NORTHAMPTON BUCKS COUNTY MUNICIPAL AUTHORITY

Five Year Strategic Plan: FY2013-2017

Working Document as of 11/07/2012

FIVE YEAR STRATEGIC PLAN: FY2013‐ 2017

November 2012

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The statements, configurations, technical data, and recommendations in this document are believed to be accurate and reliable at the time of publication, but are presented without warranty.

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TABLE OF CONTENTS

NORTHAMPTON BUCKS COUNTY MUNICIPAL AUTHORITY ...... I CHAPTER 1 – INTRODUCTION TO FIVE YEAR PLAN ...... 1—5 PURPOSE OF THE PLAN ...... 1—5 MAINTENANCE OF THE PLAN ...... 1—5 CHAPTER 2 - ABOUT THE AUTHORITY ...... 2—7 AUTHORITY MISSION, VISION AND PRINCIPLES ...... 2—7 Mission ...... 2—7 Vision ...... 2—7 Principles ...... 2—7 POPULATION AND DEMOGRAPHICS: ...... 2—7 CHAPTER 3 - THE PLAN: CONTINUOUS IMPROVEMENT AND CHANGE ...... 3—9 AUTHORITY OPERATIONAL PHILOSOPHY: TOTAL PRODUCTIVE MAINTENANCE (TPM) ...... 3—9 THE HUMAN ELEMENT ...... 3—9 Succession Planning & Change Management: ...... 3—9 THE AUTHORITY WATER OPERATIONS OVERVIEW: (PWSID – NO. 1090089) ...... 3—10 H2O REGULATORY REQUIREMENT / COMPLIANCE STANDARDS ...... 3—11 LONG TERM WHOLESALE WATER SUPPLY AGREEMENT WITH BCWSA ...... 3—12 THE AUTHORITY SANITARY SEWER OPERATIONS OVERVIEW ...... 3—13 INTRODUCTION ...... 3—13 The Authority’s SERVICE AREA FLOWING TO THE NESHAMINY INTERCEPTOR (BCWSA) ...... 3—16 INFLOW AND INFILTRATION ( I&I ) ...... 3—17 THE AUTHORITY’S I&I ABATEMENT PROGRAM ...... 3—18 CONDITION OF EXISTING SYSTEM ...... 3—26 CORRECTIVE ACTION PLAN (“CAP”) ...... 3—29 LITAGATION & PENDING ISSUES OF CONSIDERATION ...... 3—33 FINANCES OF THE AUTHORITY ...... 3—34 AUTHORITY DEBT ...... 3—34 CAPITAL RESERVES ...... 3—34 CAPITAL BUDGET ...... 3—34 2013 OPERATIONAL BUDGET ...... 3—35 CAPITAL PLAN (5 YEAR PLAN) ...... 3—36

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Chapter 1 – Introduction to Five Year Plan

Purpose of the Plan

The purpose of Northampton, Bucks County, Municipal Authority (”Authority”) 5 year strategic plan (“Plan”) is to provide a long range forecast of necessary sanitary sewer / water improvements and maintenance activities to meet the needs of our community. The Plan provides policy makers and the community with a strategic approach to the implementation and administration of improvements and maintenance projects. Decisions about improving the Authority’s infrastructure must be made not only on the basis of need, but also on the basis of availability of resources, and long-term impact on the community. The Plan identifies the Authority’s infrastructure, establishes priorities and provides for an allocation of resources to meet those objectives.

It is prudent for the Authority to retain adequate capital reserve balance for unexpected conditions and events due to the capital intensive nature of a utility.

Maintenance of the Plan The Plan represents an ongoing working planning tool for projected monetary infrastructure and maintenance needs during the next five years. While the improvements in the proposed Plan are not “written in stone”, they do provide a sound framework for allocating, planning and forecasting personnel and finance requirements. The cost projections in the Plan are educated estimates using 2012 dollars amounts for capital projects, which will be refined during subsequent processes including budget deliberation, feasibility studies, alternative analysis studies and bidding processes. In addition, the Plan and subsequent annual amendments will be presented to the Authority Board for annual review, update and annual forecast planning purposes. The purpose of the Plan is to provide a living document that identifies the Authority’s infrastructure needs, skill set staffing requirements, development objectives, regulatory requirements and appropriate allocation of resources. The projects and initiatives are designed to meet the Authority’s current and future needs while providing a safe environment and safe drinking water for our ratepayers in a fiscally responsible manner to our bond holders.

Certain statements in this Plan are forward-looking statements These forward-looking statements are predictions based on our current expectations and assumptions regarding future events and may relate to, among other things, our projected capital expenditures and related funding requirements, our ability to repay debt, our ability to finance current operations , the impact of legal proceedings and potential fines and penalties, regulatory or legal developments or rate adjustments.

Actual results could differ materially because of factors such as decisions of governmental and regulatory bodies, including decisions to raise or lower rates; changes in laws, governmental regulations and policies, including environmental, health and water quality and public utility regulations and policies; weather conditions, patterns or events, including drought or abnormally high rainfall; changes in customer demand

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for, and patterns of use of, water, such as may result from conservation efforts; our ability to obtain permits and other approvals for projects; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations, electricity, fuel, water and other raw materials that are needed for our operations; cost overruns relating to improvements or the expansion of our operations; changes in general economic, business and financial market conditions; access to sufficient capital on satisfactory terms; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt.

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Chapter 2 - About the Authority

The Authority is an independent, governmental entity, created under the Pennsylvania Municipal Authorities Act as amended (“Act”) to provide public water and sanitary sewer services to its ratepayers. The Authority is responsible to its bondholders, ratepayers and regulatory agencies. Income to operate the Authority is derived directly from the service revenues provided by ratepayers using the public water and sanitary sewer services.

The Certificate of Incorporation was issued to the Authority by the Secretary of the Commonwealth on December 31, 1964. Articles of Amendment were filed with the Department of State of the Commonwealth on December 1, 2006, to extend the life of the Authority for a term of fifty (50) years from such date. The Authority has the power and authority to enter into long term agreements that do not extend beyond its amended term of existence (November 30, 2056).

AUTHORITY MISSION, VISION AND PRINCIPLES

Mission With pride and dedication we will serve our ratepayers by providing cost effective, safe water and environmentally sound wastewater services.

Vision The Authority must conserve today to sustain tomorrow by protecting its valuable water and environmental resources.

Principles Value honesty and integrity in all that the Authority does Champion environmental stewardship Embrace technology to create a better tomorrow Ensure a safe working environment Promote professional & technical excellence Collaborate with Authority’s community partners Commit to conservation of water resources

POPULATION AND DEMOGRAPHICS:

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The Authority serves a population estimated at 36,500 persons (2011). The geographic boundary of Northampton Township is approximately 28 square miles. Median income for a household in the Township (2010) was calculated to be $82,655, and the median income for a family was $91,477. The average household size was calculated at 3.01 persons. Significant population growth over the next thirty (30) years is NOT expected.

YEAR POPULATION % CHANGE 1940 1,734 26.1% 1950 2,248 29.6% 1960 6,006 167.2% 1970 15,807 163.2% 1980 27,392 73.3% 1990 35,406 29.3% 2000 39,384 11.2% 2010 39,726 0.9%

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Chapter 3 - The Plan: Continuous Improvement and Change

AUTHORITY OPERATIONAL PHILOSOPHY: Total Productive Maintenance (TPM)

TPM originated in Japan in 1971 as a method for improved productivity through better utilization of maintenance and production resources. Whereas in most productive operational settings the operator is not viewed as a member of the maintenance team, in TPM the operator/ technician is trained to perform many of the day-to-day tasks of simple maintenance and fault-finding. Teams are created that include a technical expert as well as operators in areas of core competencies (Water and Sanitary Sewer Operations) . In this setting the operators are enabled to understand the machinery and identify potential problems, righting them before they can impact operational productivity and by so doing, decreasing downtime and reducing costs of operations.

Unreliable uptime is caused by breakdowns or badly performed maintenance. Correct maintenance allows uptime to improve and speed operational production through a given area allowing a system to run at its designed and permitted capacity of production.

TPM is "deterioration prevention". Deterioration is what happens naturally to anything that is not "properly maintained". TPM is a proactive approach that essentially aims to identify issues as soon as possible and plan to prevent any issues before occurrence.

THE HUMAN ELEMENT

Succession Planning & Change Management: Succession planning is a process for identifying and developing internal team members with the potential to fill key business leadership positions in the Authority. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, "replacement planning" for key roles is the heart of succession planning. In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. Change management is an approach to shifting/transitioning from a current state to a desired future state. It is an organizational process aimed at helping change stakeholders to accept and embrace changes in our business environment. In a progressive organization, change management must be the underlying mindset in ensuring an effective organization in the future. Fundamental to the succession-management process is an underlying philosophy that top talent in the organization must be managed for the greater good of the enterprise by embracing change management.

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Talent mindset must be part of the leadership culture for these practices to be effective. The underlying culture is to “ Be a better organization today than you were yesterday”. Clear objectives are critical to establishing effective succession planning. These objectives are core to any organization that have well-established practices:

 Identify those with the potential to assume greater responsibility in the Authority  Provide critical development experiences to those that can move into key roles  Engage the leadership in supporting the development of high-potential leaders  Build a data base that can be used to make better staffing decisions for key jobs

Additional objectives should be embedded in the succession process:  Embrace employee commitment and retention  Meet the career development expectations of existing employees

A formal succession planning initiative should be formally developed in the 2013 fiscal year. The plan should be developed as a living documents projecting future staffing needs and skill requirements of the organization. This plan will identify what training initiative should be embraced by the Authority.

THE AUTHORITY WATER OPERATIONS OVERVIEW: (PWSID – No. 1090089) The Authority has 11,249 water customers as of October, 2012 including:

10,841 Residential 274 Commercial 54 Institutional 80 Industrial

The Authority operates 15 groundwater wells which are regulated by the federal Environmental Protection Agency (EPA), the Pennsylvania Department of Environmental Protection (PA-DEP), and the Delaware River Basin Commission (DRBC). Thirteen million (13,000,000) gallons of above ground water storage tanks are available to its customers to facilitate fire service and back-up water supply during periods of high usage and/or drought conditions. In addition to the 15 municipal wells, the Authority acquires water via a wholesale water contract with BCWSA. The wholesale water is drawn at two (2) locations within Northampton Township.

In 2012, Northampton will purchase approximately sixty percent (60%) of its water from the BCWSA under a long-term agreement. BCWSA is currently supplied water by the City of Philadelphia from its Baxter Water Treatment Plant. The average daily water consumption (2011) of public water in Northampton is approximately two million three hundred thousand gallons per day (2.3MGD). Based upon current water consumption levels, the Authority has 5.652 days of standby storage capacity.

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Since 1974, the City of Philadelphia has been the primary provider of potable wholesale water to the Authority via the Water Agreement with BCWSA. The Authority has been adversely impacted by substantial rate increases imposed by The City of Philadelphia upon BCWSA for the acquisition of wholesale water. The Authority has seen its wholesale water acquisition costs increase by 108% over the last eight years.

In 2012, the Authority entered into a new 30 year wholesale water agreement with BCWSA. Once the necessary pipeline infrastructure is completed by BCWSA, the new source of water will come from the Forrest Park Treatment Facility. That facility draws its water from the Delaware River at Point Pleasant, PA and is treated at the “Forrest Park” facility located in Chalfont , PA. We have been informed by BCWSA that they are investing an estimated sixty nine million dollars ($69,000,000.) in capital improvements to extend the infrastructure from the Forrest Park Treatment Facility to its wholesale and retail customers currently served by the Philadelphia connection.

The combination of fifteen (15) municipal wells internally owned and operated by the Authority in combination with the thirty (30) year wholesale water purchase agreement with BCWSA and the significant storage reserves provides a sound water infrastructure and supply for the foreseeable future.

H2O REGULATORY REQUIREMENT / COMPLIANCE STANDARDS

EPA GROUND WATER RULE – 4 LOG - The United Sates Environmental Protection Agency (EPA) issued the Ground Water Rule (GWR) to improve drinking water quality and provide additional protection from disease-causing microorganisms. Ground water systems that have ground water may be susceptible to fecal contamination. The GWR provides increased protection against microbial pathogens. In 1996, Congress amended the Safe Drinking Water Act (SDWA) to require the EPA take a targeted risk-based approach to require GWSs that are identified as being the highest risk of contamination to take action to protect public health.

Ground water that is susceptible to fecal contamination may contain harmful viruses or bacteria. Viral pathogens found in GWSs may included enteric viruses such as Evhovirus, Hepatitis A and E, Rotavirus, Norovirus and bacterial pathogens such as Escherichia coli (including E. Coli 0157:H7), Salmonella species, hepatitis, or myocarditis. Health implications in sensitive subpopulations may be severe and may cause death.

To achieve the drinking water reliability of 99.99 percent (4-log) inactivation or removal of viruses, the Authority implemented additional controls (continuous chlorine residual control), by amendment to well flow rates and duration via the SCADA (System Control and Data Acquisition System) continuous monitoring systems to insure compliance. In cooperation with its consulting engineer, Pennoni Associates, the Authority has been in compliance with the 4-log monitoring regulatory requirement June 1, 2010. Our compliance implementation was ahead of the regulatory deadline requirement.

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The 4-Log Program was an unfunded mandatory regulatory requirement which has a negative economic impact on operational costs and productivity of our ground water sources. These increase costs are ultimately paid by the Authority’s ratepayers.

LONG TERM WHOLESALE WATER SUPPLY AGREEMENT WITH BCWSA

BCWSA: The cost model contained within the BCWSA wholesale water contract consists of three (3) cost elements in determining the wholesale rate charged to this Authority: Each element has cost control factors which will provide a stable long term rate structure.

Cost of Water (CW) + BCWSA Component (BCWSA) + Capital Improvement Cost (CI) + ______(CW) + (BCWSA)+(CI) = TOTAL COST PER 1,000 GALLONS

“The Cost of Water” is the production cost of water provided by North Penn/North Wales Authorities pursuant to their agreement with BCWSA which is initially set at $1.79 per 1,000 gallons. This rate is expected to remain very stable though the term of the contract. Historic rates from this facility have been extremely stable for long periods. Any escalation in costs requires the principal Authorities to raise their respective rates on an equal basis for the cost of water.(CW) Initial “Cost of Water” is set at $1.79 per 1,000 gallons.

“The BCWSA Component” is the BCWSA’s water operating cost capped at the Consumer Price Index measured by the Philadelphia Urban Consumer Price Index published by the United States Department of Labor with the base year being 2015. (BCWSA) “BCWSA Component” rates are set at $.81 per 1,000 gallons.

“Capital Improvement Costs” / Wholesale Water Facilities is the Authority’s estimated portion of the cost of capital improvement facilities; sixty-nine million dollars ($69 Million) cost of the Authority’s portion is seven million eight hundred forty-nine thousand three hundred eighty dollars ($7,949,380) based upon an assumed 5 ¼% annual rate (Debt Service Rate) financed over a 30 year period. A actual final cost expended by BCWSA for the improvement will need to be verified and confirmed. The monetary “Capital Improvement Costs” by this Authority is capped as defined above, but would be reduced if actual costs incurred by BCWSA fall below projections, the Authority participation costs would be adjusted accordingly. The Authority will purchase of 619 million gallons annually from BCWSA for term of the contract. There are no monetary cost escalation factors in the “Capital Improvement Facilities” element of the water rate. No capital improvement wholesale water facilities cost would be incurred for additional purchases of wholesale water for the 30 year contract period. (CI) “Capital Improvement Facilities“ are set at a maximum of $.84 per 1,000 gallons for the term of the contract subject to actual cost verification and confirmation as stated above.

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THE AUTHORITY SANITARY SEWER OPERATIONS OVERVIEW

INTRODUCTION

THE AUTHORITY has 13,044 public sewer customers in the entire system as of October, 2012. They include: 12,666 Residential 282 Commercial 42 Institutional 54 Industrial

The Authority’s sanitary sewer system consists of 217 miles of conveyance infrastructure not including service laterals to customer owned facilities. THE Authority’s sewer system is divided into three service areas: BCWSA, Upper Southampton Sewer Authority (USSA), and Warminster Township Municipal Authority (Warminster).

The Authority has been adversely impacted by significant wholesale sanitary sewer rates imposed by BCWSA over the last six (6) years. Since BCWSA rates remain unpredictable and volatile, this Plan does not provide any forecast of those rates and their corresponding increases. As such, any future rate increases imposed by BCWSA, must be immediately assessed by the Authority and an appropriate rate adjustment implemented in a timely manner. As illustrated in the graph below, repetitive and unpredictable rate increases in the cost of wastewater treatment by BCWSA have resulted in more than doubling of the Authority costs in just six years.

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It is important to note that the impacts of these cost increases adversely effects the direct operating income of Authority, cash flows, reserve balances and ultimately costs to ratepayers. The Authority calculates sewer rates based upon water consumption. There is a direct relationship between the two factors and based on empirical data, metered sewage inflow is approximately 150% of metered water usage on a system-wide basis. This underscores the need for continuous capital investment and aggressive maintenance programs to ensure that excessive inflows are further reduced, saving significant costs for sewage treatment.

As illustrated in the graph below, BCWSA rate increases consistently reduce available operating dollars for maintenance, enhancement and operations of the Authority’s sewage system. The shortfall in operating income resulting from these rate changes has traditionally been accommodated by prudent and fiscally sound management cost reductions in other areas, use of capital reserves to reduce ratepayer impact, and the use of Water Revenue surpluses (and reserves).

The Authority targets $2.00 per unit (1000 Gallons) as a requirement to support the ongoing operations, maintenance and enhancement of the sewer system. As illustrated below, BCWSA rates have continuously eroded the Authority’s operating revenues. While the Authority has only had one rate

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increase in the last six years (2010) and absorbed the differential, the Authority must take action now to ensure its compliance with the financial covenants and indentures its of Bond Holders.

For 2013, the Authority must consider a minimum 25% increase in all retail sewer rates. Furthermore, the Authority anticipates future significant rate increases depending upon the disputed actions of BCWSA, the results of certain litigation involving the Industrial Park section of the “West End”, anticipated litigation involving PA-DEP, and other concerns regarding BCWSA rate-setting.

BCWSA COST IMPACT TO NBCMA OPS INCOME (2006‐2013)

$5.00

$4.14 $4.14 $4.00 $3.76

$3.25 $3.25 $3.25

$3.00 $2.62 $2.21 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $1.85 $2.00 $1.75 Gal

$1.44 $1.46 1000

$0.95 Per $1.00 $0.81 $0.81 $ $0.57 $0.21

$0.00 ($0.25) ($0.56) ($0.54) ($1.00) ($1.05) ($1.19) ($1.19) ($1.43) ($2.00) 2006 2007 2008 2009 2010 2011 2012 2013est NBCMA OPS INC $2.21 $1.44 $0.81 $0.81 $1.46 $0.95 $0.57 $1.75 BCWSA COST $1.85 $2.62 $3.25 $3.25 $3.25 $3.76 $4.14 $4.14 TARGET OP INC $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 VARIANCE $0.21 ($0.56) ($1.19) ($1.19) ($0.54) ($1.05) ($1.43) ($0.25)

As a maturing authority in a township with limited growth and expansion capability, the Authority must transition away from dependency on tapping and other fees to build and maintain appropriate reserve levels as those sources will continue to decline. As such, future capital projects need to be increasingly funded by rates.

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The Authority’s SERVICE AREA FLOWING TO THE NESHAMINY INTERCEPTOR (BCWSA)

The Authority’s sewer service area flowing to the Neshaminy Interceptor contains 17.6 square miles. It has five (5) pump stations and serves 12,164 customers. At this time, it has a total of 12,844 equivalent dwelling units (EDU’s).

There are three sewer sub-basins in this service area, as follows:

Ironworks Creek and Mill Creek Sanitary Sewer Basins:

The interceptor for the Ironworks Creek and Mill Creek Basin is over six miles long and begins at Almshouse Road as 15-inch diameter pipe and ends at Langhorne Avenue as 30-inch diameter pipe.

This basin is metered by BCWSA at site 3105 – near Langhorne Avenue. The Authority also has a permanent meter at Manhole 1224M. The Ironworks and Mill Creek Interceptor serves a total of 5,988 EDU’s.

Pine Run Creek Basin

The Pine Run Creek Basin is approximately two miles long and ends near the Mill Creek Basin. This sub-basin connects to the Mill Creek Interceptor at Manhole 1219.

As stated above, this basin and the Ironworks Creek and Mill Creek Basins are metered by BCWSA at site 3105 and a The Authority meter at Manhole 1224M. A total of 2,283 EDU’s are connected to the Pine Run Creek Interceptor.

Neshaminy Creek Interceptor

The Authority has five sub-basins with each sub-basin having its own siphon connection into the Neshaminy Creek Interceptor which is owned and operated BCWSA.

This basin is metered by BCWSA as follows: site 3101 – siphon located near the Buckhill Acres developments (1,747 EDU’s), site 3102 – siphon located near the Village Shires development (2,227 EDU’s) and site 3103 – siphon near the Holland Acres development (147 EDU’s). There are also three other BCWSA connection locations that at this time are not metered by BCWSA. The Authority permanent meters are located at Manholes VS-M1, HE-3, BHA 1281 and 104-5.

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Peak flow information for meter sites 3101, 3102, 3103 and 3105 is provided to the Authority by BCWSA and reported in the Authority’s Chapter 94 reports. The total flow is measured by BCWSA and monthly totals are reported to The Authority and billed by BCWSA accordingly.

Flow data collected from the Authority permanent meters at strategic locations is used by the Authority to measure the effectiveness of their I&I abatement program.

INFLOW AND INFILTRATION ( I&I )

I&I is extraneous water flow that enters the sanitary sewer collection system. (See below photo). Inflow is defined as water entering the system from roof drains, foundation drains (sump pumps), cross connections from storm sewers, catch basins and surface runoff. Infiltration is water entering the collection system from the ground through service connections, defective pipes, pipe joints, cracks, pipe connections or manholes.

I&I reduces the capacity of sewer systems and treatment facilities to transport and treat wastewater. I&I occurs when existing sewer lines deteriorate and degrade. Common defects include leaking joints, cracks, joint openings, joint displacement and surface damage.

Another source of pipe deterioration that can cause infiltration is root intrusion. Roots enter the system through cracks, holes, joints and defective laterals. Once inside the pipe, roots grow quickly and can cause a reduction of flow and increased I&I.

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THE AUTHORITY’S I&I ABATEMENT PROGRAM

The Authority remains vigilant with respect to uncharacteristic sewage flows and repairing sources of I&I. They include: 1. Accurate Metering: Phase I-V metering studies were completed from 2006 through 2009. Studies included temporarily metering over 133 manhole locations (see Map 6 for meter locations). Metering information was analyzed to determine areas with I&I. These locations were identified and prioritized. 2. Investigative Televising of Sanitary Sewer System:: The Authority televises their sewer mains to identify and address problem areas. The Authority uses its jet truck, television truck and push camera to televise their mains. 3. Sanitary Sewer System Hydraulic Characterization:

a. Ironworks Creek Sanitary Sewer Interceptor

In August 2007, the Authority authorized Pennoni Associates Inc. (Pennoni) to evaluate portions of the Ironworks Creek Interceptor (Manhole 115 – Almshouse Road to Manhole 339 – South of Chapel Drive). The Interceptor had capacity limitations during rain events and when the ground water level was high. The investigation included determining the existing Interceptor’s capacity, projection of the future sewer flows including Sewer District No. 3, identifying overloaded portions of the system as well as identifying problem areas in need of repair/rehabilitation. Restricted areas (Phase I) were replaced and or lined to increase capacity to convey the anticipated additional future sewage flows from the newly constructed Sewer District 3. Other portions (Phase II) of the existing interceptor that were not replaced during Phase I of the project will require additional investigation to determine when additional capacity will be needed to convey the anticipated future peak flows. A report titled Ironworks Creek Interceptor Rehabilitation Project, dated August 2007, was sent to PA-DEP prior to construction of the West End Sewer project.

b. Comprehensive Analysis of 30-inch Sanitary Sewer Interceptor

The Authority has completed an initial analysis of the 30-inch Interceptor including the Mill Creek Interceptor with specific focus to the hydraulic capacity of the existing interceptor and projecting future flows through 2050. It was determined that additional metering and analysis should be conducted to identify problem areas as well as define the appropriate system peaking factors to be used in planning a CAP. A credible analysis can only be

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conducted after corrective actions are addressed as recommended and summarized in Section 3.c.

c. Neshaminy Interceptor (BCWSA) Capacity Concerns

The Authority has previously expressed concerns about the capacity of the Neshaminy Interceptor to Bucks County Water & Sewer Authority (BCWSA). An environmentally responsible initiative would be for BCWSA to increase the Neshaminy Interceptor’s hydraulic capacity to meet existing sewage flows as well as meeting long term future flow requirements of the contributing municipalities, towns and boroughs. As set forth below, the Authority has previously expressed this concern to BCWSA.

On March 3, 2011, the Authority communicated in writing to BCWSA specific concerns of the Neshaminy Interceptor’s capacity just downstream from meter site location No. 3105 at Langhorne Avenue. During periods of high ground water and sanitary sewer flows, Manholes 1226 and 1219 experience sanitary sewer overflows (SSO’s). These manholes and the 30-inch diameter trunk line are located just before the siphon chamber that crosses the Neshaminy Creek and the entry point for the Neshaminy Interceptor. BCWSA has used the December 26, 2009 storm event to calculate individual wholesale sanitary system capacity requirements. Manhole 1226 experienced a (sanitary sewer overflow (SSO) for three days beginning December 26, 2009. Those events were reported to the PA-DEP as required by law. The reason for the overflow was stated as “receiving interceptor was unable to accept flows.” The overflow occurred below the No. 3105 site, thus not all sanitary sewer flows charged to the Authority by BCWSA were conveyed through the interceptor for treatment at the Northeast Treatment Plant.

The current configuration on the BCWSA side of the siphon chamber has a 30-inch and 33-inch diameter trunk line perpendicularly joining into a hydraulically challenged 36-inch diameter outflow line. It is this Authority’s concern that flows from a 30-inch line combined with flows from a 33-inch line cannot be conveyed effectively by the minimally sloped 36- inch diameter outflow line. As set forth in the March 3, 2011 letter to BCWSA, the Authority stated that “based upon current sanitary sewer flows” and reduction in flow velocity during high flow conditions, “a significant hydraulic restriction or limitation exists in the Neshaminy Interceptor.” This Authority highly recommends that BCWSA “seriously consider a significant upgrade to the interceptor’s capacity between BCWSA Manhole 95 and proposed surge tank in Lower Southampton.” “The Authority also strongly encourages BCWSA to correct the 90 degree intersection where Northampton sanitary sewer flows merge with the upstream interceptor flows.” All efforts should be made to improve the hydraulic flow dynamics and outflow capacities at this location with or without the implementation of the proposed surge tank by BCWSA. A dynamic computer model should be used to identify corrections with post rehabilitation metering to confirm success.

Once the hydraulic restriction as described above has been corrected and the flow dynamics improved, an effective analysis of the 30-inch diameter Mill Creek Interceptor line can be effectively completed by this Authority. .

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As stated in the Authority’s letter dated May 5, 2011 to BCWSA, this Authority endorsed financial participation of BCWSA’s regional surge tank and interceptor upgrade project. This endorsement is contingent on the above mentioned sewer conveyance facilities being upgraded and an agreement being ratified by each respective authority. As of the date of this report, no draft agreement or updates on the implementation plans has been presented by BCWSA to this Authority for consideration in the last year and a half. The “Notice of Violation” issued by PA-DEP to BCWSA dated March 9, 2012 (Item No.1) instructed BCWSA to submit a Corrective Action Plan (CAP) without the utilization of a surge tank. The approval of a surge tank is thereby questioned and reflected accordingly in our plan.

In June 2012, PA-DEP communicated specific concerns to BCWSA that have a great impact on this Authority. It is PA-DEP’s position that “the Bucks County Water and Sewer Authority’s (BCWSA) Totem Road Pump Station and portions of their Neshaminy Interceptor are projected to be hydraulically overloaded. As such, capacity for any project must be provided for in the BCWSA Connection Management Plan (CMP) for sewage flows through their Totem Road Pump Station and the Neshaminy Interceptor that has been approved by the Department prior to the connection of a project connection to public sewer”. The Authority has filed an appeal with the PA-DEP Environmental Hearing Board (EHB) to protect its interest.

d. Woods at Northampton Sanitary Sewer Basin Improvement Evaluation

In October 2011, The Authority previously met with the PA-DEP to discuss the Woods at Northampton Sanitary Sewer Improvement Evaluation (Woods Basin Report) of July 5, 2011. Inflow and Infiltration abatement efforts to date have not completely addressed the extraneous sanitary sewer flows to the Authority’s satisfaction. and work is continuing. The Authority engaged Pennoni Associates to complete a comprehensive analysis of the Woods sanitary sewer basin and provide alternatives for consideration. The report was completed on May 24, 2012.

Pennoni issued a comprehensive report which evaluated the existing Woods Pump Station flow to confirm the estimated peak flow rates and provide recommendations. A copy of this report has been made available to PA-DEP as an amendment to our Chapter 94 Report. Endorsement by the department is sought by the Authority. At the Authority’s public meeting on August 1, 2012, the Board accepted the report findings and authorized Pennoni to proceed with preparing Contract documents for televising, inspecting and grouting the infrastructure. Television/Inspection logs and testing reports will be used to determine additional I&I abatement actions. The Woods at Northampton Sanitary Sewer Basin Improvement Evaluation report was endorsed by the Authority board on August 1, 2012 the recommendations as set forth in the report. The “Capital Improvement Plan” (CAP) was submitted to the PA-DEP as an amendment to the Authority’s 2011 Chapter 94 Report on September 6, 2012. As of November 1, 2012, the review of our CAP by PA- DEP remains outstanding.

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4. Sanitary Sewer System Rehabilitation:

a. Maintenance (TPM)

The Authority’s preventive maintenance program consists of routine inspections, weekly cleaning and degreasing as required, treatment of sewer mains for root intrusion, flushing and televising lines to monitor the condition of the pipes. Throughout the year, the Authority completes the repairs as they are found.

b. System Hydraulic Improvement:

The Authority authorized Pennoni to prepare design documents for the Ironworks Creek Interceptor Rehabilitation project. The specifications, plans and permits were submitted to PADEP in February 2009. Construction began in the fall of 2009 and was completed in June of 2010. Total Construction cost was $2,257,704. The project included replacing 2,555 feet of the existing 15 and 18-inch vitrified clay pipe with 24-inch ductile iron pipe, replacing 875 feet of 18-inch vitrified clay pipe with 30-inch ductile iron pipe, replacing 22 manholes and lining (Cured in Place Pipe – CIPP) 1,100 feet of the exiting 15-inch vitrified clay pipe. The project also improved easement access to manhole locations as well as addressed manholes with poor hydraulic conditions. In addition, it included bypass pumping and televising, which identified additional I&I areas for future rehabilitation. The additional I&I areas that were identified are being lined under the 2012 CIPP Lining Contract. This work was completed in September, 2012.

c. Rehabilitation:

1) CIPP Lining (Cured In Place Pipe) : Since 2003, the Authority has invested over $2.3 million dollars and lined approximately 7 miles of sanitary sewer.

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CIPP Lining of 15-inch diameter VCP along Ironworks Creek - 8/23/12.

2) Manhole Rehabilitation: Since 2003, the Authority has invested over $140,626 rehabilitating 27 manholes to remove I&I and provide corrosion protection to the manholes. The project includes the application of a monolithic polyurethane coating.

Before After

3) Manhole Rehabilitation: Since 2003, the Authority has invested $155,363 grouting 78 manholes to remove I&I.

4) Lateral Grouting and Cleanout Installation: Since 2003, the Authority has performed 28 lateral grouting and repairs to remove I&I.

5) Joint Grouting – Since 2003, the Authority has tested and grouted pipe joints in 4.6 miles of pipe to remove I&I.

6) Smoke Testing – Since 2003, the Authority has smoke tested the areas as shown on Map 6. Total smoke testing project cost to date is $71,648.

7) Point Repairs – Since 2003, the Authority has performed point repairs on their sewer mains as leaks have been identified. Total point repair project cost to date is $431,264.

8) Inspections of properties have eliminated 36 sump sumps from residential dwelling units in compliance with Township Ordinance 492. Flow reduction by this initiative is unknown.

5. Post-Rehabilitation Flow Metering:

a. BCWSA Flow Meter (Site 3105)

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Graph 1 below compares annual average flow as reported in the 2011 Chapter 94 report (BCWSA metering information) versus groundwater level. The comparison shows that the annual average flow has been reduced by 560,000 gallons per day.

The Authority began its annual CIPP lining program during the summer of 2006. Therefore, June 2006, was used as the date to compare the impact of the Authority’s ’s CIPP lining annual projects on the annual average flows.

As shown on the graph and Table 6 below, between 2002 and 2006, the average groundwater level below land surface was 31.18 feet and the annual average sewage flow was 4.25 MGD. From 2006 to 2011, the groundwater level below the land surface is at a similar estimated average of 31.13 feet, but the annual average sewer flow decreased to 3.69 MGD. The data shows that the average groundwater level below land surface remained the same for the two periods and despite the number of sewer connections increasing at an average rate of 37 connections per year, the annual average sewerage flows decreased as a result of The Authority’s abatement efforts. The Authority’s I&I abatement programs have reduced the annual average flows approximately 560,000 gallons per day. The above flow data information was obtained from the Authority’s pre- and post-metering programs (metering by BCWSA) as recommended and encouraged by the PA-DEP.

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TABLE 6 - REDUCTION OF ANNUAL AVERAGE FLOW ANNUAL GROUNDWATER AVERAGE AVERAGE FLOW LEVEL (DEPTH OF GROUNDWATER AS REPORTED AVERAGE YEAR WATER LEVEL, DEPTH, FEET IN THE FLOW (MGD) FEET BELOW LAND BELOW LAND CHAPTER 94 SURFACE) (FEET)* SURFACE (FEET) REPORT (MGD) 2002 3.36 37.70 2003 3.98 29.89 PRE-REHABILITATION 2004 4.54 4.25 29.62 31.18 2005 4.65 29.27 2006 4.74 29.40 2007 3.88 33.41 2008 3.40 32.25 POST- 2009 3.69 3.69 29.39 31.13 REHABILITATION 2010 3.21 32.60 2011 4.27 27.99

* Depth of groundwater based on USGS Bucks County Observation Well BK 1020 located in Warminster Township.

b. The Authority’s Langhorne Avenue Meter (Manhole 1224M)

In accordance with the PA-DEP’s Chapter 94, Municipal Wasteload Management Corrective Action Plan and Connection Management Plan Information Sheet, a ratio of the peak instantaneous flow to the annual average flow should be analyzed to determine the effectiveness of I&I abatement efforts. Table 7 below lists the annual average flow, peak instantaneous flow and their ratio. As shown in the Table, the ratio has decreased every year since 2007, the first full year that the permanent meter was installed. The reduction in the ratio indicates that Authority’s I&I abatement program to date has been successful.

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Table-7

6. Expansion of Sewage Facilities (EHB 2008-184-L)

In accordance with Northampton Township’s Act 537 plan, public sewer service was provided to the western end of the Township. The project was completed in two phases: Phase I - Harvest Acres (residential area) and Phase II - residential areas along Jacksonville and Almshouse Roads, Traymore Manor (residential area), Grenoble Manor (residential area), St. John’ United Methodist Church (institutional) and the Northampton Industrial Park (non- residential).

The project involved the construction of approximately 47,000 linear feet of gravity sewer, 16,480 linear feet of force mains, 3,830 linear feet of low pressure sewers, and two pump stations.

Phase I construction began in July of 2008 and was substantially complete in February of 2009. Phase II construction began in November of 2009 and was substantially complete in December 2010.

The total cost of Phase I and Phase II was $974,768 and $13,715,211, respectively for a total project cost of $14,689,979.

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CONDITION OF EXISTING SYSTEM

The expected service life of a sewage system is between fifty and seventy years. As the system ages, it requires maintenance and repair. Monitoring and maintenance of the system is on-going and occurs throughout the year. In addition, as new developments and connections occur, the capacity of the system needs to monitored and upgraded as required.

One tool used to monitor the condition of the sewage system is the Chapter 94 report. The PA-DEP requires that all municipalities file a Chapter 94 Municipal Wasteload report annually. The purpose of the report is to anticipate and prevent overloading sewerage facilities as well as project and plan for future sewage needs. The report focuses on the capacity of the existing system. The PA-DEP defines capacity as the rated ability of a system to effectively convey a specified (or permitted) load. For pump stations, each station should be capable of handling flows without the use of the backup pump during wet weather conditions. For conveyance, the system should be able to handle the peak flows without surcharging or overflowing (SSO).

The Authority’s 2011 Chapter 94 report was issued in March of 2012. The following is a summary of the report findings for the Authority’s basins flowing to BCWSA.

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1. SSO’s reported for the Authority’s basins flowing to BCWSA: TABLE 8 - SSO’s in 2011

Location Manhole Number Date

1. Langhorne Avenue 1219* 3/7/2011 2. Langhorne Avenue 1226* 3/7/2011 3. Langhorne Avenue 1219* 3/11/2011 4. Langhorne Avenue 1226* 3/11/2011 5. Langhorne Avenue 1226* 4/18/2011 6. Langhorne Avenue 1210 8/28/2011 7. Langhorne Avenue 1219* 8/28/2011 8. Langhorne Avenue 1226* 8/28/2011 9. Highspire Pump Station Basin H-1A 8/28/2011 10. Langhorne Avenue 1210 9/7/2011 11. Langhorne Avenue 1219* 9/7/2011 12. Langhorne Avenue 1226* 9/7/2011 13. Highspire Pump Station Basin H-1A 9/7/2011 14. Woods Pump Station Basin HN-48-1 9/7/2011 15. Woods Pump Station Basin HN-48-1 12/7/2011 16. Langhorne Avenue 1226* 12/8/2011 17. Langhorne Avenue 1219* 12/8/2011 * SSO was a result of receiving Interceptor unable to accept flow (Neshaminy Interceptor). To date in 2012, there has been one SSO because of a blockage caused by roots. The manhole number is PR-16. This blockage was cleared.

2. Sewage Pumping Stations:

The Authority owns and operates five (5) pump stations: Highspire, Manchester Farms (Manchester), Richard Road, Tanner, and the Woods at Northampton (Woods Basin Report) pump stations. The Richard Road and Tanner Pump Stations were completed and brought into operation in 2010. a. The Highspire Pump Station has two (2) pumps with a capacity of approximately 250 gallons per minute (GPM) each and a six (6) inch force main which discharges into the gravity system, where the wastewater is conveyed into the BCWSA system. The peak hourly or instantaneous readings to the pump station are not known. In 2011, there were nine times that it was necessary for both pumps to run due to the peak flow to the pump station. On two of these

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occasions, it rained more than 4-inches and this resulted in peak flows to the pump station that exceeded the pump station capacity and a SSO occurred. PA-DEP would classify the Highspire Pump Station as hydraulically challenged as during wet weather conditions, two pumps are required to run to convey the sewage flows and at times this results in an SSO at Manhole H-1A. See the below CAP. b. The Manchester Pump Station has two (2) grinder pumps with a capacity of approximately 50 GPM each and a three (3) inch force main which discharges into the gravity system, where the wastewater is conveyed into the BCWSA system. The peak hourly or instantaneous readings to the pump station are not known. During the week of August 22, 2011, there was over 7 inches of rain in Richboro, PA. It was necessary for both pumps to run together for approximately 2 hours on August 28, 2011. During the year, there were no other problems or times when it was necessary for both pumps to run simultaneously.

c. The Richard Road Pump Station has two (2) pumps with a capacity of 131 GPM each and a peak hydraulic capacity of 0.173 million gallons per day (MGD). The pump station uses a four (4) inch diameter force main which discharges into the gravity system and flow is conveyed to the Tanner Pump Station. The peak hourly or instantaneous readings to the pump station are not known. For the past calendar year, the pump station was capable of conveying maximum flows with one pump operational at a time.

d. The Tanner Pump Station has two (2) pumps with a design capacity of 340 GPM and a peak hydraulic capacity of 0.3664 MGD. The Tanner Pump Station uses an eight (8) inch diameter force main which discharges into the Ironworks Creek Interceptor where wastewater is conveyed into the BCWSA system. The peak hourly or instantaneous readings to the pump station are not known. For the past calendar year, the pump station was capable of conveying maximum flows with one pump operational at a time.

e. The Woods Pump Station has two (2) pumps with a capacity of approximately 380 GPM each and an eight (8) inch force main which discharges into the gravity system at Manhole HN-48-1, where the wastewater is conveyed into the BCWSA system. Alternatively, this pump station is also capable of pumping to Virginia Drive at Manhole HH-14 at a rate of 300 GPM. The peak hourly or instantaneous readings to the pump station are not known. However, the peak instantaneous flow is estimated to be approximately 600 GPM. For the past calendar year, the pump station was not capable of conveying maximum flows with only one pump. On two occasions, a rain event of over 4-inches resulted in peak flows to the pump station that exceeded the pump station capacity and a SSO occurred in Manhole HN-48-1. The Authority met with the PADEP and authorized Pennoni to prepare an evaluation of the basin. Pennoni issued a report on May 24, 2012 (Woods Basin Report). On August 1, 2012, the Authority Board accepted the recommendations of the report and authorized Pennoni to prepare bid documents for a TV inspection/grouting contract. The award of the contract is pending approval by PA-DEP of the corrective action plan (CAP) and funding.

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PA-DEP would classify the Woods Pump Station as hydraulically challenged during wet weather conditions, as two pumps are required to run to convey the sewage flows and at times this results in a SSO at Manhole HN-48-1. See the below CAP.

CORRECTIVE ACTION PLAN (“CAP”)

In accordance with the PA-DEP’s Chapter 94, Municipal Wasteload Management Corrective Action Plan and Connection Management Plan Information Sheet, a successful Inflow and Infiltration (I&I) abatement program should include the following items; mapping, accurate metering, televising, system hydraulic characterization, system rehabilitation and post-rehabilitation flow metering.

For the reasons described above, the Authority’s CAP will focus on the Woods Pump Station Basin, Highspire Pump Station Basin and Mill Creek Interceptor at Langhorne Avenue, as follows:

1. Woods Pump Station Basin

a. Mapping – Complete.

b. Accurate Metering

c. Televising – Per the May 24, 2012 report, The Authority will televise Countryside Meadow, Hampton Woods, Wedgewood Green, Brookwood Estates and Fairway Estates Developments. The purpose of the televising is to document the current conditions of the pipe, joints and previously installed spot repairs. The videos will be reviewed to identify problem areas. Previously installed spot repairs may require repair or replacement.

d. System Hydraulic Characterization – Ongoing, see Woods Basin Report, dated May 24, 2012. As stated in the attached report, the conveyance lines that receive the flows from the Woods Pump Station must be addressed to properly convey flows greater than 500 gpm. The Authority has endorsed the recommendation to install a splitter structure to divide flow between Edwards Drive and Virginia Drive sewer mains.

e. Recommending and seeking regulatory endorsement (PA-DEP) of the CAP endorsed by the Authority board on August 1, 2012. The Cap was delivered to PA-DEP on September 6, 2012 for review, comment and consideration.

f. Sanitary Sewer System Rehabilitation

1) Joint Testing and Joint Grouting will be performed in 2012 as recommended in the Woods Basin Report. The Authority will televise and test all main joints. Joints that fail will be evaluated to determine appropriate abatement measures including joint grouting.

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2) Installation of gravity sewer extension along Hatboro Road and Virginia Drive including a splitter structure to distribute forcemain flows to the existing gravity sewer system. See Woods Basin Report dated May 24, 2012. This initiative is pending regulatory approval and funding. .

3) Pump Station Upgrade – Pump station improvements will be considered if after the completion of the above proposed I&I abatement efforts peak flow exceeds the pump station rated capacity and if SSO’s continue to occur. See Woods Basin Report dated May 24, 2012.

g. Post-Rehabilitation Flow Metering – A flow measurement device will be installed on the influent side of the Woods Pump Station to monitor and analyze sewage flows after the completion of the above proposed I&I abatement efforts.

2. Highspire Pumping Station Basin

a. Mapping – Mapping will be updated as needed. Current mapping completed to date shows that the basin area to the Highspire Pump Station can be divided into three sub-basin areas. In a meter program performed in early 2007, the Authority captured data for each of the three sub-basins. Based on review of the meter data available, the sub-basin that flows to Manhole H-3 is of the highest priority. A sewer capacity analysis will be done for this sub-basin. The analysis will document pipe slopes and invert elevations. Locations of limited capacity will be identified and investigated.

b. Accurate Metering –The Authority has had temporary meters located in Manholes H-3, H-13 and H-48. This meter data has been reviewed to determine problem areas for the I&I abatement actions required. Baseline and wet weather flows have been identified. Based on review of the meter data available, the sub-basin that flows to Manhole H-3 is of the highest priority.

c. Televising – Television inspection videos for the sub-basin flowing to Manhole H-3 will be reviewed to determine problem areas.

d. System Hydraulic Characterization – As stated above, a sewer capacity analysis will be prepared for the sewer mains located in the H-3 sub-basin area. The analysis will identify areas that have restricted flow due to pipe slope, size and/or configuration.

e. Sanitary Sewer System Rehabilitation – In 2010, approximately 1,700 feet of CIPP lining was performed in this basin. Also, six manholes have been grouted to remove infiltration. Problem areas are identified through the above televising and sewer capacity analysis evaluation will be

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rehabilitated. Anticipated repairs include: lining, pressure testing and grouting of areas with visible leaks and defects. Also, a comminutor is planned to be installed at the Highspire Pumping Station in fiscal year 2013 is pending & subject to deferral.

f. Post-Rehabilitation Flow Metering – Flow monitoring will be performed at Manholes H-3, H-13 and H-48 to document the flows and determine the effectiveness of the repairs. A comparison of pre and post rehabilitation flows will be analyzed.

3. Mill Creek Sanitary Sewer Interceptor at Langhorne Avenue

As noted on the above SSO Table, during wet weather events, Manholes (1210, 1219, and 1226) located near Langhorne Avenue have overflowed. If the sewage flows are reduced in Woods and Highspire pump station basins, it would reduce these SSO’s. The Authority will continue to monitor the meters in this area to determine if the flows have been reduced. In addition, as discussed in Section E.3.c., additional re-engineering and corrective action of our current hydraulics concerns is anticipated on the BCWSA side of the siphon. These improvements will significantly improve the dynamic hydraulic capacity of the sanitary sewer system.

a. Mapping – Mapping will be updated as needed.

b. Accurate Metering – The Authority has a permanent meter located on Langhorne Avenue in Manhole 1224M. Baseline and wet weather flows will be identified. There are also four other permanent meters in place that collect data to the BCWSA system that will be used to monitor I&I abatement.

c. Televising – This area and tributaries will be televised as part of the Authority’s ’s routine yearly maintenance and as required following the proposed I&I abatement procedures.

d. System Hydraulic Characterization – As stated previously, a system hydraulic evaluation of the Ironworks Creek and Mill Creek Interceptors will be completed once the proposed BCWSA upgrades have been completed.

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e. Sanitary sewer System Rehabilitation – As part of the Authority’s ongoing I&I abatement program, the 2012 CIPP Lining Contract . The below photograph is an example of a source of infiltration found along the Ironworks Creek Interceptor. This area is included in the 2012 Contract. It is estimated that over 100 gpm of infiltration will be removed from the interceptor during this project.

f. Post-Rehabilitation Flow Metering – The Authority will continue to monitor flows to the Langhorne Avenue permanent meter to determine the effectiveness of its I&I abatement program.

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LITAGATION & PENDING ISSUES OF CONSIDERATION

The Authority is a party to legal proceedings that have arisen related to the West End Sanitary Sewer Project (Industrial, non-residential properties). The case is docketed with the Bucks County Court of Common Pleas; Docket No. BCCCP 2011-00550. The Authority is represented by RUDOLPH, CLARKE & KIRK, LLC of Trevose , PA.

The Authority has filed an entry with the Pennsylvania Department of Environmental Protection Environmental Hearing Board: Docket No. 2012-155L, appealing the action issued by the Department to the Bucks County Water and Sewer Authority. The action was filed on July 25, 2012:; Docket No. EHB 2012-155L. The Authority is represented by the firm of MANKO, GOLD, KATCHER, & FOX LLP.

The Authority is a party to a legal proceeding between Ivyland Industrial Partners and the Authority. The case is docketed with the Bucks County Court of Common Pleas. The Authority is represented by RUDOLPH, CLARKE & KIRK, LLC of Trevose, PA.

The Authority has an ongoing investigation regarding the appropriate wholesale sanitary sewer rates charged by Bucks County Water & Sewer Authority based upon the agreement with the Authority dated February 23, 1965. Compliance to all issues are under review including rates (current & historic) and tapping fees. The review is being completed by several professionals and entities engaged by the Authority under professional services. In November of 2011, Bucks County Water & Sewer Authority announced a 10% increase in wholesale sanitary sewer rates. This Authority has not paid the rate increase to Bucks County Water & Sewer Authority, but has escrowed the funds until the matter is resolved.

Lastly, the Authority is examining the determination of the current wholesale water rates as to its compliance with the terms of the water agreement previously referenced.

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FINANCES OF THE AUTHORITY

AUTHORITY DEBT In fiscal year 2012, the Authority reduced principal debt by $1,185,047. In 2013, the Authority has budgeted reducing debt principal by $1,245,407.

CAPITAL RESERVES Capital Reserves of the Authority have been adversely impacted by Sewer District No. 3 (Non- Residential Properties) not connecting to the Authority’s sanitary sewer system as required by Township Ordinance. As such, the deficiency must be made up by a rate adjustment

CAPITAL BUDGET No new capital projects are budgeted for 2013 due to funding requirements. Only Capital items already awarded in fiscal year 2012 will carry over. The five (5) year Strategic Plan provides for a listing desired capital requirements which includes 2013 items for consideration. If funding balances and immediate needs assessment warrant, the Executive Director will present to the board its recommendation at that time for Board consideration during the fiscal year. Future capital projects will most likely need to be financed in some part by rates.

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2013 OPERATIONAL BUDGET This budget does NOT include balance sheet items that impact the cash flow requirements of the Authority.

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CAPITAL PLAN (5 YEAR PLAN)

1-Nov-13 NORTHAMPTON BUCKS COUNTY MUNICIPAL AUTHORITY ABBRIVIATION KEY: MEANING S Sewer 2013 CAPITAL PLAN W Water NBCMA Fiscal Year November 1st to October 31st WS Water & Sewer Estimates and projections are based on costs within fiscal year A Administration Based upon 2012 cost est. w/o escalation COLA or inflationary Factor I & I Inflow and Infiltration COLOR CODE KEY TPM Total Preventive Maintenance Proceed / Contract issued in 2012 Fiscal Year / Balance Remaining PS Proferssional Services Questionable Approval by Requlatory Agency: PA DEP CAT Category Questionable Capital Investment due to above Deferred / Pending Fund Balance PROJECTED ANTICIPATED FISCAL YEAR 2013 CAT NOTES REASON / BASIS TOTAL USEFUL LIFE I & I Remediation Manhole Rehab.(Contract 2-S-A-12) BALANCE DUE S Proceed / Contract issued I & I $ 102,000.00 25 I & I Remediation CIPP (Contract 1-S-12)BALANCE DUE S Proceed / Contract issued I & I $ 28,000.00 50 VFD Humphreys Drive P.S. (Purchase Order Issued fiscal year 2012) WS Proceed / Contract issued TPM $ 17,000.00 10 Replace Vehicle 4WD PU with snow plow (Unit No. 25) 2-A-12-1 WS Proceed / Contract issued TPM $ 24,798.00 5 Replace Vehilce 4WD PU (Unit No. 26)2-A-12-2 WS Proceed / Contract issued TPM $ 17,683.00 5 Replace Vehicle 4WD PU (Unit No. 30)2-A-12-3 WS Proceed / Contract issued TPM $ 17,899.00 5 Relocate Woods PS Force Main / Splitter Chamber S Deferred / Pending Fund Balance I & I $ 265,000.00 50 Professsional Services / Capital Projects S Deferred / Pending Fund Balance PS$ 75,000.00 NA I & I Remediation (select grouting / Highspire Basin) S Deferred / Pending Fund Balance I & I $ 75,000.00 7 I & I Remediation (select grouting /Upper South Basin) S Deferred / Pending Fund Balance I & I $ 50,000.00 7 I & I Remediation (Grouting V.C.P. / Woods Basin) S Deferred / Pending Fund Balance I & I $ 275,825.00 7 Muffin Monster ( Highspire P.S. ) S Deferred / Pending Fund Balance TPM$ 40,000.00 15 Erosion Control / Easement Clearing/ Manhole Protection S Deferred / Pending Fund Balance TPM$ 60,000.00 30 VFD Drive for Richboro Pump Station W Deferred / Pending Fund Balance TPM$ 27,000.00 10 Replace Air Compressor (Upper Holland) WS Deferred / Pending Fund Balance TPM$ 20,000.00 20 Zero Turn Mower (Replacement for Unit No. 1) WS Deferred / Pending Fund Balance TPM$ 9,000.00 7 TOTAL 2013 Proceed / Contract issued$ 207,380.00 Deferred / Pending Fund Balance$ 896,825.00 TOTAL 2013 $ 1,104,205.00

PROJECTED ANTICIPATED FISCAL YEAR 2014 CAT NOTES REASON / BASIS TOTAL USEFUL LIFE Professsional Services / Capital Projects S Deferred / Pending Fund Balance PS$ 75,000 NA BCWSA Surge Tank & Capacity Upgrade downstream No. 1226: S Approval Questionable I & I $ 846,000 50 I & I Remediation (CIPP) S Deferred / Pending Fund Balance I & I$ 200,000 50 I & I Remediation (Manhole Rehabilitation) / Urathan Spray Rehabilitation S Deferred / Pending Fund Balance I & I$ 50,000 50 I & I Rehabilitation (Grouting- General) S Deferred / Pending Fund Balance I & I$ 50,000 7 Erosion Control / Easement Clearing / Manhole Protection S Deferred / Pending Fund Balance I & I$ 60,000 30 Replace Vehicle Box Van ( Unit No. 24) WS Deferred / Pending Fund Balance TPM$ 18,000 5 Replace Vehicle E.D. (Unit No. 36) A Deferred / Pending Fund Balance TPM$ 18,000 5 Replace Vehicle 4WD PU with Rear Utility Box and Lift Gate (Unit No. 34) WS Deferred / Pending Fund Balance TPM$ 25,000 5 Replace vehicle 4WD with Rear Utiltiy Box (Unit No. 37) WS Deferred / Pending Fund Balance TPM$ 23,000 5 Replace Vehicle 1 Ton PU 4WD with utility body ( Unit No. 22) WS Deferred / Pending Fund Balance TPM$ 25,000 5 Replace Vehicle 1 Ton PU 4WD with utility body & snow plw ( Unit No. 35) WS Deferred / Pending Fund Balance TPM$ 30,000 5 Zero Turn Mower ( Replacement for Unit No. 2) WS Deferred / Pending Fund Balance TPM$ 9,000 7 Adminstative Buidling / Replace metal Façade : Exterior A Deferred / Pending Fund Balance TPM$ 25,000 25 CSI ( Software Replacement) A Deferred / Pending Fund Balance TPM$ 60,000 10 PC Office Upgrade A Deferred / Pending Fund Balance TPM$ 15,000 5 Information Technology ( Server: Replacement) A Deferred / Pending Fund Balance TPM$ 10,000 5 TOTAL 2014 Deferred / Pending Fund Balance$ 693,000 BCWSA Surge Tank / Subject to DEP Approval) Approval Questionable$ 846,000 TOTAL 2014 $ 1,539,000

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PROJECTED ANTICIPATED FISCAL YEAR 2015 CAT NOTES REASON / BASIS TOTAL USEFUL LIFE Professsional Services S Deferred / Pending Fund Balance PS$ 75,000 NA I & I Remediation (CIPP) S Deferred / Pending Fund Balance I & I$ 150,000 50 I & I Remediation (Manhole Rehabilitation) / Urathan Spray Rehabilitation S Deferred / Pending Fund Balance I & I$ 50,000 50 I & I Rehabilitation (Grouting- General) S Deferred / Pending Fund Balance I & I$ 50,000 7 Erosion Control / Easement Clearing / Manhole Protection S Deferred / Pending Fund Balance I & I$ 50,000 30 Replace Well Pump ( general) W Deferred / Pending Fund Balance TPM$ 12,000 10 Replace Vehicle PU 4WD with utility body ( Unit No. 27) WS Deferred / Pending Fund Balance TPM$ 22,000 5 Replace Vehicle PU 4WD with utility body ( Unit No. 33) WS Deferred / Pending Fund Balance TPM$ 22,000 5 Zero Turn Mower ( Replacement for Unit No. 3) WS Deferred / Pending Fund Balance TPM$ 9,000 7 TOTAL 2015 $ 440,000 TOTAL 2015 Deferred / Pending Fund Balance $ 440,000

PROJECTED ANTICIPATED FISCAL YEAR 2016 CAT NOTES REASON / BASIS TOTAL USEFUL LIFE Professsional Services S Deferred / Pending Fund Balance PS$ 75,000 NA I & I Remediation (CIPP) S Deferred / Pending Fund Balance I & I$ 150,000 50 I & I Remediation (Manhole Rehabilitation) / Urathan Spray Rehabilitation S Deferred / Pending Fund Balance I & I$ 50,000 50 I & I Rehabilitation (Grouting- General) S Deferred / Pending Fund Balance I & I$ 50,000 7 Erosion Control / Easement Clearing / Manhole Protection S Deferred / Pending Fund Balance I & I$ 50,000 30 Replace Well Pump ( general) W Deferred / Pending Fund Balance TPM$ 12,000 10 Replace Vehicle ( Unit No. TBD) WS Deferred / Pending Fund Balance TPM$ 22,000 5 Replace Vehicle ( Unit No. TBD) WS Deferred / Pending Fund Balance TPM$ 22,000 5 TOTAL 2016 $ 431,000 TOTAL 2016 Deferred / Pending Fund Balance $ 431,000

PROJECTED ANTICIPATED FISCAL YEAR 2017 CAT NOTES REASON / BASIS TOTAL USEFUL LIFE Professsional Services S Deferred / Pending Fund Balance PS$ 75,000 NA I & I Remediation (CIPP) S Deferred / Pending Fund Balance I & I$ 150,000 50 I & I Remediation (Manhole Rehabilitation) / Urathan Spray Rehabilitation S Deferred / Pending Fund Balance I & I$ 50,000 50 I & I Rehabilitation (Grouting- General) S Deferred / Pending Fund Balance I & I$ 50,000 7 Erosion Control / Easement Clearing / Manhole Protection S Deferred / Pending Fund Balance I & I$ 50,000 30 Replace Well Pump ( general) W Deferred / Pending Fund Balance TPM$ 12,000 10 Replace Vehicle ( Unit No. TBD) WS Deferred / Pending Fund Balance TPM$ 22,000 5 Replace Vehicle ( Unit No. TBD) WS Deferred / Pending Fund Balance TPM$ 22,000 5 TOTAL 2017 $ 431,000 TOTAL 2017 Deferred / Pending Fund Balance $ 431,000

SUMMARY: TOTAL 5 Year Capital Plan with Surge Tank $ 3,945,205 TOTAl 5 Year Capital Plan w/o Surge Tank $ 3,099,205 Proceed / Contract Issued $ 207,380 Deferred / Pending Fund Balance $ 2,891,825

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