Rate which is charged to the Members. A fixed cost component of the rate is established and billed monthly to recover the defined fixed costs of the Agency based on the Members’ pro rata share of production. A variable cost component of the rate is established and billed monthly based on the current month’s production to recover the defined variable operating costs; primarily power, chemicals, and purchased water. Contract terms require that rates collected be sufficient to pay the annual water system operating and maintenance costs, annual debt service, and purchase of operating equipment, net of other available revenue sources. Rates must also be sufficient to fund required reserves and to provide adequate levels of working capital through the Utility Reserve and Operating Reserve Funds.

$-

$0.5000

$1.0000

$1.5000

$2.0000

$2.5000

$3.0000

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2007

FY 2008

FY 2009

FY 2010

Tampa Bay Water Uniform RatesFY 1999 - FY 2010

31

Expenditures

Expenditure levels are established annually for operating and maintenance costs based on projected water service demands, permit and compliance requirements, and equipment needs. Expenditures are also budgeted to make debt service payments, to satisfy bond covenant and reserve funding requirements, and to fund capital improvement costs not funded by borrowing or grants. Purchasing is conducted in accordance with the Agency’s purchasing policies which prescribe procedures to obtain competitive pricing when appropriate.

32

Tampa Bay Water

Annual Budget FY 2010

Sources & Uses of Funds - Actual 2008, Approved 2009 and 2010

Fund Category 2008 Actual 2009 Approved 2010 Approved

Sources of Funds

Revenue from Water Sales $ 152,079,484 $ 153,362,694 $ 154,575,895

Revenue from TBC-Sale of Water 467,771 581,260 581,260

Misc. Income 202,014 - -

Interest Income 7,723,388 6,394,023 2,298,626

Subtotal 160,472,656 160,337,977 157,455,781

Transfers In from Rate Stabilization Acct.- for Bond Coverage - 2,500,000 -

Transfers In from Rate Stabilization Acct. - Operations 12,166,462 7,340,000 3,680,012

Transfers In from Rate Stabilization - Unencumbered funds from Prior Year 2,878,333 2,131,619 4,600,881

Transfer In from Renewal & Replacement - 150,000 400,000

SWFWMD Grant for Capital Program 21,250,000 63,750,000 10,000,000

Transfer in From Capital Improvement Funds 1,638,400 - -

Total Sources $ 198,405,851 $ 236,209,596 $ 176,136,674

Uses of Funds

Personnel Services $ 10,724,069 $ 11,918,422 $ 12,239,395

Materials & Supplies 1,974,916 2,206,474 2,040,963

Professional Services 28,250,569 30,243,865 26,870,442

Repairs & Other Services 3,069,884 3,557,881 4,413,771

Rent & Insurance 1,399,246 1,597,670 1,568,315

Legal Services 2,346,781 1,560,000 931,000

Capital Expenditures 5,107,531 2,061,500 1,550,526

Total Debt Service-Bonds 92,695,253 138,995,710 74,250,624

Total Debt Service-Acquisition Credit to Member Governments 10,415,634 10,338,935 10,231,557

Water Quality Credit to Member Governments 309,750 292,000 292,000

Misc./Other - - -

Water Treatment Chemicals - Variable Cost 8,259,697 12,771,680 16,220,170

Power / Electricity - Variable Cost 16,283,109 15,948,636 19,285,074

Water for Resale - Variable Cost 2,721,021 1,154,250 4,418,050

Subtotal 183,557,459 232,647,023 174,311,887

Transfer Out to Capital Improvement Fund 823,656 - -

Transfer Out to R&R Fund 858,303 725,000 150,000

Transfer Out to Operating Reserve 706,158 337,573 1,674,787

Transfer Out to Rate Stabilization Account 12,189,306 2,500,000 -

Transfer Out to Utility Reserve 270,969 - -

Total Uses $ 198,405,851 $ 236,209,596 $ 176,136,674

Tampa Bay Water

Projected Sources & Uses of Funds

Approved

Enterprise Fund 2010 2011 2012 2013 2014 2015

Sources of Funds

Water Sales 154,575,895$ 172,509,331$ 177,843,280$ 191,444,051$ 194,031,877$ 194,788,838$

TBC-Sale of Water 581,260 581,260 581,260 581,260 581,260 581,260

Interest Income 2,298,626 2,232,391 2,154,477 2,154,477 2,154,477 2,154,477

Subtotal 157,455,781 175,322,982 180,579,017 194,179,788 196,767,614 197,524,576

Transfers In from Rate Stabilization Account 3,680,012 2,800,000 - - - -

SWFWMD Grant for Capital Program 10,000,000 - - - - -

Estimated unencumbered funds from Prior Year (note 1) 4,600,881 1,545,759 1,725,093 1,778,433 1,914,441 1,940,319

Transfer In from Renewal & Replacement 400,000 320,000 2,360,000 2,000,000 2,000,000 2,000,000

Total Sources 176,136,674$ 179,988,741$ 184,664,110$ 197,958,221$ 200,682,055$ 201,464,895$

Uses of Funds (note 2)

Personnel Services 12,239,395 12,851,365 13,493,933 14,168,630 14,877,061 15,620,914

Materials & Supplies 2,040,963 2,212,291 2,403,930 2,524,715 2,611,480 2,701,066

Professional Services 26,870,442 28,756,098 29,690,671 30,655,618 31,651,925 32,680,613

Repairs & Other Services 4,413,771 4,614,522 4,764,494 4,919,340 5,079,219 5,244,294

Rent & Insurance 1,568,315 1,695,690 1,750,800 1,807,701 1,866,451 1,927,111

Legal Services 931,000 961,258 992,498 1,024,755 1,058,059 1,092,446

Capital Expenditures 1,550,526 1,658,222 2,892,502 2,986,509 3,083,570 3,183,786

Total Debt Service-Bonds (note 3) 74,250,624 74,252,606 74,247,191 82,070,952 80,701,302 79,065,164

Total Debt Service-Acquisition Credit to Member Governments 10,231,557 10,231,557 10,231,557 10,231,557 10,231,557 10,231,557

Water Quality Credit to Member Governments 292,000 292,000 181,750 145,000 145,000 145,000

Water Treatment Chemicals - Variable Cost 16,220,170 17,072,047 17,626,888 18,199,762 18,791,254 19,401,970

Power / Electricity - Variable Cost 19,285,074 20,198,358 20,854,804 21,532,585 22,232,394 22,954,947

Water for Resale - Variable Cost 4,418,050 4,563,846 4,714,453 4,870,029 5,030,740 5,196,755

Subtotal 174,311,887 179,359,858 183,845,472 195,137,152 197,360,014 199,445,623

Transfer Out to R&R Fund 150,000 310,389 591,656 2,586,697 3,080,039 1,769,391

Transfer Out to Operating Reserve 1,674,787 318,494 226,983 234,372 242,002 249,881

Total Uses 176,136,674$ 179,988,741$ 184,664,110$ 197,958,221$ 200,682,055$ 201,464,895$

BUDGET PROJECTIONS

NOTES:

[1] ESTIMATED UNENCUMBERED FUNDS FROM PRIOR YEAR FOR 2010 IS ESTIMATED AT 3% OF PRIOR YEARS REVENUE FROM WATER SALES. FOR 2011-2015 ESTIMATED AT 1% OF PRIOR

YEAR WATER REVENUE FROM WATER SALES

[2] AN INFLATION RATE RANGE OF 3.3% TO 5% IS USED FOR FUTURE COST PROJECTIONS WHERE STAFF BELIEVES THIS IS APPROPRIATE. COST PROJECTIONS ARE ALSO MODIFIED TO

INCLUDE FIRST YEAR AND SUBSEQUENT YEAR OPERATING COSTS OF NEW FACILITIES CURRENTLY UNDER CONSTRUCTION. NO OPERATING COSTS PROVISION IS MADE FOR THOSE

PROJECTS WHICH HAVE NOT BEEN SELECTED BY THE BOARD FOR CONSTRUCTION.

[3] THE PROJECTIONS PRESENTED ABOVE FOR 2011-2015 ARE BASED ON THE CAPITAL PROJECTS CASH FLOW PROJECTIONS PRESENTED IN THE CAPITAL IMPROVEMENT PROGRAM

WHICH INCLUDE PROJECTS UNDER CONSIDERATION BY THE BOARD FOR BOTH SYSTEM IMPROVEMENT AND EXPANSION. THE EXACT MIX OF PROJECTS TO MOVE FORWARD TO

CONSTRUCTION WILL BE SELECTED BY THE BOARD IN THE FUTURE AS SYSTEM NEEDS ARE EVALUATED. THESE PROJECTIONS INCLUDE ISSUANCE OF $124.8 MILLION SERIES 2012

BONDS. THESE PROJECTIONS WILL CHANGE AS PROJECT SELECTION TAKES PLACE AND FINANCING NEEDS ARE FURTHER DEFINED.

33

34

Capital Improvements Planning and Financing

Planning:

New water supply projects are developed through the long-term water supply planning process, which is performed to insure that (1) the public has sufficient water supplies to meet its needs in an environmentally sustainable and cost-effective manner, and (2) Tampa Bay Water is in compliance with its obligations under the Amended and Restated Interlocal Agreement. It can take as long as 10 years to plan, permit, design, and build drinking water facilities. Tampa Bay Water develops its Master Water Supply Plans through this long-term planning effort. This process is a multi-step process including determination of need, identification of potential projects, feasibility studies, review and selection by the Board of projects to be studied further through preliminary design, and final selection by the Board of projects to be constructed.

Long-term water supply planning is conducted at least every five years. As part of the planning process, demand projections are updated annually to identify the need for and timing of the development of new water sources. It is the Agency’s goal to bring new water supplies on-line in a timely manner based on need, but not so far in advance as to unnecessarily burden the cost of water by overbuilding supply capacity.

Financing:

Tampa Bay Water finances its capital improvements program through the issuance of tax exempt bonds. Bond proceeds are placed in a restricted Construction Fund until disbursed for the intended purpose. Certain small projects are funded from the Uniform Rate (Capital Improvement Charge) or other revenue sources approved by the Board to be utilized for that purpose. The funds are retained in the Capital Improvement Fund until disbursed for approved purposes. The Agency also seeks and obtains available grant funding for its projects from SWFWMD, the State of Florida and the federal Environmental Protection Agency.

Tampa Bay Water’s current Capital Improvement Program is funded primarily through the issuance of Revenue Bonds. Co-funding from SWFWMD will fund an estimated 50-percent of the System Configuration II Projects. The Capital Improvement Fund may be used to fund any Board approved Capital Project and is currently budgeted to fund nine projects during 2010. The Renewal and Replacement Fund is currently funding projects where major repairs or replacement of specific components are needed to maintain the service level of the system. The Uniform Rate generally funds projects that improve existing facilities. Uniform Rate projects are considered routine and include technological upgrades and facility remodeling/renovations. For fiscal year 2010 the Board has also approved two projects that at the time of this writing did not have a funding source identified.

35

A capital project is defined as planned activities that result in

o a distinct capital asset or improvements to an existing asset.

o major repairs, renovations or expansions that extend an existing asset’s useful life and/or result in a significant change in its functionality or capacity.

Capital assets are recorded on Tampa Bay Water’s financial records in accordance with generally accepted accounting principles and applicable Florida state statutes.

Approved projects can include projects constructed for the benefit of member governments or other government agencies. If Tampa Bay Water does not retain ownership of the completed project, it is accounted for as a contribution to the respective entity.

The Capital Improvement Program section of this document provides budget detail and project description for all approved projects as of May 2009.

The list on the following page reflects Capital Projects that will be in process during fiscal year 2010.

Revenue Bonds49.17%

SWFWMDCo-Funding

43.96%

Capital Improvement

Fund4.01%

Renewal and Replacement

Fund0.33%

Uniform Rate0.33%

Approved for Future Funding

2.20%

Funding Sources for Capital Projects in Fiscal Year 2010$120,601,114

36

TAMPA BAY WATER – CAPITAL PROJECT LIST FISCAL YEAR 2010

Project Name

Total Project

Budget FY 2010

Northern Tampa Bay Wellfields - Additional Supply $ 200,000 $ 50,000

Surface Water Enhancement and Recharge (Alafia Expansion and Groundwater Recharge) 5,000,000 1,000,000

Tampa Bay Desalination Plant Expansion 150,000 50,000

Carrollwood Well #1 - Well House 222,947 183,000

Config II: Downstream Enhancements - SWTP Expansion 139,791,228 54,201,185

Config II: Downstream Enhancements - High Service Pump Station Expansion 12,539,199 5,153,211

Config II: Downstream Enhancements - Offstream Reservoir Pump Station 17,070,870 8,971,344

Config II: Downstream Enhancements - Tampa Bypass Canal Pump Station Expansion 22,614,908 7,801,954

Config II: Downstream Enhancements - Repump Station Expansion 9,406,226 3,777,143

Config II: Downstream Enhancements - SCHI Booster Pumping Station 22,121,230 10,829,851

Config II: System Interconnects - Cypress Creek Pump Station Expansion 13,964,531 5,330,935

Config II: System Interconnects - Morris Bridge Booster Station Expansion 4,669,240 2,810,333

US 301 Interconnect Pipeline Extension (Part of Config II SWTP Expansion) 1,174,159 985,625

BUD Transmission Main Extension-Permanent (Part of Config II SWTP Expansion) 1,089,500 1,007,500

Config II: System Interconnects - Northwest Hillsborough Pipeline 12,885,743 7,156,269

Regional System Surge Protection 2,340,000 1,170,000

SCHIP Phase III (Hydrogen Sulfide Removal at Lithia) 30,590,459 227,848

Brandon Well Testing (BUDW#5 Relocation) 4,335,924 1,171,222

Seaboard and Valrico Hills 2,250,000 439,411

Revenue Bonds Total 302,416,162 112,316,830

Cypress Creek Security Improvements 100,000 100,000

Cypress Creek Machinery and Equipment Warehouse 206,070 129,517

Cypress Creek Road Improvements 169,780 139,945

NWH # 7 Connection 2,674,935 1,564,362

2025 Analysis - Emergency - Lake Park WTP Yard 886,780 431,890

2025 Analysis - Emergency - Cosme WTP Yard 1,269,780 720,904

Cosme Pressure Reducing Valve Yard Piping Addition 354,000 181,000

2025 Analysis - Comm. Power - Cypress Creek Wellfield 1,600,000 1,487,500

Dye's Crossing 100,000 79,166

Capital Improvement Fund Total 7,361,344 4,834,284

South Central Hillsborough Wellfield-Pumps Replacement 400,000 400,000

Renewal and Replacement Fund Total 400,000 400,000

South Central Hillsborough Well No 2 - Site Drainage 125,000 100,000

Cross Bar Wellfield-Pumps Evaluation 100,000 100,000

South Central Hillsborough Wellfield-Pumps Evaluation 100,000 100,000

Vulnerability Assessment-Recommended Improvements 450,000 100,000

Uniform Rate Total 775,000 400,000

Alternative Energy Feasibility Study 500,000 150,000

Regional Reservoir Investigation and Repair 125,000,000 2,500,000

Approved for Future Funding Total 125,500,000 2,650,000

TOTAL CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2010 $120,601,114

ANNUAL RATE SETTING AND MEMBER COSTS

37

TAMPA BAY WATER ANNUAL RATE SETTING AND MEMBER COSTS

This section presents a summary of the budgeted components which make up the approved Uniform Rate and the manner in which each Member will be invoiced for water purchased in 2010. The “Uniform Rate” is the uniform dollars per 1,000 gallons wholesale rate charged to the Member Governments for the supply of water through a Fixed Cost and Variable Cost component. The Uniform Rate is based upon the annual estimate and the projected quantity of water expected to be delivered to customers. The only exception to the Uniform Rate for water supply is the rate charged to the City of Tampa for water supplied from the Tampa Bypass Canal. The annual True-up required by the Master Water Supply Contract provides for a year end adjustment in the Fixed Costs component of bills paid during the fiscal year. Each member’s pro-rata share of the Annual Estimate of Fixed Costs in effect during the fiscal year is adjusted based on the actual quantity of Quality Water delivered. Any adjustments are payable within sixty days of determination. The Amended and Restated Interlocal Agreement provides for three credits to be applied against charges to Member Governments for water service. The annual credit for the debt service amortization for Tampa Bay Water’s purchase of the Members’ water supply facilities is the most significant credit. This credit is applied to the Member Governments’ water bills. The credit is reflected in the budget as an annual debt service cost and is also reflected as a credit against the member’s cost to purchase water. The annual debt service/credit is computed on a 30-year amortization of the net purchase price, compounded semiannually at 4.865%. The aggregate annual debt service cost/credit is $10,231,557. Additional annual credits consist of a credit for the actual direct costs of water treatment. In the event water delivered to Member Governments does not meet specifications for quality water in relation to hydrogen sulfide removal, a credit for hydrogen sulfide treatment is applied. Hydrogen sulfide was and remains an issue for the existing groundwater system, but not for the new supply sources. The water quality credit for hydrogen sulfide treatment affects the Cities of St. Petersburg and New Port Richey, and Hillsborough County. The total annual Water Quality credit for hydrogen sulfide for fiscal year 2010 is $292,000. The primary source of revenue to Tampa Bay Water is the sale of quality water to our members. The projected revenue requirements must cover operation and maintenance expenses, debt service payments, bond coverage, renewal and replacement expenditures, required deposits to reserves, and capital expenditures. Revenue from sale of water and unrestricted interest income fund the operating and maintenance costs of Tampa Bay Water. Water sales for fiscal year 2010 are budgeted at $154,575,895. Interest income available for operations is estimated to be $2,298,626. Rate Stabilization funds totaling $3,680,012 and an estimated $4,600,881 of unencumbered monies from fiscal year 2009 are budgeted for use in fiscal year 2010 to maintain water sales at the $154,575,895 level.

38

The Tampa Bypass Canal sale of water represents the estimated billing to the City of Tampa for its water needs at the Tampa Bypass Canal facility at a rate of .1570 per 1000 gallons for 2010. Rate Setting

Pursuant to the Master Water Supply Contract, Tampa Bay Water establishes an Annual Estimate based on Tampa Bay Water’s budget for the ensuing fiscal year, which sets forth the expected cost of providing water service to Member Governments. Tampa Bay Water is required to develop the Rate ($/1,000 gallons), based on the Annual Estimate and the projected quantity of Quality Water to be delivered to Member Governments during the ensuing fiscal year. In accordance with the provisions of the Interlocal Agreement, a separate rate, based on actual costs incurred and allocated overhead, is charged to the City of Tampa for water supplied from the Tampa Bypass Canal.

The Uniform Rate to be charged in a fiscal year to the Member Governments for water

service may include the following components:

Operation, Maintenance and Administrative Costs – These costs are the costs of

operating, maintaining and administering the system in such fiscal year.

Debt Service Charges – Debt Service Charges relating to any of Tampa Bay Water’s

Obligations are based on principle, redemption premium, if any, and interest coming

due on debt in the fiscal year.

Renewal and Replacement Fund – Tampa Bay Water is required to maintain an amount

equal to five (5) percent of the prior fiscal year’s Gross Revenues or such other amount

as is certified by the Consulting Engineer. These funds are available to be used for

repair and replacement of the System.

Bond Coverage Costs – These costs are based on coverage requirements established by

the debt documents. The Board previously approved $2.5 million to be held in the Rate

Stabilization Account for additional bond coverage. These funds may be transferred

into Revenue in the event that coverage requirements are not satisfied from current

revenue.

Capital Improvement Charges – These charges are based on the amount identified for

capital improvements in Tampa Bay Water’s Annual Estimate for the fiscal year.

Operating Reserve Funds – These funds are provided in the annual budget to maintain

a reserve balance equal to two times the monthly average variable costs as provided in

the budget.

Rate Stabilization Fund – Operation, Maintenance and Administrative Costs may be utilized to fund a rate stabilization fund.

39

Uniform Rate Elements

The Uniform Rate consists of two components: a Fixed Cost component and a Variable

Cost component. The Fixed Cost rate is designed to recover annual costs and expenses

associated with the operation, maintenance, management, security, development and

financing of the System, other than those included as part of the Variable Cost component.

The Variable Cost rate is designed to recover costs and expenses for the operation,

maintenance and management of the System that change in direct proportion to changes in

the volume of Quality Water produced by Tampa Bay Water. The Variable Cost component

includes, but is not limited to, the costs of power, chemicals, and water purchases.

Fixed Costs

The Uniform Rate calculation is based on the total Net Annual Revenue Requirement for the fiscal year for which the rate is established and the projected amount of Quality Water, in millions of gallons per day, to be delivered to Member Governments during such fiscal year. For the purposes of the Uniform Rate calculation, the Fixed Costs for the fiscal year selected are defined as:

Fixed Costs = Net Annual Revenue Requirement – Budgeted Variable Costs

The Net Annual Revenue Requirement for the fiscal year selected (also referred to as Annual Estimate for purposes of rate computation) is calculated by making the necessary adjustments to the annual budget requirement. Such adjustments include, but are not limited to, estimated interest income, budgeted transfers from various funds (i.e., Rate Stabilization Account, Operating Reserve Fund, etc.), capitalized interest available for debt service, potential funding assistance from SWFWMD/EPA, and estimated revenues from the sale of surface water to the City of Tampa.

Variable Costs

Pursuant to the Master Water Supply Agreement, Tampa Bay Water is required to establish a variable rate to cover costs associated primarily with power, chemicals and water purchases. The variable rate ($/1,000 gallons) is defined as the ratio of the total budgeted Variable Costs to the total Net Annual Revenue Requirement, applied to the Uniform Rate.

Variable Rate = (Budgeted Variable Costs /Net Annual Revenue Req.) x Uniform Rate

40

Rate for Surface Water Source(s)

Pursuant to Section 3.08(D) of the Interlocal Agreement, the rate charged for water

delivered to the City of Tampa from the Tampa Bypass Canal (TBC) facility should be equal

to Tampa Bay Water’s direct cost of operating the TBC and allocated overhead. As part of

its annual budget development process, Tampa Bay Water prepares an estimate of direct cost

and allocated overhead associated with the Tampa Bypass Canal facility using the projected

quantity of water to be delivered to the City of Tampa from the facility during the ensuing

fiscal year.

TBC Rate = (Allocated Overhead + Direct Costs) ÷ Qty. of Surface Water (to be delivered)

The unit rate for delivery of water to the City of Tampa from the Tampa Bypass Canal

facility is presented to the Board for approval as part of the annual budget approval process

for the ensuing fiscal year. The unit rate for 2010 is $.157 ($/1,000 gallons).

Allocated Direct Estimated

Overhead Costs MGD

$0.157 per 1000 gal

= (509,418 + 178,014)

÷ (12 mgd x 365 x 1000)

Other Budget Factors

For fiscal year 2010, $2,298,626 has been estimated for interest income. Interest income will be applied to offset projected expenditures, to the extent permitted.

The Operating Reserve has been funded to a level equal to two months of variable operating expenditures.

The Uniform Rate is further segregated into Fixed Costs (do not vary as a result of water production) and billed at 1/12 of total Fixed Costs monthly per Member. The Variable Costs; (vary with water production) electricity, chemicals, and water for re-sale; are billed monthly based on actual production.

Acquired Member facilities are included in this budget as Tampa Bay Water owned supply systems and are being paid for through debt issuance and credits back to Members.

Water quality standards are established and costs are budgeted to sustain the standards. Water Quality Credits related to hydrogen sulfide removal for fiscal year 2010 have been established and will be credited to Hillsborough County, St. Petersburg, and New Port Richey.

The Southwest Florida Water Management District has committed to funding assistance for various water supply projects through 2012. The System Configuration II Projects and the associated System Interconnect Projects will receive 50 percent co-funding, up to $116 million for the construction of the projects. This reduces the amount of debt that the Agency must incur to finance these projects.

Tampa Bay Water is hopeful that additional state and federal funding will be obtained for development of its water supply projects to reduce future financing needs.

Tampa Bay Water

Projected Uniform Water Rates

APPROVED

Cost Category Fiscal Year 2010 2011 2012 2013 2014 2015

Fixed Operating Costs 49,614,412$ 52,749,445$ 55,988,829$ 58,087,267$ 60,227,766$ 62,450,230$

Variable Operating Costs 39,923,294 41,834,250 43,196,145 44,602,377 46,054,389 47,553,672

Total Debt Service-Bonds (note 1) 74,250,624 74,252,606 74,247,191 82,070,952 80,701,302 79,065,164

Total Debt Service-Acquisition Credits to Member Governments 10,231,557 10,231,557 10,231,557 10,231,557 10,231,557 10,231,557

Water Quality Credits to Member Governments 292,000 292,000 181,750 145,000 145,000 145,000

Misc./Other

Total Costs (note 2) 174,311,887 179,359,858 183,845,472 195,137,152 197,360,014 199,445,623

Adjustments

Less: Estimated unencumbered funds from prior year (note 3) (4,600,881) (1,545,759) (1,725,093) (1,778,433) (1,914,441) (1,940,319)

Less: Estimated Credit(s)/Surcharge(s) - - - - - -

Less: Estimated Revenues from TBC (581,260) (581,260) (581,260) (581,260) (581,260) (581,260)

Less: Estimated Interest Earned (2,298,626) (2,232,391) (2,154,477) (2,154,477) (2,154,477) (2,154,477)

Less: Transfer In from Rate Stabilization - - - - - -

Less: Transfer In from Rate Stabilization Account (3,680,012) (2,800,000) - - - -

Less: SWFWMD Grant (Interest from Trust) (10,000,000) - - - - -

Less: Capitalized Interest - - - - - -

Less: Transfer in from Renewal & Replacement Fund (400,000) (320,000) (2,360,000) (2,000,000) (2,000,000) (2,000,000)

Plus: Transfer Out to Capital Improvement Fund - - - - - -

Plus: Transfer Out to R&R Fund 150,000 310,389 591,656 2,586,697 3,080,039 1,769,391

Plus: Transfer Out to Operating Reserve 1,674,787 318,494 226,983 234,372 242,002 249,881

Plus: Transfer Out to Rate Stabilization Account - - - - - -

Plus: Transfer to Rate Stabilization - - - - - -

Subtotal Adjustments (19,735,992) (6,850,527) (6,002,192) (3,693,101) (3,328,137) (4,656,785)

Total Net Revenues Required 154,575,895$ 172,509,331$ 177,843,280$ 191,444,051$ 194,031,877$ 194,788,838$

Projected Water Demand (mgd) 176.60 179.50 182.10 184.30 186.70 189.30

Projected Uniform Water Rate ($/1000 gal.) $2.3980 $2.6330 $2.6757 $2.8459 $2.8473 $2.8192

BUDGET PROJECTIONS

NOTES:

[1] THE PROJECTIONS PRESENTED ABOVE FOR 2011-2015 ARE BASED ON THE CAPITAL PROJECTS CASH FLOW PROJECTIONS PRESENTED IN THE CAPITAL IMPROVEMENT PROGRAM WHICH INCLUDE PROJECTS UNDER CONSIDERATION BY THE BOARD FOR BOTH SYSTEM

IMPROVEMENT AND EXPANSION. THE EXACT MIX OF PROJECTS TO MOVE FORWARD TO CONSTRUCTION WILL BE SELECTED BY THE BOARD IN THE FUTURE AS SYSTEM NEEDS ARE EVALUATED. THESE PROJECTIONS INCLUDE ISSUANCE OF $124.8 MILLION SERIES 2012 BONDS.

THESE PROJECTIONS WILL CHANGE AS PROJECT SELECTION TAKES PLACE AND FINANCING NEEDS ARE FURTHER DEFINED.

[2] AN INFLATION RATE RANGE OF 3.3% TO 5% IS USED FOR FUTURE COST PROJECTIONS WHERE STAFF BELIEVES THIS IS APPROPRIATE. COST PROJECTIONS ARE ALSO MODIFIED TO INCLUDE FIRST YEAR AND SUBSEQUENT YEAR OPERATING COSTS OF NEW FACILITIES CURRENTLY

UNDER CONSTRUCTION. NO OPERATING COSTS PROVISION IS MADE FOR THOSE PROJECTS WHICH HAVE NOT BEEN SELECTED BY THE BOARD FOR CONSTRUCTION.

[3] ESTIMATED UNENCUMBERED FUNDS FROM PRIOR YEAR FOR 2010 IS ESTIMATED AT 3% OF PRIOR YEARS REVENUE FROM WATER SALES. FOR 2011-2015 ESTIMATED AT 1% OF PRIOR YEAR WATER REVENUE FROM WATER SALES

41

Hillsborough County51.80

29.33%

City of Tampa6.00

3.40%

Pasco County26.90

15.23%

City of New Port Richey

2.50 1.42%

Pinellas County60.70

34.37%

City of St. Petersburg

28.70 16.25%

Projected Water Demand for FY 2010176.6 mgd

42

Uniform Rate Budget Hillsborough County City of Tampa Pasco CountyCity of New Port

Richey

Pinellas County City of St. Petersburg Total

Uniform Water Rate ($/1,000 gallons) 2.3980$ 2.3980$ 2.3980$ 2.3980$ 2.3980$ 2.3980$ 2.3980$

Member Water Demand Projection (mgd) for FY 2010 51.80 6.00 26.90 2.50 60.70 28.70 176.60

Percentage of Total Water Sales (see note # 1) 29.33% 3.40% 15.23% 1.42% 34.37% 16.25% 100.00%

Member Water Purchase (FY 2009) 55.50 6.00 27.60 2.90 64.70 30.45 187.15

Percentage of Total Water Sales (see note # 2) 29.66% 3.21% 14.75% 1.55% 34.57% 16.27% 100.00%

Total Member Fixed Costs before Credits/Surcharge FY 2010 34,000,638$ 3,675,745$ 16,908,425$ 1,776,610$ 39,636,780$ 18,654,404$ 114,652,601$

Total Member Variable Costs before Credits/Surcharge FY 2010 11,710,230 1,356,397 6,081,181 565,166 13,722,219 6,488,100 39,923,294

Total Member Costs before Credits/Surcharge FY 2010 45,710,868 5,032,142 22,989,607 2,341,775 53,358,999 25,142,504 154,575,895

Additional Credits/Surcharges (Board Approved) - - - - - - -

Sale of Surface Water (TBC) - 581,260 - - - - 581,260

Water Quality Credits to Member Governments for FY 2010 (183,000) - - (12,000) - (97,000) (292,000)

Facilities Acquisition Credits to Member Governments for FY 2010 (1,238,468) (219,828) (1,873,513) (847,579) (4,378,395) (1,673,774) (10,231,557)

Net Annual Member Costs 44,289,400$ 5,393,574$ 21,116,094$ 1,482,196$ 48,980,604$ 23,371,730$ 144,633,598$

Notes:

[1] Variable costs are allocated based on the member government's projected annual water demand (mgd) for FY 2010

[2] Fixed costs billed to member governments in FY 2010 are based on the actual FY 2009 production. A true-up to the actual FY 2010 production is completed at FY 2010 year end.

Tampa Bay Water Authority

Estimated Annual Budget for FY 2010

Member Costs

43

Hillsborough County

$44,289,400 30.62%

City of Tampa$5,393,574

3.73%

Pasco County$21,116,094

14.60%

City of New Port Richey

$1,482,196 1.02%

Pinellas County$48,980,604

33.87%

City of St. Petersburg

$23,371,730 16.16%

Net Member Costs for FY 2010Total Net Annual Costs = $144,633,598

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45

46

47

48

49

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DEBT SERVICE

51

TAMPA BAY WATER DEBT SERVICE

Bonds At the time of its reorganization in 1998, Tampa Bay Water issued the 1998A Bonds to refund all existing debt. In addition, the 1998B Bonds were issued to finance the cash component of the purchase of the members’ wellfields. Of those proceeds, $71.8 million, $92.4 million, $31.7 million and $3 million were paid to Pinellas County, City of St. Petersburg, City of Tampa and Pasco County, respectively. To address the increasing need to develop new water supplies, Tampa Bay Water and its member governments worked collectively to develop a Capital Improvement Program that would identify and develop new water sources capable of producing 111 million gallons per day (mgd) by December 31, 2007. With the development of the Capital Improvement Program came the necessity to incur debt as a means of financing the Board approved program. Accordingly, Tampa Bay Water adopted a long-term plan to accomplish the financing of the Capital Improvement Program. In furtherance of this plan, Tampa Bay Water has issued its revenue bonds Series 1999, 2001B and 2002. Additional funds for the Capital Improvement Program were obtained from the Series 2001A, 2005, and 2006 refunding bond issues. On June 5, 2008 Tampa Bay Water issued $101.4 million Revenue Bonds, Series 2008 to provide additional funding for the System Configuration II projects. Series 2004 was a refunding only. Tampa Bay Water’s outstanding bonds consist of the following:

All-In

Balance True

Original Outstanding Interest Final

Issue 9/30/2009 Cost Maturity Purpose

$ 155,680,000 Refunding Revenue $ 27,360,000 0.0493 2027 Defease WCRWSA debt and fund

Bonds, Series 1998 A

Capital Improvement Program

216,570,000 Revenue Bonds, Series 38,340,000 0.0495 2027 Purchase member facilities

1998 B

372,761,143 Revenue Bonds, Series 21,690,000 0.0569 2011 Fund Capital Improvement Program

1999

307,370,000 Refunding Revenue 303,810,000 0.0513 2029 Partial defeasance of 1999 Bonds

Bonds, Series 2001 A (N.I.C)

238,230,000 Revenue Bonds, Series 164,545 0.051 2031 Fund Capital Improvement Program

2001 B

108,390,000 Revenue Bonds, Series 42,500,000 Variable 2009 Fund Capital Improvement Program

2002

107,870,000 Refunding Revenue 106,900,000 0.0369 2019 Partial defeasance of 1998 A,

Bonds, Series 2004

1998 B and 2001 B Bonds

174,965,000 Refunding Revenue 174,965,000 0.0399 2024 Partial defeasance of 1998 A,

Bonds, Series 2005 1998 B and 2001 B Bonds: fund

Capital Improvement Program

81,885,000 Refunding Revenue 79,325,000 0.0463 2036 Refund 2002 Bonds and FLGFC

Bonds, Series 2006

Loans; fund Capital Improvement

Program

101,375,000 Revenue Bonds, 101,375,000 4.869 2038 Fund Capital Improvement Program

Series 2008

52

Rate Covenant

The Bond Resolution requires Tampa Bay Water to take all actions to collect Net Revenues

in each fiscal year so that, together with Fund Balance, they equal at least 125% of the

Annual Debt Service coming due in such fiscal year. Such Net Revenues must also be

adequate in each fiscal year to pay at least 100% of:

A. The Annual Debt Service coming due in such fiscal year;

B. Any amounts required by the terms of the Bond Resolution to be deposited in the

Reserve Account or with any issuer of a Reserve Account Letter of Credit or Reserve

Account Insurance Policy;

C. Any amounts to be deposited in the Renewal and Replacement Fund in such fiscal

year; and

D. Any amounts to be repaid to the Capital Improvement Fund in such fiscal year.

For the purposes of the Rate Covenant compliance calculations, the Total Debt Service is

calculated, in accordance with the Bond Resolution, net of any Capitalized Interest and

Release of Debt Service Reserve. The Finance and Administration Division is responsible

for making sure that the Uniform Rate adopted for any fiscal year complies with the Rate

Covenants.

For the purposes of calculating the Rate Coverage test, Debt Coverage test and the Renewal

and Replacement Fund (R&R) coverage requirements, the Net Revenues are determined as

shown below.

Net Revenues = (Gross Revenues – Operating Expenses)

Rate Coverage Test:

Rate Coverage Test = Net Revenues + Utility Reserve Fund Balance

Total Debt Service

The minimum requirement for the Rate Coverage Test is 125% (i.e., the sum of Net Revenues and

the Utility Reserve Fund Balance shall be greater or equal to 125% of the total Debt Service due for

the Fiscal Year).

Debt Coverage Test:

Debt Coverage Test = Net Revenues

(Total Debt Service + Annual Contribution to Capital

Improvement Fund + Annual Contribution to R&R

Fund)

The minimum requirement for the Debt Coverage Test is 100% (i.e., the Net Revenues shall be equal

to or greater than the sum of Total Debt Service + Annual Contribution to the Capital Improvement

Fund + Annual Contribution to the R&R Fund for the fiscal year).

53

Facility Acquisition Credits In 1998, pursuant to the Interlocal Agreement, the Member Governments sold certain wellfield and transmission facilities to Tampa Bay Water. A portion of the purchase price is being paid in the form of “Facility Acquisition Credits” payable over 30 years. The credits are applied to the Members’ monthly bills.

Projected Projected

Balance Balance

Outstanding Outstanding

FACILITY ACQUISITION CREDITS 10/1/2009 9/30/2010

Pasco County $ 22,656,792 $ 21,901,454

City of New Port Richey 10,249,954 9,908,238

Hillsborough County 14,977,059 14,477,750

City of St. Petersburg 20,241,310 19,566,501

Pinellas County 52,948,885 51,183,662

City of Tampa 2,658,432 2,569,804

TOTAL ACQUISITION CREDITS $123,732,432 $ 119,607,409

SUMMARY OF 2010 DEBT SERVICE

Bonds Interest Principal Total

Revenue Bond, Series 1998 A $ 1,299,600 $ - $ 1,299,600

Revenue Bond, Series 1998 B 1,821,150 - 1,821,150

Revenue Bond, Series 1999 740,250 7,220,000 7,960,250

Refunding Revenue Bond, Series 2001 A 15,599,113 955,000 16,554,113

Revenue Bond, Series 2001 B 7,995,770 3,385,000 11,380,770

Revenue Bond, Series 2002 -

-

Refunding Revenue Bond, Series 2004 5,078,388 5,995,000 11,073,388

Refunding Revenue Bond, Series 2005 9,277,350 3,610,000 12,887,350

Refunding Revenue Bond, Series 2006 3,415,254 2,790,000 6,205,254

Revenue Bond, Series 2008 5,068,750 - 5,068,750

DEBT SERVICE - BONDS $ 50,295,624 $ 23,955,000 $ 74,250,624

Facility Acquisition Credits

Pasco County $ 1,118,175 $ 755,338 $ 1,873,513

City of New Port Richey 505,863 341,716 847,579

Hillsborough County 739,159 499,309 1,238,468

City of St. Petersburg 998,964 674,810 1,673,774

Pinellas County 2,613,172 1,765,224 4,378,396

City of Tampa 131,201 88,627 219,828

DEBT SERVICE - FACILITY ACQUISITION CREDITS $ 6,106,534 $ 4,125,023 $ 10,231,557

TOTAL DEBT SERVICE $ 56,402,158 $ 28,080,023 $ 84,482,181

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TAMPA BAY WATER

FUTURE DEBT SERVICE

FYE Sept 30 Principal Interest Total

2011 $ 28,263,588 $ 55,744,585 $ 84,008,173

2012 29,409,628 54,479,328 83,888,956

2013 30,804,094 53,059,980 83,864,074

2014 32,266,599 51,572,975 83,839,574

2015 32,433,062 50,008,618 82,441,680

2016-2020 179,506,827 224,019,804 403,526,631

2021-2025 231,576,199 170,730,444 402,306,643

2026-2030 276,172,413 104,436,175 380,608,588

2031-2035 179,060,000 39,545,534 218,605,534

2036-2039 95,335,000 9,695,963 105,030,963

TOTAL $ 1,114,827,410 $ 813,293,406 $ 1,928,120,816

Rating Agency Analysis Rating agencies provide an independent assessment of the relative credit worthiness of a municipal security. These agencies provide a letter grade that conveys their assessment of the ability of the borrower to repay the debt. These ratings are also a factor that is considered by the municipal bond market when determining the cost of borrowed funds (interest rate). The three nationally recognized rating agencies - Moody’s Investor Services, Standard and Poor’s, and Fitch Ratings – consider the following primary factors when evaluating a debt offering: Economic environment - trend information/revenue to support debt Debt history - previous debt issued and current debt outstanding

Debt management - debt planning and policies Administration- quality of Tampa Bay Water management and organizational

structure Financial performance – Tampa Bay Water’s current and historical operations

The rating agencies each use a different system to rate debt. The table below provides a comparison of their rating systems:

Moody's Fitch Standard & Poor’s

Premium Quality Aaa AAA AAA

High Quality Aa AA AA

Medium Quality A A A

Medium Grade, Lower Quality Baa BBB BBB

Predominantly Speculative Ba BB BB

Speculative, Lower Grade B B B

Poor to Default Caa CCC CCC

Highest Speculation Ca CC CC

Lowest Quality C C C

In Default or Arrears DDD DDD

Questionable Value DD,D DD,D

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In May, 2008 Tampa Bay Water’s debt received a rating upgrade from both Standard & Poor’s and Fitch. The following table summarizes the current ratings assigned to Tampa Bay Water’s debt by the rating agencies based on the agency’s credit, except for the 2002 bonds, which reflect the rating based on being backed by a letter of credit.

Moody's Fitch Standard & Poor’s

1998A Bonds Aa3 AA AA+

1998B Bonds Aa3 AA AA+

1999 Bonds Aa3 AA AA+

2001A Bonds Aa3 AA AA+

2001B Bonds Aa3 AA AA+

2002 Bonds Aa3 AA AA+

2004 Bonds Aa3 AA AA+

2005 Bonds Aa3 AA AA+

2006 Bonds Aa3 AA AA+

2008 Bonds Aa3 AA AA+

Tampa Bay Water’s bonds, except for the 2002 Bonds and 2008 Bonds are insured by Financial Guaranty Insurance Company (FGIC). In early 2008, the insurer’s financial strength and ratings were downgraded by Moody’s, Standard & Poor’s and Fitch to ratings below those of Tampa Bay Water. Due to Tampa Bay Water’s increasingly strong ratings, we have not seen any impact on the agency’s debt. The 2008 Bonds are uninsured. Future Borrowing The 2010 budget projections include the issuance of $124.8 million Series 2012 bonds for future capital improvement projects under consideration by the Board. At this time, $124.8 million is an estimate and will be revised as project selection takes place and financing needs are further defined.

CAPITAL IMPROVEMENT PROGRAM

56

TAMPA BAY WATER CAPITAL IMPROVEMENT PROGRAM

Introduction Tampa Bay Water is a Regional Water Supply Authority, supplying drinking water to the residents in the Tampa Bay community through its six Member Governments. Water sources include groundwater, surface water, and desalinated seawater. Figure 1 shows the location of Tampa Bay Water’s existing facilities. This Capital Improvement Program (CIP) document describes projects authorized or contemplated that will result in new assets, or improvement of existing assets using funding sources that are (1) borrowed, (2) derived through the Agency’s Capital Improvement Fund, (3) derived through the Agency’s Renewal and Replacement Fund, (4) collected through the Uniform Rate, or (5) received from outside sources.

Figure 1: Tampa Bay Water Facilities (2009)

57

Long Term and Master Water Supply Planning New water supply projects constitute the majority of the CIP. These projects are developed through the water supply planning process, which is performed to ensure (1) the public has sufficient water supplies to meet its needs in an environmentally sustainable and cost-effective manner, and (2) that Tampa Bay Water is in compliance with its obligations under the Amended and Restated Interlocal Agreement. It takes as long as 10 years to plan, permit, design, and build drinking water facilities. Tampa Bay Water conducts Long-Term Water Supply Planning and develops Master Water Supply Plans pursuant to the long-term planning effort. Long-Term Water Supply Planning is conducted at least every five years, evaluating hundreds of new water supply concepts, and is the pool from which Master Water Plan projects are drawn for further evaluation. As part of the planning process, demand projections are annually updated to facilitate new supplies being on-line in a timely manner, but not so far in advance as to unnecessarily burden the cost of water by overbuilding capacity.

The first Master Water Plan (a forerunner to the Long-Term Water Supply Planning that is now required by the Amended and Restated Interlocal Agreement) was approved in December 1995 and was the blueprint to meet long-term drinking water needs. This strategic plan studied, analyzed, and compared water supply options. The options proven to be technically feasible and environmentally and economically sound were selected for implementation by Tampa Bay Water's Board of Directors in 1998 as Configuration I. Construction of the Configuration I projects was completed nine years later, in late 2007, when the remediated seawater desalination facility completed its Acceptance Test and transferred to the Operations phase. The Configuration I group of water supply projects was funded in part with revenue bonds, Southwest Florida Water Management District (SWFWMD) grants and federal funds, and will meet regional water demands through 2012. The System Configuration I projects included:

Brandon Urban Dispersed Wells

Enhanced Surface Water System

Tampa Bypass Canal/Hillsborough River High Water Alafia River Pump Station South-Central Hillsborough Intertie C.W. Bill Young Regional Reservoir Regional Water Treatment Facilities

North-Central Hillsborough Intertie

Brandon/South-Central Connection

Cosme Transmission Main

Wetland Mitigation

Tampa Bay Seawater Desalination Facility

In 2001-2003, through the Long-Term Water Supply Planning process, a comprehensive list of more than 300 projects was developed based on public input, the advice of a Planning Advisory Committee, and Tampa Bay Water’s Technical Advisory Committee. As a part of this planning process, the Tampa Bay Water Board studied a short list of four new supply projects in depth between 2003 and 2006. This effort was completed in October 2006 when the Tampa Bay Water Board chose Enhancements Phases A/B for System Configuration II of the Master Water Plan. Enhancements Phases A/B builds on Tampa Bay Water’s existing Surface Water System. Other projects that were under consideration for System Configuration II, but not selected, were deferred back to the Master Water Plan and Long-Term planning process, where the non-selected and the

58

other previously studied projects are available for consideration to meet the long-term (20-year) needs of the Member Governments. System Configuration II is under construction using revenue bonds and SWFWMD funding sources, and is currently projected to meet water needs through 2019. These projects are detailed further in the next section.

System Configuration II Projects Following a five-year planning process, in October 2006 Tampa Bay Water’s Board approved Enhancements Phases A/B for System Configuration II. These projects will build on Tampa Bay Water’s existing Surface Water System to provide environmentally sound and economically feasible additional water supply. Also included are modifications to the existing water use permit on the Hillsborough River and Tampa Bypass Canal to withdraw more water, while preserving the ecosystem benefit of low and high flow regimes and reducing the annual nutrient loading to Tampa Bay. In December 2006, the Board approved a Cooperative Funding Agreement with the Southwest Florida Water Management District for 50% co-funding of the projected $232 million capital cost of System Configuration II. This program includes Enhancements Phases A/B with six surface water system projects, and the four System Interconnect projects which are needed to distribute the potable water supplies to the Member Governments. System Configuration II is projected to provide 25 million gallons per day (mgd) based on a median-year yield. All 10 projects are currently projected to be on-line before 2012, when new drinking water supplies are expected to be needed. As previously stated, six projects from the 2025 Capital Improvement Program have been incorporated into Configuration II projects where convenient and cost-effective. System Configuration II Supply Project Elements Collectively these Projects will increase Tampa Bay Water’s alternative water supply by 25 million gallons per day (mgd) median-year surface water yield through expansion of Tampa Bay Water’s Enhanced Surface Water System.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

6303 Config II: Downstream Enhancements - SWTP Expansion 139,791,228 54,201,185 14,300,296

Surface Water Treatment Plant Expansion: This project will increase the capacity of the Surface Water Treatment Plant (SWTP) to a Florida

Department of Environmental Protection (FDEP) rated treatment capacity of not less than 99 mgd through the expansion of necessary

treatment plant components anticipated to include coagulation, sedimentation, and primary disinfection by ozone, filtration, solids

handling, chemical application, storage, piping, pumping, and power supply. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010

6313 US 301 Interconnect Pipeline Extension (Part of Config II SWTP Expansion) 1,174,159 985,625

6314

BUD Transmission Main Extension-Permanent (Part of Config II SWTP

Expansion)

1,089,500

1,007,500

Surface Water Treatment Plant Add-On Projects: These projects include expansion of the existing Alkalinity Adjustment facility to match the

capacity of the expanded Surface Water Treatment Plant; removal and restoration of the temporary access roadway referred to as Stannum

Road; construction of an extension of the existing US 301 transmission main to connect it to the expanded High Service Pump Station; and

extension of the existing Brandon Transmission Main to provide a potable connection between the Brandon line and the extended US 301

transmission main. Completion is scheduled for 2010.

59

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

6306

Config II: Downstream Enhancements - Tampa Bypass Canal Pump Station

Expansion

22,614,908

7,801,954

4,551,140

Tampa Bypass Canal Pump Station Expansion: This project will increase the pumping capacity of raw water from the Tampa Bypass Canal

Lower and Middle Pool to the SWTP or the Repump Station. The Tampa Bypass Canal Pump Station Expansion will be designed and

constructed to expand capacity from 138 mgd to not less than 200 mgd. This is anticipated to be accomplished by adding four or more

additional pumps; modifying the suction header configuration; and augmenting the power supply and drive capabilities. Completion is

scheduled for 2011.

Project

No. Project Name

Total Project

Budget FY 2010

6304

Config II: Downstream Enhancements - High Service Pump Station

Expansion

12,539,199

5,153,211

High Service Pump Station Expansion: This project will increase the pumping capacity of treated water into the Regional

Transmission System. The Tampa Bay Water Regional High Service Pump Station capacity will be designed and constructed to

expand from 120 mgd to not less than 135 mgd by adding variable frequency drive pumps. This is anticipated to include the

addition of two or more additional variable frequency drive pumps and one variable frequency drive to an existing pump. Auxiliary

power, storage, and chemical feed expansion are also anticipated to be included in this task. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010

6307 Config II: Downstream Enhancements - Repump Station Expansion 9,406,226 3,777,143

Repump Station Expansion: This project will increase the pumping capacity of raw water from the Regional Facilities site to the

South-Central Hillsborough Intertie Booster Pumping Station. The Tampa Bay Water SWTP Repump Station will be designed and

constructed to expand from 130 mgd to not less than 180 mgd. This is anticipated to be accomplished by adding two or more

additional pumps, associated electrical equipment, and yard piping. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

6308 Config II: Downstream Enhancements - SCHI Booster Pumping Station 22,121,230 10,829,851 5,414,926

South-Central Hillsborough Intertie (SCHI) Booster Pumping Station: The purpose of the SCHI Booster Pump Station is to boost the

flow from the Tampa Bay Water SWTP Repump Station to the C.W. Bill Young Regional Reservoir. The repump station will be

designed and constructed for a flow of not less than 180 mgd. This is anticipated to require construction of a new facility to include

a block building, pumps, piping, motors, drives, and associated heating, ventilation and air conditioning (HVAC) and electrical

equipment. Completion is scheduled for 2011.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

6305 Config II: Downstream Enhancements - Offstream Reservoir Pump Station 17,070,870 8,971,344 3,738,060

Offstream Reservoir Pump Station: The function of the offstream reservoir pump station is to pump raw water from the C.W. Bill

Young Reservoir to the Tampa Bay Water Surface Water Treatment Plant. The Offstream Reservoir Pump Station will be designed

and constructed to have a capacity of not less than 120 mgd. This is anticipated to require construction of a new facility to include a

block building, pumps, piping, motors, drives, and associated HVAC and electrical equipment. Completion is scheduled for 2011.

System Configuration II System Interconnects Project Elements

The System Interconnects comprises four of the System Configuration II Projects that individually and collectively will provide delivery of the alternative water supplies from the regional system to the Member Governments of Tampa Bay Water.

Project

No. Project Name

Total Project

Budget

6508

Config II: Downstream Enhancements - SCHI Infrastructure Project (SCHIP

Phase II

2,642,027

Project Completion

FY 2009

South-Central Hillsborough Infrastructure Project (SCHIP) Phase II: This project comprises the installation of a chloramination facility

at the Brandon Wells and approximately five miles of 10-inch to 24-inch interconnecting piping. Completion is scheduled for 2009.

60

Project

No. Project Name

Total Project

Budget FY 2010

6401 Config II: System Interconnects - Northwest Hillsborough Pipeline 12,885,743 7,156,269

Northwest Hillsborough Pipeline: This project will add the necessary transmission capacity and associated infrastructure

improvements to supply water from the Regional System to the Northwest Hillsborough Potable Water Treatment Facility. The

additional transmission capacity associated with this task will be not less than 15 mgd. It will comprise the installation of

approximately 2.5 miles of a 36-inch diameter pipe. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010

6310 Config II: System Interconnects - Morris Bridge Booster Station Expansion 4,669,240 2,810,333

Morris Bridge Booster Station Expansion: This project will provide additional pumping capacity and associated improvements to

accommodate higher regional system pressure and delivery needs at the Morris Bridge Point of Connection. It is anticipated that this

will include the replacement or upgrade of the Morris Bridge Booster Station with larger variable frequency drives (VFD) pumps. The

purpose is to maintain the existing capacity of 30 mgd for operation at higher pressures. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

6309 Config II: System Interconnects - Cypress Creek Pump Station Expansion 13,964,531 5,330,935 3,109,712

Cypress Creek Pump Station Expansion: This project will provide additional pumping capacity with improvements that are

anticipated to include additional pumps, VFD, switchgear, power supply augmentation upgrades and storage and associated

improvements to accommodate higher regional system pressure and delivery needs at the Cypress Creek Pump Station. The

additional capacity associated with this task will be not less than 15 mgd. Completion is scheduled for 2011.

Figure 2 shows the location of the ongoing Configuration II Projects.

Figure 2: Configuration II Projects

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2025 Capital Improvement Program In 2005, Tampa Bay Water staff, the Member Governments, and the System Engineer conducted an evaluation of the Regional System capacity, connectivity, and backup systems through 2025. With the completion of all System Configuration I Projects, the System Engineer updated its pre-Configuration I evaluation of the Regional System conducted in 1998. The updated analysis made recommendations for improvements to hydraulic capacity, auxiliary and commercial power, and pipeline system connectivity. The updated plan is intended to ensure that each Member Government’s projected delivery needs will be met over the next 20 years. The 2025 program also contemplates development of surplus treatment agreements with New Port Richey, St. Petersburg, and Hillsborough County to utilize their constructed treatment capacity to treat and return water to the Tampa Bay Water system during emergencies or for other special operating conditions. The work conducted by the System Engineer was discussed with each Member Government individually and collectively with the Technical Advisory Committee. The 2025 Capital Improvement Program will take place over a 10-year period which commenced in 2006. The initial estimated cost of the program, provided to Tampa Bay Water’s Board of Directors in February 2006 when the plan was approved, was $30,910,000. Tampa Bay Water will fund these improvements from the Capital Improvement Fund and revenue bond funds. The list of projects in the 2025 Capital Improvement Program and their disposition as of January 2009 are listed on Table 1, which shows, as of this writing, that of the 21 projects identified in the original program, nine are complete, one is no longer required, six have been incorporated into the Configuration II program and will be complete by 2011, and five will be implemented in the future.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012

7061 2025 Analysis - Comm. Power - S. Pasco Wellfield 1,400,000 112,500 1,287,500

Commercial Power S. Pasco Wellfield: Install underground electrical service for the South Pasco Wellfield. Completion is schedule

for 2012

Project

No. Project Name

Total Project

Budget FY 2010

7121 2025 Analysis - Emergency - Lake Park WTP Yard 886,780 431,890

Lake Park WTP Yard Improvements: Improvements at Lake Park WTP to allow treated Section 21 Wellfield supply to be sent to the

Regional System via the Lake Park WTP high service pumps (emergency outage scenarios). Completion is scheduled for 2010

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

7131 2025 Analysis - Emergency - Cosme WTP Yard 1,269,780 720,904

7131 Cosme Pressure Reducing Valve Yard Piping Addition 354,000 181,000 124,000

Cosme WTP Yard Improvements: Improvements at Cosme WTP to allow treated NW Hillsborough Wellfield supply to be sent to the

Regional System via the Cosme WTP high service pumps (emergency outage scenarios). Completion is scheduled for 2010

Cosme Pressure Reducing Valve Yard Piping Addition: This project includes a pressure/flow control device that will limit the flow

from the plant to the City of St. Petersburg’s Oberley Pump Station while the City is providing treated water to Tampa Bay Water in

emergency conditions. The work also includes a new isolation valve, a new connection on the City’s finished water line and a

connection to the existing Tampa Bay Water finished water bypass piping. Completion is scheduled for 2011.

Project

No. Project Name

Total Project

Budget FY 2010

7141 2025 Analysis - Comm. Power - Cypress Creek Wellfield 1,600,000 1,487,500

Commercial Power Cypress Creek Wellfield: The project comprises supplementing the existing overhead commercial power lines at

Cypress Creek Wellfield with underground power lines that will feed the existing 13 Cypress Creek wells. Completion is schedule for

2010

62

Figure 3 shows the location of the ongoing 2025 Capital Improvement Program.

Figure 3: 2025 Capital Improvement Program

Table 1: 2025 Capital Improvement Program

Program Category

Project Name Disposition as of January 25, 2009

Auxiliary Power

2025 Analysis - Aux. Power - Section 21-8 Complete

Cypress Bridge Wellfield Complete

Central Pasco Infrastructure - Lake Bridge Incorporated into Central Pasco Program/Complete

Central Pasco Infrastructure - US 41 Incorporated into Central Pasco Program/Complete

Central Pasco Infrastructure - Odessa Incorporated into Central Pasco Program/Complete

Regional Facilities Site Incorporated into Configuration II

2025 Analysis - Aux. Power - South Pasco Wellfield Complete

Commercial Power Feed

2025 Analysis - Comm. Power - South Pasco Wellfield In the Concept/Planning

Stage

2025 Analysis - Comm. Power - Cypress Creek Wellfield In the Design Stage

2025 Analysis - Comm. Power - Cross Bar Wellfield Complete

System Delivery

Improvements

Configuration II: System Interconnects - Northwest Hillsborough Pipeline

Incorporated into Configuration II

Configuration II: System Interconnects - Cypress Creek Pump Station Expansion

Incorporated into Configuration II

Configuration II: Enhancements - High Service Pump Station Expansion

Incorporated into Configuration II

Configuration II: System Interconnects - Morris Bridge Booster Station Expansion

Incorporated into Configuration II

Cypress Bridge Wellfield Pumps & Meter Design Stage to start 2013

Emergency Operations

2025 Analysis - Emergency - Cosme WTP Yard In the Design Stage

2025 Analysis - Emergency - Lake Park WTP Yard In the Design Stage

Configuration II: System Interconnects - Northwest Hillsborough Pipeline

Incorporated into Configuration II

West Pasco Infrastructure - Maytum WTP Incorporated into West

Pasco Program/Complete

2025 Analysis - Emergency- Odessa Emergency Bypass TM Complete

63

Other Capital Improvement Program Projects

Other projects that are funded, or will be funded, through either the Uniform Rate, Renewal and Replacement Fund, borrowed monies, the Capital Improvement Fund, or outside funding, that are included in the Capital Improvement Program, includes the following list.

Project No. Project Name Total Project

Budget FY 2010 FY 2011 FY 2012

0 Lab & Science Building Roof Replacement 1,500,000 530,771 969,229

Lab & Science Building Roof Replacement: This project will replace the building’s 20-year-old flat roof with a sloped roof. Completion

is scheduled for 2012.

Project

No. Project Name

Total Project

Budget FY 2010

4903 Carrollwood Well#1 - Well House 222,947 183,000

Carrollwood Well #1 - Well House: Construction of a new wellhouse at Site No. 1 in the Carrollwood neighborhood. Completion is

scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010

6420 Regional System Surge Protection 2,340,000 1,170,000

Regional System Surge Protection: This project provides surge suppression and control devices in existing regional transmission mains

that will experience increased flows or operating pressures as a result of implementation of the expansion of the Surface Water

Treatment Plant and the raw water system that supplies it. Completion is scheduled for 2010.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012

6503 SCHIP Phase III (Hydrogen Sulfide Removal at Lithia) 30,590,459 227,848 9,170,951 18,076,079

SCHIP Phase III (Hydrogen Sulfide Removal at Lithia): This project replaces existing hydrogen sulfide treatment facilities at the Lithia

Water Treatment Plant to improve long-term compliance with the Master Water Supply Contract, Exhibit D requirements and

elimination of hydrogen sulfide treatment credits. Completion is scheduled for 2012.

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012

6506 Brandon Well Testing (BUDW#5 Relocation) 4,335,924 1,171,222 2,104,549 175,380

Brandon Well Testing (BUDW#5 Relocation): Brandon Urban Dispersed Wells production well No. 5 has been plugged and

abandoned. The permitted average annual withdrawal quantity from this well (1.25 MGD) will be relocated to continue to meet the

water demand in the South-Central Hillsborough service area. This project includes hydrogeologic investigations, installation of

monitoring wells, pumping equipment, and a raw water transmission main to connect the replacement well to the SCHIP Phase II

project. Completion is scheduled for 2011

Project

No. Project Name

Total Project

Budget FY 2010 FY 2011

9701 Seaboard and Valrico Hills 2,250,000 439,411 290,000

Seaboard & Valrico Hills: This project will transfer all or some of the existing Water Use Permit (WUP) quantities from the Seaboard

and Valrico Hills facilities to a new production well near Tampa Bay Water’s Surface Water Treatment Plant. Hillsborough County

owns facilities associated with Valrico Hills Utilities and Seaboard Utilities. Negotiations are underway with Hillsborough County to

determine the quantity that can be transferred from the existing permit.

64

Project No. Project Name Total Project

Budget FY 2010

0 Cypress Creek Security Improvements 100,000 100,000

Cypress Creek Security Improvements: This project will replace the existing plant security gates with new gates and a guard enclosure.

Completion is scheduled for 2010

Project No. Project Name Total Project

Budget FY 2010

7025

Cypress Creek Machinery and Equipment

Warehouse 206,070

129,517

Cypress Creek Machinery & Equipment Warehouse: This project provides a new 2,000-square foot warehouse at the Cypress Creek

Pump Station area, for secure housing of machinery and equipment. Completion is scheduled for 2010.

Project No. Project Name Total Project

Budget FY 2010

7026 Cypress Creek Road Improvements 169,780

139,945

Cypress Creek Road Improvement: This project provides improvements to the entry roadway between Gate No. 1 and Gate No. 2

and other in-plant paving. Completion is scheduled for 2010

Project No. Project Name Total Project

Budget FY 2010

7071 NWH # 7 Connection 2,674,935

1,564,362

NWH #7 Connection: This project includes a new raw water pipeline between existing production well NWH #7 and the Section 21

wellfield in northwest Hillsborough County. Completion is scheduled for 2010

Project No. Project Name Total Project

Budget FY 2010

7201 Dye's Crossing 100,000

79,166

Dye’s Crossing Project: This project provides space for two 11 cubic feet per second (cfs) pad-mounted electric emergency pumps at

Dye’s Crossing in the Cypress Creek Wellfield, to alleviate flooding upstream in the Saddlewood subdivision when necessary.

Completion is scheduled for 2010.

Project Name

Total

Project

Budget

FY

2010

FY

2011

FY

2012

FY

2013

FY

2014

FY

2015

FY

2016

FY

2017

Tampa Bay Seawater

Desalination

Reliability Program

14,000,000

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

2,000,000

Tampa Bay Seawater Desalination Facility Reliability Program: In December 2007, the seawater desalination facility was determined

to have passed its Acceptance Test and transferred to the Operations phase. As stated in the Construction Completion Agreement

(CCA) with American Water Pridesa (AWP), the first 12 months of operations of the plant allow for development of baseline conditions

under which Tampa Bay Water can request AWP to implement additional work at the site and take responsibility for its maintenance

and performance. Staff has tabulated the first 12 months of operations-related issues that have lead to unscheduled plant shutdowns

and will exhaust the funds available in the CCA for baseline activities. Accordingly, staff has developed a reliability program to

implement projects that are needed in future years. The cost estimate included herein is based on the October 27, 2008 report

prepared by Black & Veatch, as amended. This program will extend through 2017.

65

Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012 FY 2013

Regional Reservoir Investigation and Repair

125,000,000

2,500,000

2,500,000

60,000,000 60,000,000

Regional Reservoir Investigation and Repair: In December 2006, cracking beyond what was anticipated, was observed of the soil

cement flat plate that lines the interior of the C.W. Bill Young Regional Reservoir. Starting in 2007 and finishing with the end of the

2009 drawdown cycle, a monitoring program was deployed to collect data from the soil cement flat plate and the soil wedge below.

In October 2008, the Board of Directors authorized the initiation of litigation to recover costs associated with repair or replacement of

the soil cement system. The current schedule of activity contained in this CIP is based on the schedule provided to the Board of

Directors in June 2009 that shows design and permitting activities taking place between 2010 and early 2012, and assuming a worst-

case scenario of construction of a complete replacement of the soil cement and wedge system occurring between June 2012 and June

2014.

Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012

Alternative Energy Feasibility Study

500,000

150,000 150,000 200,000

Alternative Energy Feasibility Study: This project will explore the available alternative energy options, such as wind and solar power,

and their feasibility for future implementation by Tampa Bay Water. Completion of this study is scheduled for late 2012.

Figure 4 shows the location of the described Other Projects of the Capital Improvement Program.

Figure 4: Capital Improvement Program-Other Projects

Master Water Plan Projects

During 2007-2008, Tampa Bay Water initiated the next update to its Long-Term Water Supply Plan. In December 2007, an initial list of 300 potential projects was narrowed by the Board of Directors to a list of 17 candidate projects for further examination. In December 2008 (the end of the five-year period for updating the Long-Term and Master Water Plans), the Board of Directors approved a list of seven projects including three studies as the Update to the Master Water Plan. Given the

66

current projection that Configuration II will meet water supply demands through 2019, the next decision point for selection of Configuration III projects is projected to be 2012, or seven years prior to the new supply projects having to be on line. The projects to be further studied pursuant to the 2008 Master Water Supply Plan will be funded with 2008 Revenue Bonds and are listed below. 1. Small Footprint Reverse Osmosis - Pinellas County 2. Tampa Bay Seawater Desalination Expansion 3. Gulf Coast Desalination 4. Additional Potable Groundwater from Existing Northern Tampa Bay Wells 5. Thonotosassa Wells 6. Alafia Expansion (including a potential Reservoir II) 7. Aquifer Recharge The studies to be developed pursuant to the 2008 Master Water Supply Plan will be funded through the Uniform Rate and are listed below. 1. Source Water Protection Plan 2. Demand Management Plan Update 3. Regional Reclaimed Water Planning Assistance

Project Name Total Project

Budget FY 2010 FY 2011 FY 2012 FY 2013

Gulf Coast Seawater Desalination 400,000 100,000 150,000 150,000

Northern Tampa Bay Wellfields - Additional Supply 200,000 50,000 50,000 50,000 50,000

Thonotosassa Wells 1,350,000 450,000 450,000 450,000

Surface Water Enhancement and Recharge (Alafia

Expansion and Groundwater Recharge) 5,000,000 1,000,000

1,000,000

1,500,000

1,500,000

Tampa Bay Desalination Plant Expansion 150,000 50,000

50,000

Small Footprint Reverse Osmosis-Pinellas County -

Configuration III Water Supply Program: Configuration III, the next water supply program, is currently projected to require

development of 20 mgd of new supply to be on line by 2019. For cost planning purposes, the basis of the cost estimate used in this

CIP is a 25 mgd of new Gulf Coast Desalination. The cost used for this CIP is the mid-range of capital costs for the Master Water Plan

projects, as estimated in the December 2008 Long-Term Water Supply Plan developed by Black & Veatch and approved by the

Tampa Bay Water Board of Directors. The actual project or projects that may be chosen for System Configuration III are not yet

determined. The Master Water Plan evaluations will assist the Board in choosing the project or projects needed for System

Configuration III. It is anticipated that this decision will occur in late 2011 or early 2012.

Renewal and Replacement Projects

Project Name Total Project Budget FY 2010

South Central Hillsborough Wellfield-Pumps Replacement 400,000 400,000

South-Central Hillsborough Wellfield-Pumps Replacement: This project will implement the recommendations resulting from the

South-Central Hillsborough Wellfield-Pumps Evaluation. Completion is scheduled for late 2011.

Project Name Total Project Budget FY 2010 FY 2011 FY 2012

Cross Bar Wellfield-Pumps Replacement 680,000

320,000 360,000

Cross Bar Wellfield-Pumps Replacement: This project will implement the recommendations resulting from the Cross Bar Wellfield-

Pumps Evaluation Project. Completion is scheduled for 2012.

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Fiscal Year 2010 Uniform Rate Projects

Project Name Total Project

Budget FY 2010

South Central Hillsborough Well No 2 - Site Drainage 125,000 100,000

South-Central Hillsborough Well No. 2 - Site Drainage: This project includes installation of a permanent production well flushing

line. The new line will discharge to an existing stormwater pond nearby. (Fishhawk Trails). Completion is scheduled for 2010.

Project Name Total Project

Budget FY 2010

Cross Bar Wellfield-Pumps Evaluation 100,000 100,000

Cross Bar Wellfield-Pumps Evaluation: This project evaluates the 25-year old wellfield pumps for development of a targeted

replacement program consistent with future operating pressures. Completion is scheduled for 2010.

Project Name Total Project

Budget FY 2010

South Central Hillsborough Wellfield-Pumps Evaluation 100,000 100,000

South-Central Hillsborough Wellfield-Pumps Evaluation: This project evaluates the 20-year- old wellfield pumps for development of a

targeted replacement program consistent with future operating pressures. Completion is scheduled for 2010.

Project Name Total Project

Budget FY 2010 FY 2011 FY 2012 FY 2013

Vulnerability Assessment-Recommended Improvements 450,000 100,000

100,000

125,000

125,000

Vulnerability Assessment-Recommended Improvements: This project will implement various security related improvements

recommended by the Agency’s vulnerability assessment. . Completion is scheduled for late 2010.

Funding Sources

The projects included in this Capital Improvement Program are funded by the following:

Revenue Bonds

2001B Bonds

2008 Bonds

Capital Improvement Fund (CIF)

Member Government Contributions

State Grants

Southwest Florida Water Management District (SWFWMD) Grants

Community Budget Issue Request (CBIR) Grants

Federal Grants

Renewal and Replacement Fund (R&R)

Uniform Rate Table 2 shows the projects described above, together with proposed future projects, their total budget, and current funding sources. Tables 3 through 7 show the list of projects by funding source and include their budget by fiscal year through FY 2019.

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Funding Recommendations for Unfunded Projects The total unfunded project cost estimate is $583,500,000 for the projects that have been included in the 2010 - 2019 CIP. Staff recommends the following action plan regarding future funding of these projects:

Regional Reservoir Investigation and Repair ($125,000,000) - amend the 2008 Revenue Bond resolution to provide for sufficient funds to pay for design and permitting work through mid-2011; seek additional borrowing once the design is complete and a refined construction cost estimate is available. This stepped approach will allow the timely design and permitting of a permanent fix for the documented reservoir soil cement problems based on a better cost estimate for the repairs, once the Florida Department of Environmental Protection permit is issued on the final selected design. An option to this approach may also be to borrow the construction funds based on the construction contractor’s actual proposal, with minor modifications to the timing requirements for Notice of Award and Notice to Proceed contained in the Agency’s construction contract documents.

Configuration III ($458,000,000) - complete the Master Water Planning process through Board selection of the water supply projects (currently scheduled for late 2011 or early 2012) and seek additional borrowing at that time to cover design, permitting and property acquisition to support the selected project(s). This stepped approach will allow for borrowing to be timed to the actual need for the new water supplies. Current capital estimates for 20 MGD of supply from the Master Water Plan projects range from $99.2 million to $1.054 billion depending on the supply project(s) selected. Updated demand forecasting is currently underway. Updated demand forecasts may delay or hasten the timing for the new supplies to be on line.

Alternative Energy Feasibility Study ($500,000): Seek funding through the Florida Governor’s Energy Office and the U.S. Department of Energy. If funding is unavailable, alternative funding will be sought.

Tampa Bay Water

Table 2: Cost And Funding Sources For Capital Improvement Program

Project No. Project Name

Total Project

Budget

Total Project

Funding

Fully Funded 2001 Bond 2008 Bond Uniform Rate CIF R&R Co-Funding

0 South Central Hillsborough Well No 2 - Site Drainage 125,000$ 125,000$ Yes -$ -$ 125,000$ -$ -$ -$

0 Configuration III 458,000,000 - No - - - - - -

0 Gulf Coast Seawater Desalination 400,000 400,000 Yes - 400,000 - - - -

0 Northern Tampa Bay Wellfield - Additional Supply 200,000 200,000 Yes - 200,000 - - - -

0 Thonotosassa Wells 1,350,000 1,350,000 Yes - 1,350,000 - - - -

0 Surface Water Enhancement and Recharge (Alafia Expansion and Groundwater Recharge) 5,000,000 5,000,000 Yes - 5,000,000 - - - -

0 Tampa Bay Desalination Plant Expansion 150,000 150,000 Yes - 150,000 - - - -

0 Regional Reservoir Investigation and Repair 125,000,000 - No - - - - - -

0 Lab & Science Building Roof Replacement 1,500,000 1,500,000 Yes - - - 1,500,000 - -

0 Tampa Bay Seawater Desalination Reliability Program 14,000,000 14,000,000 Yes - - - - 14,000,000 -

0 Alternative Energy Feasibility Study 500,000 - No - - - - - -

0 Cypress Creek Security Improvements 100,000 100,000 Yes - - - 100,000 - -

0 Small Footprint Reverse Osmosis-Pinellas County - - Yes - - - - - -

0 Cross Bar Wellfield-Pumps Evaluation 100,000 100,000 Yes - - 100,000 - - -

0 Cross Bar Wellfield-Pumps Replacement 680,000 680,000 Yes - - - - 680,000 -

0 South Central Hillsborough Wellfield-Pumps Evaluation 100,000 100,000 Yes - - 100,000 - - -

0 South Central Hillsborough Wellfield-Pumps Replacement 400,000 400,000 Yes - - - - 400,000 -

0 Vulnerability Assessment-Recommended Improvements 450,000 450,000 Yes - - 450,000 - - -

4903 Carrollwood Well#1 - Well House 222,947 222,947 Yes 222,947 - - - - -

6303 Config II: Downstream Enhancements- SWTP Expansion 139,791,228 139,791,228 Yes 57,963,370 13,068,127 - - - 68,759,731

6304 Config II: Downstream Enhancements - High Service Pump Station Expansion 12,539,199 12,539,199 Yes - 5,247,405 - - - 7,291,794

6305 Config II: Downstream Enhancements - Offstream Reservoir Pump Station 17,070,870 17,070,870 Yes 7,655,727 3,738,060 - - - 5,677,083

6306 Config II: Downstream Enhancements - Tampa Bypass Canal Pump Station Expansion 22,614,908 22,614,908 Yes 3,628,406 5,990,078 - - - 12,996,424

6307 Config II: Downstream Enhancements - Repump Station Expansion 9,406,226 9,406,226 Yes 1,159,668 2,498,451 - - - 5,748,107

6308 Config II: Downstream Enhancements - SCHI Booster Pumping Station 22,121,230 22,121,231 Yes 9,793,405 6,650,743 - - - 5,677,083

6309 Config II: System Interconnects - Cypress Creek Pump Station Expansion 13,964,531 13,964,531 Yes 638,351 7,649,097 - - - 5,677,083

6310 Config II: System Interconnects - Morris Bridge Booster Station Expansion 4,669,240 4,669,240 Yes 3,332,148 337,092 - - - 1,000,000

6313 US 301 Interconnect Pipeline Extension (Part of Config II SWTP Expansion) 1,174,159 1,174,159 Yes 1,174,159 - - - - -

6314 BUD Transmission Main Extension-Permanent (Part of Config II SWTP Expansion) 1,089,500 1,089,500 Yes 1,089,500 - - - - -

6401 Config II: System Interconnects - Northwest Hillsborough Pipeline 12,885,743 12,885,743 Yes 3,034,172 4,174,488 - - - 5,677,083

6420 Regional System Surge Protection 2,340,000 2,340,000 Yes - 2,340,000 - - - -

6503 SCHIP Phase III (Hydrogen Sulfide Removal at Lithia) 30,590,459 30,590,459 Yes 11,093,665 19,496,794 - - - -

6506 Brandon Well Testing (BUDW#5 Relocation) 4,335,924 4,335,924 Yes 1,689,260 2,646,664 - - - -

7025 Cypress Creek Machinery and Equipment Warehouse 206,070 206,070 Yes - - - 206,070 - -

7026 Cypress Creek Road Improvements 169,780 169,780 Yes - - - 169,780 - -

7061 2025 Analysis - Comm. Power - S. Pasco Wellfield 1,400,000 1,400,000 Yes - - - 1,400,000 - -

7071 NWH # 7 Connection 2,674,935 2,674,935 Yes - - - 2,674,935 - -

7121 2025 Analysis - Emergency - Lake Park WTP Yard 886,780 886,780 Yes - - - 886,780 - -

7131 2025 Analysis - Emergency - Cosme WTP Yard 1,269,780 1,269,780 Yes - - - 1,269,780 - -

7131 Cosme Pressure Reducing Valve Yard Piping Addition 354,000 354,000 Yes - - - 354,000 - -

7141 2025 Analysis - Comm. Power - Cypress Creek Wellfield 1,600,000 1,600,000 Yes - - - 1,600,000 - -

7201 Dye's Crossing 100,000 100,000 Yes - - - 100,000 - -

9701 Seaboard and Valrico Hills 2,250,000 2,250,000 Yes 1,594,494 655,506 - - - -

TOTAL 913,782,506 330,282,509 104,069,272 81,592,505 775,000 10,261,345 15,080,000 118,504,388

69

Tampa Bay Water

Table 3: Capital Improvement Program Budget-Projects Funded through Revenue Bonds

Project No. Project Name Total Project Budget FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

0 Gulf Coast Seawater Desalination 400,000$ 100,000$ 150,000$ 150,000$

0 Northern Tampa Bay Wellfields - Additional Supply 200,000 50,000 50,000 50,000 50,000

0 Thonotosassa Wells 1,350,000 450,000 450,000 450,000

0 Surface Water Enhancement and Recharge (Alafia Expansion and Groundwater Recharge) 5,000,000 1,000,000 1,000,000 1,500,000 1,500,000

0 Tampa Bay Desalination Plant Expansion 150,000 50,000 50,000 50,000

0 Small Footprint Reverse Osmosis-Pinellas County -

4903 Carrollwood Well#1 - Well House 222,947 27,747 183,000

6303 Config II: Downstream Enhancements - SWTP Expansion 139,791,228 53,751,185 54,201,185 14,300,296

6304 Config II: Downstream Enhancements - High Service Pump Station Expansion 12,539,199 5,571,940 5,153,211

6305 Config II: Downstream Enhancements - Offstream Reservoir Pump Station 17,070,870 3,005,543 8,971,344 3,738,060

6306 Config II: Downstream Enhancements - Tampa Bypass Canal Pump Station Expansion 22,614,908 7,801,953 7,801,954 4,551,140

6307 Config II: Downstream Enhancements - Repump Station Expansion 9,406,226 4,120,519 3,777,143

6308 Config II: Downstream Enhancements - SCHI Booster Pumping Station 22,121,230 3,528,781 10,829,851 5,414,926

6309 Config II: System Interconnects - Cypress Creek Pump Station Expansion 13,964,531 4,000,165 5,330,935 3,109,712

6310 Config II: System Interconnects - Morris Bridge Booster Station Expansion 4,669,240 1,571,477 2,810,333

6313 US 301 Interconnect Pipeline Extension (Part of Config II SWTP Expansion) 1,174,159 154,254 985,625

6314 BUD Transmission Main Extension-Permanent (Part of Config II SWTP Expansion) 1,089,500 82,000 1,007,500

6401 Config II: System Interconnects - Northwest Hillsborough Pipeline 12,885,743 3,905,287 7,156,269

6420 Regional System Surge Protection 2,340,000 1,170,000 1,170,000

6503 SCHIP Phase III (Hydrogen Sulfide Removal at Lithia) 30,590,459 227,848 227,848 9,170,951 18,076,079

6506 Brandon Well Testing (BUDW#5 Relocation) 4,335,924 578,909 1,171,222 2,104,549 175,380

9701 Seaboard and Valrico Hills 2,250,000 1,451,471 439,411 290,000

TOTAL 304,166,162$ 90,999,078$ 112,316,830$ 44,329,634$ 20,401,459$ 2,150,000$ -$ -$

Tampa Bay Water

Table 4: Capital Improvement Program Budget-Projects Funded through Capital Improvement Fund

Project No. Project Name Total Project Budget FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

0 Lab & Science Building Roof Replacement 1,500,000$ 530,771$ 969,229$

0 Cypress Creek Security Improvements 100,000 100,000

7025 Cypress Creek Machinery and Equipment Warehouse 206,070 76,553 129,517

7026 Cypress Creek Road Improvements 169,780 29,835 139,945

7061 2025 Analysis - Comm. Power - S. Pasco Wellfield 1,400,000 112,500 1,287,500

7071 NWH # 7 Connection 2,674,935 844,240 1,564,362

7121 2025 Analysis - Emergency - Lake Park WTP Yard 886,780 237,142 431,890

7131 2025 Analysis - Emergency - Cosme WTP Yard 1,269,780 307,756 720,904

7131 Cosme Pressure Reducing Valve Yard Piping Addition 354,000 49,000 181,000 124,000

7141 2025 Analysis - Comm. Power - Cypress Creek Wellfield 1,600,000 112,500 1,487,500

7201 Dye's Crossing 100,000 20,834 79,166

TOTAL 10,261,344$ 1,677,860$ 4,834,284$ 767,271$ 2,256,729$ -$ -$ -$

70

Tampa Bay Water

Table 5: Capital Improvement Program Budget-Projects Funded through Uniform Rate

Project No. Project Name

Total Project

Budget

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

0 South Central Hillsborough Well No 2 - Site Drainage 125,000$ 25,000$ 100,000$

0 Cross Bar Wellfield-Pumps Evaluation 100,000 100,000

0 South Central Hillsborough Wellfield-Pumps Evaluation 100,000 100,000

0 Vulnerability Assessment-Recommended Improvements 450,000 100,000 100,000 125,000 125,000

TOTAL 775,000$ 25,000$ 400,000$ 100,000$ 125,000$ 125,000$ -$ -$

Tampa Bay Water

Table 6: Capital Improvement Program Budget-Projects Funded through Renewal and Replacement Fund

Project No. Project Name

Total Project

Budget

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

0 Tampa Bay Seawater Desalination Reliability Program 14,000,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$

0 Cross Bar Wellfield-Pumps Replacement 680,000 320,000 360,000

0 South Central Hillsborough Wellfield-Pumps Replacement 400,000 400,000

TOTAL 15,080,000$ 400,000$ 2,320,000$ 2,360,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$ 2,000,000$

Tampa Bay Water

Table 7: Capital Improvement Program Budget: Un-Funded Projects

Project No. Project Name

Total Project

Budget FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

0 Configuration III 458,000,000$ 1,000,000$ 1,000,000$ 5,000,000$ 11,000,000$ 122,000,000$ 216,000,000$ 102,000,000$

0 Alternative Energy Feasibility Study 500,000 150,000 150,000$ 200,000$

0 Regional Reservoir Investigation and Repair 125,000,000 2,500,000 2,500,000$ 60,000,000$ 60,000,000$

TOTAL 583,500,000$ 2,650,000$ 2,650,000$ 61,200,000$ 61,000,000$ 5,000,000$ 11,000,000$ 122,000,000$ 216,000,000$ 102,000,000$

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DIVISIONAL OPERATING BUDGET DETAIL

72

TAMPA BAY WATER DIVISIONAL OPERATING BUDGET DETAIL

This section provides summaries of Tampa Bay Water’s divisional organization, mission, responsibilities, and historical budget trends for its four operating divisions for fiscal year 2010.

Tampa Bay Water’s Divisional Organization

Tampa Bay Water is organized into two Executive Offices and three Divisions, consisting of 128 (124 existing, 4 new) fulltime equivalent positions.

Executive Offices – Executive Offices includes the General Manager’s Office and General Counsel’s Office. Both the General Manager and General Counsel report to the Board of Directors. The General Manager is responsible for implementing Board policy to ensure the agency’s mission of responsible water delivery is met. Public Affairs staff is in the General Manager’s Office. The General Counsel handles a variety of legal matters for the agency relating to operations, permitting, contracts, property acquisition, defense of legal matters, construction-related services, human resource and fiscal matters.

Operations & Facilities – The division is responsible for water quality compliance, facilities and maintenance, operations, instrumentation and controls, construction and mitigation. The division oversees construction, start-up, testing, operation and maintenance of all facilities and equipment used to produce, treat and deliver water to Tampa Bay Water’s member governments.

Science & Engineering – The division is responsible for tracking, analyzing and evaluating hydrologic and environmental conditions in and around Tampa Bay Water facilities; preparing permit applications and implementing regulatory requirements; developing alternative management scenarios for facility operations to minimize environmental impacts; identifying potential environmental impacts associated with water supply projects and implementing programs to minimize those impacts; identifying and developing new water supplies and obtaining construction permits and properties and easements required for new facilities.

Finance & Administration – The division manages the financing of new and existing water supply facilities, budgeting, accounting, financial reporting, debt compliance, purchasing, fixed assets, human resources, records retention, telecommunications and all computer services. Computer services include software and hardware maintenance, software development, network infrastructure, database applications and support of the supervisory control and data acquisition (SCADA) system.

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Staffing For fiscal year 2010, $12,239,395 or approximately 6.7 percent of the Operating Budget is funding for 128 (124 existing, 4 new) fulltime employees. In addition, Tampa Bay Water employs 4 part-time Co-op students. The following graph identifies full-time equivalent (FTE) positions by division.

STAFFING COMPARISON BY DEPARTMENT

IN FULL-TIME EQUIVALENTS

Approved Approved Approved

FY 2008 FY 2009 FY 2010

Executive Offices:

General Manager 2 2 2

Public Relations 1 1 1

General Counsel 3 3 3

Operations & Facilities Division:

Operations & Facilities Director 2 2 2

Water Quality 1 1 1

Operations 18 18 19

Instrumentation & Control 7 7 9

Maintenance 17 18 14

Construction 3 3 3

Mitigation 4 3 4

Science & Engineering Division:

Science & Engineering Director 2 2 2

Evaluation & Permitting 9 8 8

Laboratory Services 14 14 15 (1 new)

Source Rotation & Environmental Protection 5 5 5

Planning & Engineering 6 7 7

Finance & Administration Division

Finance Director 1 1 1

Information Systems 13 13 16 (3 new)

Records 6 6 6

Finance 8 8 8

Human Resources 2 2 2

124 124 128

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New Positions for Fiscal Year 2010 As part of the 2010 budget process, management evaluated ongoing activities that are currently being outsourced. Staff was directed to determine if continued outsourcing of certain services remained beneficial to the Agency. As a result, staff has recommended 4 new positions which will reduce the Professional Services budget category for Science and Engineering Division by $182,000 and the Information Services Department by $560,700 for a total reduction of $742,700. Increased Personnel Services costs of $392,700 will yield a net budgeted annual savings of $350,000 in fiscal year 2010. An additional annual savings of $348,000 of Professional Services costs is anticipated in 2011 and subsequent years. In addition, Human Resources, under the direction of the Finance and Administration Director, will continue to work with managers to re-evaluate current positions and, where necessary, establish new job descriptions for existing approved positions. This will allow management to utilize existing positions and add responsibilities needed to maintain long-term cost effective services.

Approved New Positions

Hydrologic Technician:

Tampa Bay Water has historically used professional consulting services to perform

environmental monitoring and assessment services on Agency wellfields to meet conditions

of our Water Use Permits. The consultants also are responsible for entering the collected

data in Tampa Bay Water databases, analyzing the data on an annual basis to determine

trends in water levels and wetland health, and assist our staff in the preparation of annual

compliance reports for each wellfield. As the contract renewal period approaches, staff

evaluates the continued need for these services and the cost benefit of continuing to retain

outside professional consultants to complete this work.

By adding one technician to our staff and assuming the responsibility for water level

monitoring, data quality control review, data entry, and site maintenance for all of the

wetland monitoring sites on the wellfields, the Professional Services budget will be reduced

$182,000 in fiscal year 2010. Additional savings are expected in subsequent years by

elimination of $348,000 of professional services; for a net savings of $475,000 after

offsetting the additional Personnel Services costs. This will also improve quality control over

data.

Programmer (3): IS Applications, the group within the Agency’s Information Services Department that creates unique computer programs and databases, was formed in 2002 in response to the need for unique software and databases arising with the implementation of the Configuration II Facilities. Because this was a new workgroup within the Agency, and the software technologies they used were evolving, the Agency requested permission from the Board to staff this new group by purchasing the services of Contract Programmers, from the Florida State Term Contract, instead of with employees. This strategy has worked well, because as the skill sets of IS Applications needed to change, based on dynamic programming technologies and requirements of this new group, Contractors were easily

75

swapped out and replaced to match the needs quickly. In the last few years, as the workload and technical environment of IS Applications has matured and become increasingly stable, some of the Contract Programmer positions have already been replaced by employees. These three requested employee positions are for the conversion of the remaining Contract Programmer positions into Employee programmer positions within IS Applications, and will result in a significant cost savings for the Agency. The inclusion of three Programmer positions reduced the Professional Services budget category by $560,700 in fiscal year 2010.

General Manager

1%

General Counsel2%

Finance & Admin.

4%

Operations & Facilities

75%

Science & Engineering

14%Information

System4%

Projected Operating Expenses FY 2010

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SUMMARY OF CONTRACTS AND

RESOLUTIONS

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SUMMARY OF CONTRACTS AND RESOLUTIONS Tampa Bay Water activities are governed primarily by two agreements with the Member Governments:

The Amended and Restated Interlocal Agreement and

The Master Water Supply Contract Activities and budgetary considerations are further influenced by the Master Bond Resolution. The fiscal year 2010 budget is developed within the framework of these agreements. This section provides key terms and conditions of the agreements. Amended and Restated Interlocal Agreement: 1. Section 2.08 - Annual Budget

(A) Prior to July 1 of each year, the General Manager shall prepare and deliver to the Board a

balanced tentative budget for Tampa Bay Water covering its operating and other financial requirements for the ensuing fiscal year. The tentative budget shall identify (1) the rate at which Quality Water will be sold to Members Governments’ during such fiscal year, and (2) the rate to be charged to Tampa for water provided through the Tampa Bypass Canal pumping facility during such fiscal year.

(B) The Board shall publish a notice of its intention to adopt the budget and shall provide copies

of the notice and tentative budget to each Member Government on or before the first publication date. The notice shall be published once a week for two consecutive weeks within thirty days of the public hearing, the last insertion of which shall appear not less than one week prior to the date set by the Board for the hearing on the budget and rates.

(C) At the time, date and place specified in the notice, the Board shall conduct a public hearing

and thereafter may consider adoption of the budget and rates with any amendments it deems advisable. Unless otherwise authorized by the Board, the final budget and rates shall be adopted by August 1.

2. Section 3.03 - Obligation to meet Water Needs

This section includes the following key requirements:

(A) The Agency has the absolute and unequivocal obligation to meet the Quality Water needs of

the Member Governments.

(B) The Agency shall oppose any permit, order, rule or other regulatory effort to reduce or limit the permitted capacity of its Water Supply Facilities, unless the reduction or limitation results from an agreement to which all Member Governments are parties, or the reduction or limitation will not become effective until adequate Replacement Capacity has been placed in service.

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(C) The General Manager shall actively monitor the relationship between the quantity of Quality Water actually delivered by the Authority to the Member Governments and the aggregate permitted capacity of the Agency’s production facilities.

1. If the actual delivery of Quality Water to the Members exceeds 75 percent of the aggregate permitted capacity of the Agency’s production facilities, the General Manager shall report to the Board and recommend that the Agency initiate preparation of Primary Environmental Permit applications necessary to ensure an adequate supply.

2. If the actual delivery of Quality Water to the Members exceeds 85 percent of the aggregate permitted capacity of the Agency’s production facilities, the General Manager shall report to the Board and recommend that the Agency file Primary Environmental Permit applications necessary to ensure an adequate supply.

(D) It is acknowledged and agreed that the Water delivered by the Authority (1) from the South Central Hillsborough Wellfield to the Lithia Water Treatment Plant, (2) from the Starkey and North Pasco Wellfields to the Maytum Water Treatment Plant, (3)from the Starkey and North Pasco Wellfields to the Little Road Water Treatment Plant, (4) from the Eldridge-Wilde Wellfield to the Keller Water Treatment Plant, (5) from the Cosme-Odessa Wellfield to the Cosme Water Treatment Plant, (6) from the Morris Bridge Wellfield to the Morris Bridge Water Treatment Plant, and (7)from the Tampa Bypass Canal to the Hillsborough River Reservoir, will not meet the standards for Quality Water……the Member Governments receiving such water….will be entitled to a credit against the uniform rate.

3. Section 3.04 - Uniform Rate

Tampa Bay Water shall establish a single uniform rate for the sale of quality water to Member Governments subject to the following adjustments:

(1) Actual direct costs to perform the additional treatment required to meet the standard for quality water;

(2) If a Member Government requests Tampa Bay Water provide other treatment beyond

what is necessary to meet quality water standards; (3) Credits for transferred assets assuming each Member has elected to receive a credit, inclusive of interest, shall be applied against the water rate over 30 years;

The rate for the sale of quality water to Member Governments shall be established for each fiscal year in Tampa Bay Water’s annual budget.

4. Section 3.08(D) - Surface Water Sources

Notwithstanding the provisions of Section 3.04 hereof, the rate charged to City of Tampa for water provided through the Tampa Bypass Canal Pumping Facility will be equal to Tampa Bay Water’s direct cost and allocated overhead.

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Master Water Supply Contract:

1. Section 8 - Authority’s Agreement to Provide Water Service This section of the contract provides that: (A) The Agency shall sell and deliver sufficient Quality Water to the Member Governments to meet their needs and the Member Governments shall purchase and receive the Quality Water delivered. (B) The Agency shall be in default under the contract if it fails to supply the Quality Water needs of the Member Governments, except when due to force majeure.

2. Section 13-Rate The following excerpts are fundamental to the budget process.

(B) Rates in effect each fiscal year shall be sufficient to pay the annual estimate established by Tampa Bay Water. Monthly charges for such water service are based on the rate approved by Tampa Bay Water and total volume of quality water delivered to such Member Governments by Tampa Bay Water.

(C) The rate to be charged may include the following components:

Operation, Maintenance, and Administrative costs;

Debt service charges;

Renewal and Replacement charges;

Bond coverage costs;

Capital Improvement charges;

Operating Reserve Funds; (D) The Member Governments agree that Tampa Bay Water may establish a rate stabilization fund. Operation, Maintenance and Administrative costs and/or Operating Reserve Funds may be utilized by Tampa Bay Water to fund such Rate Stabilization Fund.

(E) Annual True-up: Following the end of each fiscal year, an annual adjustment in the fixed costs component of bills paid during that fiscal year shall be computed on the basis of:

The fixed costs which are provided in the Annual Estimate in effect during the fiscal year then ended

The actual amount of quality water delivered to each of the Member Governments during the fiscal year then ended

(F) Carry Forward: Any unencumbered monies of Tampa Bay Water present at the end of the

fiscal year shall be budgeted by Tampa Bay Water for the succeeding fiscal year and shall be utilized for the same purposes for which rates are charged by Tampa Bay Water.

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Monthly Billing

In accordance with the Master Water Supply Contract provisions, Tampa Bay Water bills the Member Governments for the Quality Water delivered to them on a monthly basis. The monthly bill could include, as approved by the Board, fixed costs, variable costs, annual credits to Member Governments for the purchase of water supply facilities by Tampa Bay Water, water quality credits for treatment of Hydrogen Sulfide, and any other credit(s)/surcharge(s) as authorized by the Board.

A brief discussion of how the Fixed Costs, Variable Costs, and the costs associated with the water delivered to Tampa from the Tampa Bypass Canal are calculated and billed to the Member Governments is presented below:

Fixed Costs

Each Member Government is required to pay monthly an amount equal to one-twelfth of the Fixed Costs provided in the Annual Estimate times “A” divided by “B”, where “A” equals the amount of Quality water delivered to such Member Government during the previous fiscal year and “B” equals the total amount of Quality Water delivered to all Member Governments during such fiscal year.

Monthly Fixed Costs Billed to the

Member Government

=

Total Fixed Costs

X

Amount of Quality Water consumed by Member

Government during the prior Fiscal Year (A)

12

Total Amount of Quality Water consumed by all Member

Governments during the prior Fiscal Year (B)

As indicated above, Tampa Bay Water allocates the Fixed Costs to each Member Government based on that Member Government’s share of the total Quality Water delivered to all Member Governments during the prior fiscal year. The annual Fixed Costs allocated to the Member Government is billed in twelve equal monthly installments. Following the end of each fiscal year, Tampa Bay Water is required to perform an annual true-up of the budgeted Fixed Costs components of bills paid during that fiscal year based on the actual amount of Quality Water delivered to each Member Government during the fiscal year then ended.

Variable Costs

Each Member Government is required to pay monthly an amount equal to the amount of Quality Water consumed by the Member Government during the prior month times the Uniform Rate ($/1,000 gallons) then in effect times “C” divided by “D”, where “C” equals the Variable Costs and “D” equals the Annual Estimate (the net annual revenue requirements for the purposes of billing) then in effect.

Monthly Variable

Costs Billed to the

Member Government

=

Amount of Monthly Quality Water

Consumed Prior Month

X

Uniform Rate

X

Total Variable Costs (C) [total variable costs included in the approved annual budget for the current Fiscal Year]

Total Annual Estimate (D) [the net annual revenue requirements for the current Fiscal Year]

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As indicated in the formula, Tampa Bay Water allocates the Variable Costs to each Member Government based on that Member Government’s actual consumption of Quality Water by the Member Government during the prior month times the Uniform Rate ($/1,000 gallons) in effect multiplied by the ratio of total annual variable costs to the total Annual Estimate for the current fiscal year.

Since the budgeted Variable Costs are allocated to the Member Governments based on their actual consumption of Quality Water, there is no requirement in the Interlocal Agreement or the Master Water Supply Contract to perform an annual true-up of Variable Costs at the end of the fiscal year. Tampa Bay Water recognizes that the actual annual revenues (Variable Costs element only) may be different from the budgeted Variable Costs, if the actual amount of Quality Water delivered to the Member Governments for the given fiscal year is different from the projected amount of Quality Water used for the rate calculation for such fiscal year. Any overage or shortage in actual revenues as a result of this contractual provision is not expected to be material since the Variable Costs are expected to change in direct proportion to changes in the volume of Quality Water delivered to the Member Governments.

Surface Water Source(s)

In accordance with Section 3.08(D) of the Interlocal Agreement, Tampa Bay Water is required to charge a separate rate for water delivered to the City of Tampa from the Tampa Bypass Canal facility. The rate charged to the City of Tampa is equal to Tampa Bay Water’s direct cost plus Allocated Overhead associated with the Tampa Bypass Canal facility and is established as part of the annual budget development process. A unit rate ($/1,000 gallons) is determined for the water delivered to the City of Tampa from the Tampa Bypass Canal facility, based on the projected quantity of water to be delivered to the City of Tampa from the Tampa Bypass Canal facility during the fiscal year. Tampa Bay Water bills the City of Tampa on a monthly basis for the actual amount of water consumed from the Tampa Bypass Canal facility for the prior month.

In summary, a wholesale water rate is calculated as part of the annual estimate. Each Member pays their pro-rata share of Fixed and Variable Costs based on their water usage. Those Member Governments facing reductions in permitted supply or rapid population growth will share regionally the cost of developing new water supplies. Voting rights are equitably balanced among the three counties.

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Master Bond Resolution 98-07TBW Section 1.01 Definitions. “Reserve Account Requirement” shall mean, as of any date of calculation for the Reserve Account, an amount equal to the lesser of (1) Maximum Annual Debt Service for all Outstanding Bonds, (2) 125% of the average Annual Debt Service for all Outstanding Bonds, or (3) the maximum amount allowed to be funded from proceeds of tax-exempt obligations and invested at an unrestricted yield pursuant to the Code; provided, however, the Issuer may establish by Supplemental Resolution a different Reserve Account Requirement for a subaccount of the Reserve Account which secures a Series of Bonds pursuant to Section 4.05(B)(4) hereof. In computing the Reserve Account Requirement in respect of a series of Bonds that constitutes Variable Rate Bonds, the interest rate on such Bonds shall be assumed to be (A) if such Variable Rate Bonds have been Outstanding for at least 24 months prior to the date of calculation, the highest average interest rate borne by such Variable Rate Bonds for any 30-day period, and (B) if such Variable Rate Bonds have not been Outstanding for at least 24 months prior to the date of calculation, the Bond Buyer Revenue Bond Index most recently published prior to the time of calculation. The time of calculation for Variable Rate Bonds shall be each March 1. Section 1.04. Findings. (L) That the estimated Gross Revenues to be derived in each year hereafter from the operation of the System will be sufficient to pay all the Operating Expenses, the principal of and interest on the Bonds to be issued pursuant to this Resolution, as the same become due and all other payments provided for in this Resolution. Section 4.04. Creation of Funds and Accounts. The Issuer covenants and agrees to establish with a bank, trust company or such other entity in the State, which is eligible under the laws of the State to be a depository for its funds the following funds and accounts:

(A) The “Tampa Bay Water Utility System Revenue Fund.” The Issuer shall maintain two separate accounts in the Revenue Fund: The “Revenue Account” and the “Rate Stabilization Account.”

(B) The “Tampa Bay Water Utility System Operation, Maintenance and Administration Fund.”

(C) The “Tampa Bay Water Utility System Sinking Fund.” The Issuer shall maintain four separate accounts in the Sinking Fund: the “Interest Account,” the “Principal Account,” the “Term Bonds Redemption Account” and the “Reserve Account.”

(D) The “Tampa Bay Water Utility System Renewal and Replacement Fund.” (E) The “Tampa Bay Water Utility System Capital Improvement Fund.” (F) The “Tampa Bay Water Utility System Utility Reserve Fund.” (G) The “Tampa Bay Water System Rebate Fund.”

Section 4.06 Capital Improvement Fund The Issuer shall deposit into the Capital Improvement Fund all Capital Improvement Charges as received and such Capital Improvement Charges shall be accumulated in the Capital Improvement Fund and applied by the Issuer in the following manner and order of priority:

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(A) For the payments on or prior to each principal and interest payment date (in no event earlier than the 25th day of the month next preceding such payment date) into the Interest account, the Principal Account and the Term Bonds Redemption Account when the moneys therein are insufficient to pay the principal of and interest on the Bonds coming due, but only to the extent moneys transferred from the Utility Reserve Fund, the Reserve Account, the Renewal and Replacement Fund and the Rate Stabilization Account for such purpose pursuant to Section 4.05(B)(7), 4.05(B)(4), 40.5(B)(5) and 4.08, respectively, hereof shall be inadequate to fully provide for such insufficiency. Any moneys transferred to the aforementioned accounts described above shall be repaid from Gross Revenues and described in Section 4.05(B)(7) hereof on or prior to the date such amounts are needed for the purposes described in Sections 4.06(B) hereof. Section 5.03. Annual Budget. The issuer shall prepare and adopt, prior to the beginning of each Fiscal Year, an Annual Budget in accordance with any applicable law. No expenditure for Operating Expenses of the System shall be made in any Fiscal Year in excess of the aggregate amount provided for Operating Expenses in the Annual Budget, (A) without a written finding and recommendation by an Authorized Issuer Officer, which finding and recommendation shall state in detail the purpose of and necessity for such increased expenditures, and (B) until the Governing Body shall have approved such finding and recommendation by resolution. Section 5.04. Rates. For the Fiscal Year commencing October 1, 1998 and for each Fiscal Year thereafter, the Issuer shall fix, establish, maintain and collect such rates, fees and charges for the product, services and facilities of its System, and revise the same from time to time, whenever necessary, so as always to provide in each Fiscal Year:

(A) Net Revenues, together with the Fund Balance, equal to at least 125% of the Annual Debt Service becoming due in such Fiscal Year; provided

(B) Such Net Revenues shall be adequate at all times to pay in each Fiscal Year at least 100% of (1) the Annual Debt Service becoming due in such Fiscal Year, (2) any amounts required by the terms hereof to be deposited in the Reserve Account or with any issuer of a Reserve Account Letter of Credit or Reserve Account Insurance Policy in such Fiscal Year, (3) any amounts required by the terms hereof to be deposited in the Renewal and Replacement Fund in such Fiscal Year, and (4) any amounts required by the terms of Section 4.06(A) hereof to be repaid to the Capital Improvement Fund in such Fiscal Year.

Such rates, fees or other charges shall not be so reduced so as to be insufficient to provide adequate Net Revenues for the purposes provided therefore by this Resolution. Section 5.11. Enforcement of Charges. The Issuer shall promptly bill the Member Governments for water consumed by such Member Governments in accordance with the terms of the Master Water Supply Contract. The Issuer shall compel the prompt payment of rates, fees and charges imposed in connection with the System, and to that end will vigorously enforce all of the provisions of the Master Water Supply Contract and any other agreement in may enter into for the supply of water. Section 5.12. Amendments to Interlocal Agreement and Master Water Supply Contract. The Issuer agrees that it will not make any amendment or modification to the Master Water Supply Agreement which, in its judgment, will materially adversely affect the rights or security of the Holders of the Bonds. The Issuer acknowledges that the Member Governments agreed in the Master Water

94

Supply Contract not to make any amendment to the Interlocal Agreement which would materially adversely affect the rights or security of the Holders of the Bonds. The Issuer agrees to enforce the aforementioned provisions in order to protect the rights and security of the Bondholders. Section 5.14. Consulting Engineers. The Issuer shall at all times employ Consulting Engineers, whose duties shall be to make any certificates and perform any other acts required or permitted of the Consulting Engineers under this Resolution, and also to review the construction and operation of the System, to make an inspection of the System at least once every three years, and to submit to the Issuer a report with respect to each such inspection with recommendations as to the proper maintenance, repair and operation of the System during the ensuing Fiscal Year(s), including recommendations for expansion and additions to the System to meet anticipated service demands and an estimate of the amount of money necessary for such purposes. The Consulting Engineers shall annually recommend the amount of the Renewal and Replacement Fund Requirement. Copies of such reports, recommendations and estimates made as herein above provided shall be filed with the Issuer for inspection by Bondholders, if such inspection is requested, and shall be mailed to any Member Government requesting the same.

APPENDIX

POTENTIAL MEMBER YEAR END TRUE-UP

WITH YEAR-TO-DATE DEMAND

FISCAL YEAR 2009 - THROUGH JULY 31, 2009

ST PETE PINELLAS TAMPA HILLSBOROUGH PASCO NEW PORT TOTALS

(Morris Br) RICHEY

Oct-08 882.58 1,858.70 125.04 1,562.65 840.05 77.36 5,346.38

Nov-08 851.78 1,803.04 603.77 1,542.41 799.21 75.39 5,675.60

Dec-08 836.76 1,766.37 624.99 1,459.74 742.58 74.67 5,505.11

Jan-09 848.27 1,798.51 674.13 1,475.72 725.64 74.44 5,596.71

Feb-09 783.39 1,630.03 652.99 1,353.03 646.58 67.94 5,133.96

Mar-09 894.94 1,910.24 829.00 1,611.93 769.13 80.77 6,096.01

Apr-09 842.59 1,791.38 659.40 1,448.50 682.12 69.41 5,493.40

May-09 876.54 1,780.92 530.59 1,447.01 654.54 72.54 5,362.14

Jun-09 854.15 1,732.21 - 1,359.41 684.29 72.57 4,702.63

Jul-09 839.71 1,736.19 - 1,341.23 635.33 72.42 4,624.88

Aug-09 -

Sep-09 -

FY 08 ACTUAL 10,621.51 22,697.52 2,262.28 18,131.31 9,551.17 1,278.00 64,541.79 176.34 MGD

FY 09 YTD 8,510.71 17,807.59 4,699.91 14,601.63 7,179.47 737.51 53,536.82 176.11 MGD

+ / - (2,110.80) (4,889.93) 2,437.63 (3,529.68) (2,371.70) (540.49) (11,004.97) (0.24) MGD

FY09 YTD MGD 28.00 58.58 15.46 48.03 23.62 2.43 176.11

% of YTD 15.90% 33.26% 8.78% 27.27% 13.41% 1.38% 100%

FY 08 MGD 29.02 62.02 6.18 49.54 26.10 3.49 176.34

% of FY08 16.46% 35.17% 3.51% 28.09% 14.80% 1.98% 100%

Fixed billed fy09 20,322,188$ 43,427,278$ 4,328,432$ 34,690,726$ 18,274,301$ 2,445,204$ 123,488,128$ Actual fixed based on

% of ytd 19,630,819$ 41,075,020$ 10,840,821$ 33,680,147$ 16,560,179$ 1,701,142$ 123,488,128$

Potential True-up (691,368.52)$ (2,352,257.95)$ 6,512,389.51$ (1,010,578.90)$ (1,714,122.32)$ (744,061.83)$ 0$

Monthly Demand

95

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TAMPA BAY WATER BUDGET DEVELOPMENT SCHEDULE FOR FISCAL YEAR 2011

November 15, 2009 Request budget changes from staff and members for the coming year.

December 1, 2009 Receive comments and finalize changes for budget format.

December 15, 2009 Request to Member Governments regarding any special or unusual program needs by

December 31, 2009.

December 16, 2009 Budget packets distributed internally, meeting with Directors and Managers for “Fiscal Year

2011 Budget Kickoff.”

January 15, 2010 Fiscal year 2011 budget submissions due from departments to finance at 5:00 p.m.

January 25, 2010 Preliminary draft of fiscal year 2011 budget distributed internally for review and comments

by all departments and General Counsel.

February 1, 2010 Member Governments will supply Tampa Bay Water with an updated Annual Report, in the

form provided in Exhibit K of the Amended and Restated Interlocal Agreement, setting

forth the next five fiscal years of projected water service demand from their service area.

February 1, 2010 Request to Member Governments for any project changes since the December request.

February 8, 2010 Finance meets with General Counsel to assess any additional legal needs or requirements.

February 9-12, 2010 Finance meets with Directors and Managers to review department 2011 budget requests.

February 15, 2010 Redistribute preliminary draft fiscal year 2011 budget with changes resulting from February

9-12 meetings.

February 17-24, 2010 General Manager meeting with Directors and General Counsel to review program plans

and outstanding issues.

February 15, 2010 Preliminary presentation to Board of proposed Capital Improvement Program.

March 1, 2010 Draft of budget document prepared for internal management review.

March 17, 2010 First bound copy of Proposed Fiscal Year 2011 Budget including annual estimate

distributed to staff, Member Governments, and Board.

Mar. 24–Apr. 2, 2010 Individual meetings with Member Governments to discuss proposed fiscal year 2011

budget.

April 15, 2010 Tampa Bay Water contractual annual estimate due (will have been distributed March 17th).

April 19, 2010 Board workshop, Tampa Bay Water Board sets preliminary fiscal year 2011 budget and

schedules a public hearing for final budget approval on June 21, 2010.

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TAMPA BAY WATER

BUDGET DEVELOPMENT SCHEDULE FOR FISCAL YEAR 2011 (continued)

June 21, 2010 Public Hearing and Final Fiscal Year 2011 Budget approved by Board.

October 1, 2010 Uniform Rate for fiscal year 2011 implemented.

October 15, 2010 Fiscal year 2010 post closing adjustment and reconciliation of fixed component to annual estimate distributed to members

GLOSSARY

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GLOSSARY

The following definitions were derived from the Interlocal Agreement and the Master Water Supply Contract. Unless otherwise specifically set forth, the following words and phrases used in the 2010 Budget document shall have the following meanings:

“Annual Estimate” means the estimate of Tampa Bay Water Costs for a Fiscal Year, including the estimated amount thereof to be payable by each Member Government, and submitted to each Member Government on an annual basis, as required by Section 13 of the Master Water Supply Contract. The Annual Estimate shall be based upon Tampa Bay Water’s proposed annual budget and estimated rate and shall consider the Annual Reports in determining the estimated amounts to be payable by each Member Government. (Is equivalent to Net Annual Revenue Requirement for establishing the Uniform Rate).

“Annual Report” means the report setting forth the next five (5) Fiscal Years of anticipated Water Service within the Water Service Areas for each of the Member Governments to be prepared by each such Member Government and submitted to Tampa Bay Water as required by Section 12 of the Master Water Supply Contract.

“Actual Direct Cost” means with respect to Water Treatment, the total capital and operating cost of providing such treatment, excluding any indirect cost.

“Allocated Overhead” means that portion of the overhead that is allocated to the Water Supply Facility by dividing the estimated quantity of Quality Water to be produced at that facility by the total estimate of Quality Water to be produced by all facilities.

“Bond Coverage Costs” means the costs of providing the coverage requirements established by the Financing Documents.

“Capital Improvement Charge” means the costs identified by Tampa Bay Water for planning, designing, acquiring and constructing capital improvements to the System; provided such costs are not payable from proceeds of the Obligations (other than costs which are to be reimbursed from such proceeds) or from moneys received in relation to the Renewal and Replacement Charges.

“Debt Service Charges” means the principal, redemption premium, if any, and interest coming due on the Obligations and any recurring costs and expenses relating to the Obligations, including, but not limited to, paying agent, registrar and escrow agent fees, credit enhancement fees and other charges, but only to the extent such costs and expenses are not otherwise reflected in Operation, Maintenance and Administrative Costs.

“Environmental Permit” means all permits, licenses, or other third-party approvals necessary for the acquisition, construction or operation of a Tampa Bay Water Supply Facility, including but not limited to Primary Environmental Permits.

“Financing Documents” means any resolution or resolutions of Tampa Bay Water, as well as any indenture of trust, trust agreement or similar document relating to the issuance or security of the Obligations.

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“Fiscal Year” means a twelve (12) month period which commences on October 1 of each year and ends on the next succeeding September 30th or such other period as may be prescribed by law as the fiscal year for Tampa Bay Water.

“Fixed Costs” means all costs and expenses incurred by Tampa Bay Water for the operation, maintenance, management, security, development, and financing of the System other than Variable Costs.

“Fund Balance” means an amount of money equal to the unencumbered moneys on deposit in the Utility Reserve Fund as of September 30 of the immediately preceding Fiscal Year. Moneys shall be considered unencumbered to the extent such moneys may be used for purposes relating to the System.

“Government Grant”, when used with respect to the System, means any sum of money heretofore or hereafter received by Tampa Bay Water from the United States of America or any agency thereof or from the State of Florida or any agency or political subdivision thereof as or on account of a grant or contribution, not repayable by Tampa Bay Water, for or with respect to the construction, acquisition or other development of an addition, extension or improvement to any part of the System or any costs of any such construction, acquisition or development. Government Grant shall not include any grants or contributions received by Tampa Bay Water for purposes of (1) funding Operating Expenses or (2) paying debt service on obligations of Tampa Bay Water that are payable in whole or in part from moneys received by Tampa Bay Water from the Southwest Florida Water Management District pursuant to the Northern Tampa Bay New Water Supply and Ground Water Withdrawal Reduction Agreement or any funding agreements related thereto. Any grants or contributions described in the preceding sentences shall be considered “Gross Revenues”.

“Gross Revenues” means all income and moneys received by Tampa Bay Water from the rates, fees, rentals, charges and other income to be made and collected by Tampa Bay Water for the use of the products, services and facilities to be provided by the System, or otherwise received by Tampa Bay Water or accruing to Tampa Bay Water in the management and operation of the System, calculated in accordance with generally accepted accounting principles applicable to public utility systems similar to the System, including without limiting the generality of the foregoing (1) moneys deposited from the Rate Stabilization Fund Account into the Revenue Account in accordance with the terms hereof, provided any moneys transferred from the Rate Stabilization Account into the Revenue Account within 90 days following the end of a Fiscal Year may be designated by Tampa Bay Water as Gross Revenues, and (3) Investment Earnings. “Gross Revenues” shall include all moneys received by Tampa Bay Water pursuant to the terms of the Master Water Supply Contract. “Gross Revenues” shall not include (A) Government Grants, to the extent prohibited or restricted as to its use by the terms of Government Grant, (B) proceeds of Bonds or other Tampa Bay Water debt, (C) moneys deposited to the Rate Stabilization Account from the Utility Reserve Fund, including any moneys transferred from the Utility Reserve Fund to the Rate Stabilization Account within 90 days following the end of a Fiscal Year which Tampa Bay Water determines not to be Gross Revenues of such Fiscal Year, and (D) any moneys received by Tampa Bay Water as part of True-Up. Gross Revenues may include other revenues related to the System which are not enumerated in the definition of “Gross Revenues” if and to the extent the same shall be approved for inclusion by Tampa Bay Water of the Bonds (provided all Bonds are insured as to payment of principal and interest at the time of such inclusion).

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“Net Revenues” means Gross Revenues less Operating Expenses.

“Obligations” means a series of bonds or other evidence of indebtedness including but not limited to, notes, commercial paper, capital leases or any other obligations of Tampa Bay Water heretofore or hereafter issued or incurred.

“Operating Reserve Fund” means those funds, which are deemed by Tampa Bay Water as necessary to meet any cash flow and revenue collection shortfalls due to inaccuracies in the Annual Reports or Annual Estimates or due to the requirements of the Financing Documents. The amount of Operating Reserve Fund shall be established by Tampa Bay Water policy; provided such amount should not exceed an amount equal to two times the monthly average Variable Costs as provided in Tampa Bay Water’s preliminary budget.

“Operation, Maintenance and Administrative Costs” (also referred to as Operating Expenses) means any and all costs incurred by Tampa Bay Water in operating, maintaining and administering the System, including, but not limited to, the general administrative and legal costs of Tampa Bay Water related to operation, maintenance, management, security and development of the System; costs associated with tools, equipment, vehicles, supplies, materials, services and support for the operation, maintenance, management, security and development of the System; any costs of litigation or a legal judgment against Tampa Bay Water; costs relating to Water conservation and public education activities; costs of purchasing any Water; development expenses relating to expansion of the System; all costs incurred in planning or applying for, obtaining, maintaining and defending Environmental Permits which shall not be paid from the Capital Improvement Charge; accounting, legal and engineering expenses; ordinary and current rentals of equipment or other property; refunds of moneys lawfully due to others; pension, retirement, health and hospitalization funds; payments in lieu of taxes and facility impact fees; moneys to be deposited to a rate stabilization fund; and fees for management of the System or any portion thereof.

“Overhead” means the administrative and general expenses of Tampa Bay Water that are not directly attributable to ownership of any specific Water Supply Facility, as established in the approved budget.

“Production Failure” means (1) the occurrence of a Shortfall, provided however, that a Shortfall that results from a mechanical, equipment or other facility failure shall not constitute a “Production Failure,” or (2) following December 31, 2002, the actual delivery by the Authority to the Member Governments during any twelve-month period of Quality Water that exceeds 94 percent of the aggregate permitted capacity of the Authority’s production facilities on an annual basis, provided however, that if the Authority has received a Primary Environmental Permit for additional production facilities and the Authority has entered into a contract for final design and has bid construction of the facilities, the additional production quantity specified in the Primary Environmental Permit shall be added to the actual production capacity for purposes of determining if a “Production Failure” has occurred.

“Project Cost” means all expenses associated with the acquisition, construction, installation, reconstruction, renewal or replacement of Water Supply Facilities, including without limitation: (1) land and interests therein, property rights, and easements of any nature whatsoever; (2) physical construction, reconstruction, renewal, replacement or completion; (3) acquisition and installation of

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machinery, equipment and other tangible personal property; (4) planning, architectural, engineering, surveying, legal, environmental and other consultant services; (5) fees and expenses associated with the issuance of Obligations, including but not limited to bond counsel, disclosure counsel, financial advisor, underwriters’ discount, rating agencies, bond insurance, credit or liquidity facilities, and printing the Obligations and supporting documentation; (6) interest accruing on the Obligations for such period of time as Tampa Bay Water deems appropriate; (7) the debt service reserve fund or account, if any, established for the Obligations; and (8) all other expenses that are properly attributable thereto under generally accepted accounting principles, including reimbursement to Tampa Bay Water for any moneys advanced for such purposes and interest on any interfund loan for such purposes.

“Quality Water” means Water which (1) meets State and federal drinking water regulations and standards as defined in Rule 62-550, Florida Administrative Code, as it may be amended or superseded from time to time, including regulations pertaining to surface water or groundwater under the direct influence of surface waters, but excluding regulations pertaining to disinfection and corrosivity, and (2) would not cause a particular Member Government utility to adopt new treatment techniques beyond modified chemical dosages and/or optimization of existing unit processes to meet a moderately altered source of Water. Except as otherwise provided in the Master Water Supply Agreement, the provisions of this definition are not intended as permission for a Member Government to reject the type of Quality Water to be provided by Tampa Bay Water to such Member Government; provided, however, Tampa Bay Water shall pay for any additional treatment costs required to meet the standards for Quality Water as described in the Master Water Supply Agreement.

“Renewal and Replacement Charges” means those certain charges to be deposited to any renewal and replacement fund or account established pursuant to the Financing Documents.

“Reserve Account Requirement” shall mean, as of any date of calculation for the Reserve Account, an amount equal to the lesser of (1) Maximum Annual Debt Service for all Outstanding Bonds, (2) 125% of the average Annual Debt Service for all Outstanding Bonds, or (3) the maximum amount allowed to be funded from proceeds of tax-exempt obligations and invested at an unrestricted yield pursuant to the Code; provided, however, the Issuer may establish by Supplemental Resolution a different Reserve Account Requirement for a subaccount of the Reserve Account which secures a Series of Bonds pursuant to Section 4.05(B)(4) hereof. In computing the Reserve Account Requirement in respect of a series of Bonds that constitutes Variable Rate Bonds, the interest rate on such Bonds shall be assumed to be (A) if such Variable Rate Bonds have been Outstanding for at least 24 months prior to the date of calculation, the highest average interest rate borne by such Variable Rate Bonds for any 30-day period, and (B) if such Variable Rate Bonds have not been Outstanding for at least 24 months prior to the date of calculation, the Bond Buyer Revenue Bond Index most recently published prior to the time of calculation. The time of calculation for Variable Rate Bonds shall be each March 1. (Resolution 98-07TBW, Section 1.01

“System” means Tampa Bay Water’s water production, transmission and treatment facilities, as they currently exist and as they may be modified or expanded in the future from time to time, which are owned, leased, licensed, operated and/or used by Tampa Bay Water to provide Water.

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“Tampa Bay Water Costs” shall mean Bond Coverage Costs, Capital Improvement Charges, Debt Service Charges, Operation, Maintenance and Administrative Costs, Operating Reserve Funds and Renewal and Replacement Charges.

“Variable Costs” means all costs and expenses of Tampa Bay Water for the operation, maintenance and management of the System that change in direct proportion to changes in the volume of Water produced by Tampa Bay Water, including, but not limited to, power, chemical and Water purchases.

“Water” means Quality Water and any other water to be used by a Member Government in its public water supply system.

“Water Supply Facilities” means Water production, treatment and/or transmission facilities and related real property. The term “Water Supply Facilities” does not include facilities for local distribution.

“Water Service” means the provision of Water as required in the Interlocal Agreement to any and all of the Member Governments at the locations described in Exhibit C of the Master Water Supply Contract and provision of Water by the Member Governments to their customers.

“Water Service Areas” means, collectively, the Hillsborough Water Service Area, the New Port Richey Water Service Area, the Pasco Water Service Area, the Pinellas Water Service Area, the St. Petersburg Water Service Area and the Tampa Water Service Area.

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ACRONYMS

BUDW – Brandon Urban Dispersed Wells

CBIR – Community Budget Issuance Request

CCA – Construction Completion Agreement

CFS – Cubic Feet per Second

CIF – Capital Improvement Fund

CIP – Capital Improvement Program

FDEP – Florida Department of Environmental Protection

FGIC – Financial Guaranty Insurance Company

FTE – Full Time Equivalent

GAAP – Generally Accepted Accounting Principles

GASB - Governmental Accounting Standards Board (GASB)

MGD – million gallons per day

NWH – Northwest Hillsborough

O&M – Operation and Maintenance

R&R – Renewal and Replacement

SCADA – Supervisory Control and Data Acquisition

SCHIP – South-Central Hillsborough Infrastructure Project

SWFWMD – Southwest Florida Water Management District

SWTP – Surface Water Treatment Plant

TBC – Tampa Bypass Canal

USEPA – United States Environmental Protection Agency

VFD – Variable Frequency Drive

WTP – Water Treatment Plant

2575 Enterprise Road, Clearwater, Florida 33763

Pinellas: 727.796.2355 Hillsborough: 813.996.7009 Fax: 727.791.2388 www.tampabaywater.org