DWSD Sewage Disposal System Capital Improvement Program (CIP) for 2013-2017

October 11, 2012

Agenda

CIP Development Process

Review of how we got here (2013-2017 CIP) Discussion of where we are going (2014-2018 CIP)

Executive Summary - 2013-2017 CIP Highlights

Program statistics and financing requirements

Key Project Discussion

Detailed information on 3 key projects of interest

Questions and Discussion

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City of Detroit Water & Sewerage Department

Sewage Disposal System CIP

CIP Development Process

City of Detroit Water & Sewerage Department

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2013-2017 CIP Development Process Timeline

Based on Customer requests, DRAFT CIP was presented to Customer representatives in May 2012
First time this step was introduced to the process Comments reviewed and incorporated as appropriate

DRAFT CIP presented to BOWC in June 2012

Comments reviewed and incorporated as appropriate

BOWC approves CIP July 2012

City of Detroit Water & Sewerage Department

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2013-2017 CIP Development Process Summary

Each Year the CIP is reviewed and updated to reflect the most current information for recommended capital improvements over the five year planning horizon. The CIP incorporates needs from Master Plans and operating experience. For the July 2012 CIP, the plan presents projected expenditures for FYs 2013 through 2017.

City of Detroit Water & Sewerage Department

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2013-2017 CIP Process Summary (continued)

The first year of the plan reflects an update of the original CIP incorporated into the existing rates for FY 2012-13, the current fiscal year. The second year is recommended for the upcoming budget/rate development, and establishes the capital financing revenue requirements for that plan. The CIP strikes a balance between identified System needs and rate affordability.

City of Detroit Water & Sewerage Department

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2013-2017 CIP Process Summary (continued)

Where capital improvements have been identified but are not projected to be completed within the 5 year horizon, those remaining projected expenditures are noted beyond the five year period. This column also reflects projects that have been deferred pending additional review.

City of Detroit Water & Sewerage Department

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CIP Process Improvement Opportunities For the 2014-2018 CIP

Improve overall linkage to budget/rates Improve the overall rating/ranking process to provide more distinctive project ratings
Clarity on priorities (rationale) Enable adjustments (deferrals & advancements)

Improve customer/customer community input in the process Leverage Organizational Optimization project
Asset Management Plans

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Sewage Disposal System CIP

Executive Summary

City of Detroit Water & Sewerage Department

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2013-2017 Sewer CIP Summary Executive Summary

The KEY element to our mid and long term

capital planning strategy is how we will deal with mid-term and long-term biosolids management and disposal programs. The March 2012 Symposium on Biosolids disposal options caused us to revisit our approach envisioned by the prior CIP, which anticipated investment by 3rd parties in facilities and an operating expense impact on DWSD.
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City of Detroit Water & Sewerage Department

2013-2017 Sewer CIP Summary Executive Summary (cont.)

The new CIP reflects the addition of DWSD

investments in biosolids improvements, most prominently the new dryer facility. Weve also added the 2nd (conduit) phase of the Rouge River Outfall project.
The first phase was included in last years CIP and we knew the 2nd phase was coming. We have now included the 2nd phase in the CIP.

City of Detroit Water & Sewerage Department

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2013-2017 Sewer CIP Summary Summary of Specific Changes

~$257 million Increase (in 5-year funding reqts)

primarily related to inclusion of:
Biosolids Dryer Facility - $154 mm (see page 40) Incinerator Air Quality Improvements - $37 mm (see page 26) Dewatered Biosolids Improvements - $12 mm (see page 40) RRO#2 2nd (Conduit) phase - $91 million (see page 41)

Total CIP plan (5 year + Remaining) is $936

million and the 5-year CIP plan is $829 million.

Comparative figures from prior CIP: $608 million / $572 million City of Detroit Water & Sewerage Department
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2013-2017 Sewer CIP Potential Financial Plan Impact CIP only - does not reflect impacts of other issues

Financing plan for Bonds that closed in June

2012 was based on July 2011 CIP.

Additional ~$257 million of capital requirements

would require:

Anticipated no future bond sales needed prior to 2017

Will not impact 2013 projections nor materially

impact 2014 projections.

Additional Bond sales and/or additional SRF Loans

Key to future financial plans will be the results of:

The Organizational Optimization Board financing policies, which are under review
City of Detroit Water & Sewerage Department

May moderately impact 2015 2017 projections.

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2013-2017 Sewer CIP Summary Potential Financial Plan Impact

2012-2016 CIP
250 0.1
0.095 CIP / Financing - $millions CIP / Financing - $millions 200 0.09 200 250

2013-2017 CIP
10.0% 9.5% 9.0% 8.5% Rate Increase

0.085
150 0.08 0.075 100 0.07 0.065 50 0.06 0.055 0 2012 CIP 2013 2014 2015 2016 Rate Increase 0.05 Rate Increase

150

8.0%
7.5%

100

7.0% 6.5%

50

6.0% 5.5%

0 2012 CIP 2013 2014 2015 2016

5.0%

Bond Sale Proceeds

Bond Sale Proceeds

Rate Increase

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Sewer CIP Summary

Projected 5-year CIP Expenditures ($millions)
24 184 67 272

Solids Handling Disinfection Other WWTP

77
205

CSO Local Collection Other

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The 2013-2017 Sewer CIP totals approximately $936 million ($829 million for the 5-year CIP), of which $356 million is subject to the FY 2013-14 rates financing plan

($ millions)

FY 2012-13 FY 2013-14 FY 2014 Financing Plan Subtotal FY 2014-15 FY 2015-16 FY 2016-17 Total 5-year CIP Remaining beyond 2017 TOTAL CIP

150.11 205.82 355.93 234.91 154.29 83.67 828.80 107.25 936.05

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The CIP reports categorize projects based on their status

ACTIVE Projects:

Work is underway the CIP contains projected expenditures necessary to complete these ongoing projects
UNDER PROCUREMENT Projects:

Project is in the procurement process and is about to begin. A DRMS number (accounting code) has been assigned, but notice to proceed has not yet been issued
NEW Projects:

Project proposal has been approved but procurement process has not yet been initiated
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City of Detroit Water & Sewerage Department

The Sewer Systems investment in capital improvements has varied over the years
During the 1990s, DWSD invested approximately $730 million (~$73 million annually) in capital improvements to the sewer system During the 2000s, the corresponding figure is $2.49 billion (~$249 million annually) Estimated figures for FYs 2012-2016:
2003 Master Plan = $1.88 billion ($376 million per year) 2008 CIP = $1.85 billion ($371 million per year) 2009 CIP = $736 million ($147 million per year) 2010 CIP = $708 million ($142 million per year) 2011 CIP = $572 million ($114 million per year) 2012 CIP = $829 million ($166 million per year)
City of Detroit Water & Sewerage Department

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The CIP report contains criteria designed to identify project purpose and allocation status

Criteria in Report
Primary Project Purpose

Allocation Status

1 Directly Mandated for Regulatory Compliance 2 Necessary for Regulatory Compliance Mandates 3 System Reliability 4 Technological Advance / Efficiency 5 New Service Areas D - Detroit Only S - Suburban Only OMI - Oakland Macomb Interceptor District Only 83/17 - New Wet Weather Facilities CTA - Common to all

City of Detroit Water & Sewerage Department

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Sewage Disposal System CIP

Specific Projects of Interest

City of Detroit Water & Sewerage Department

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Projects of Interest
Summary of WWTP Projects Incinerator Air Quality Improvements (PC-791) Added to CIP to address internal investment in Solid Handling Facilities Biosolids Dryer Facility (PC-792) Added to CIP to address internal investment in Solid Handling Facilities Wastewater Treatment Plant Allowance Added to facilitate delivery of WWTP projects

City of Detroit Water & Sewerage Department

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Current and Future Capital Projects at Detroit WWTP

Number Description PC-756 New Troughs and Weirs for Primary Clarifiers 13-16 Improvements to Primary Clarifier Rectangular Tanks, PC-757 Pipe Gallery Secondary Clarifiers, RAS Pumps and MCC PC-776 Improvements PC-774 C-I and C-II Incinerator Improvements PC-780 Rehabilitate Sludge Pump Stations 1 and 2 PC-782 Plant-wide Fire Alarm Systems Upgrade Underground Electrical Duct Bank Repair and EB-1, EBPC-783 2, and EB-10 Primary Power Service Improvements, Repavement of Critical Roads Rouge River Outfall No. 2 (RRO-2) Segment 1 - WWTP PC-786 Modifications Replacement of Belt Filter Presses for Complex I and PC-787 Upper Level Complex II Pump Station 1 Rack & Grit and MP1 Sampling Station 1 PC-789 Improvements PC-791 Sewage Sludge Incinerator Air Quality Improvements PC-792 Biosolids Dryer Facility at WWTP
City of Detroit Water & Sewerage Department

Amount ($M) $7.7 $10.1 $17.4 $29.9 $3.3 $7.6

Start 2012 2013 2012 2010 2012 2012

End 2013 2016 2015 2014 2013 2015

$30.4
$14.4 $33.2 $21.1 $37.0 $154.0

2012
2012 2012 2012 2013 2013

2016
2014 2015 2015 2016 2017
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Current and Future Capital Projects at Detroit WWTP

Number Description Amount ($M) 961 Pump Station No.2 Pumping Improvements $5.7 Rehabilitation of Primary Clarifiers, Drain Lines, Hot 1141 $15.6 Water and Scum Lines 1194 Aeration System Improvements $23.7 1220 Replacement of Lower Level C-II Dewatering Centrifuges $25.0 1221 Rehabilitation of Central Offload Facility $6.0 1251 Dewatered Biosolids Storage at WWTP $12.2 1224 Replacement of LIMS / PIMS Software System $5.0 1257 Wastewater Treatment Plant Allowance $30.0 Rehabilitation of Main Plant Maintenance Bldg, Plant 1237 $13.4 Maintenance Areas Rehabilitation of Grit and Screening System at PS#2 and 1223 $11.2 Rehabilitation of Sampling Sites at WWTP Replacement of Chlorination and Dechlorination 1222 $4.1 Equipment at the WWTP 1250 Rouge River Outfall No. 2 Segment 2 - Conduit $90.7 Study / Repair Potable Water, Screened Final Effluent, 1140 $2.3 Natural Gas and Compressed Air Lines at the WWTP TOTAL $611.0
City of Detroit Water & Sewerage Department

Start 2013 2013

End 2015 2016

2013 2015 2013 2013 2013 2012

2016 2018 2016 2016 2015 2014

2013 2013

2016 2017

2013
2014

2017
2016

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WWTP Capital Projects

PC-780 PC-792 PC-789 PC-787 PC-776 PC-756 PC-780 PC-774 PC-757 1237 1222 1223 1221 1220 1194 1141 961 PC-791 Underground Electrical Rehabilitation and FacilityII NewPump I and of GritFilter Secondary Clarifiers, 2 Replacement ofto No. RAS Complex Station Weirs Improvements of Primary Rehabilitation Incinerator Rehabilitation Sludge Biosolids Dryer Primary Replacement Belt Plant Rehabilitate Main and Troughs System Aeration ReplacementCentral Pump Stationof Lower 1 Sewage Sludge Complexfor Duct Bank Repair and MaintenanceImprovements Clarifier Rectangular13-16 Clarifiers, Drain Lines,IPlant ScreeningClarifiersatII How Presses Stations MCCPS#2 IncineratorImprovements Pumping Complex Tanks, Primary &Complex 2 Pump forWWTPand Chlorination Pumps and 1 and Level Building, Rack Grit Offload Facility Improvements at Air QualitySystemand and EB-1, EB-2, and EB-10 Dechlorination Equipment MP1 Improvements ofII DewateringScum Lines Upper M Gallery Water M 2013-2016 1 andSampling Station $23.7 and 2013-2016 $29.9 Level2013-2017 $154 M 2012-2013 $5.7 M Centrifuges $3.3Pipe 2013-2015 $7.7Rehabilitation Maintenance Areas $6M 2013-2016 2010-2014 Complex $37 Primary Power Service Sampling 2015-2018 $33.2 M WWTP $17.4M Sites at WWTP $10.1Mthe 2013-2015 $5.7 $13.4 M $25 Improvements at 2012-2015 2013-2016 Improvements, Repavement $11.5M 2013-2017 $21.1M 2012-2015 $4.1 M 2013-2016 of Critical Roads $30.4 M 2012-2016

Chlorination/De-Chlorination Facilities

City of Detroit Water & Sewerage Department

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WWTP Capital Projects

Chlorination/De-Chlorination Facilities

City of Detroit Water & Sewerage Department

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Other WWTP Capital Projects (not shown on map)

Project PC-782 Description Plant-wide Fire Alarm Systems Upgrade Amount $7.6 M Start 2012 End 2015

PC-786
1251 1224 1257 1250 1140

River Rouge Outfall No. 2 (RRO-2) Segment 1 WWTP Modifications

Dewatered Biosolids Storage at WWTP Replacement of LIMS / PIMS Software System Wastewater Treatment Plant Allowance Rouge River Outfall No. 2 Segment 2 Conduit Study / Repair Potable Water, Screen Effluent, Natural Gas and Compressed Air Lines at the WWTP

$14.4 M
$12.2 M $5 M $30 M $90.7 M $2.3 M

2012
2013 2013 2012 2013 2014

2014
2016 2015 2014 2017 2016

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PC-791 Complex II Incineration Air Emissions Upgrade

Award recommendation by BOWC Sept 2012, awaiting City Council approval Design-Build Contract Designer: Black & Veatch Contractor: Walsh Contract Cost: $38 Million Schedule: Nov 2012 June 2017

Project Drivers: Current emissions controls on incinerators will not meet 2016 EPA MACT Air Standards
Page 26 of CIP Document $37 Million budget

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PC-791 Complex II Incineration Air Emissions Upgrade

Project Description: Scrubber replacement

Afterburner hearth
Induced draft (ID) fan replacement Variable-frequency drives (VFD) on fans & center drive Damper improvements

City of Detroit Water & Sewerage Department

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PC-791 Complex II Incineration Air Emissions Upgrade

City of Detroit Water & Sewerage Department

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PC-792 Biosolids Dryer Facility at WWTP

Request for Proposals issued Aug 2012 Proposals due Nov 30, 2012

Design-Build Facility (DWSD Capital)

Operate Maintain for 20 years Project Drivers: Need for biosolids disposal capacity, approximately one-third of total disposal requirements at WWTP Drying provides flexibility to utilize both land-application and energy end-uses for dried product Page 40 of CIP document - Budget $154 Million
City of Detroit Water & Sewerage Department

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PC-792 Biosolids Dryer Facility at WWTP

Project Description: Provide a dryer facility with 220 dry tons per day dryer capacity at WWTP Operate and Maintain facility for 20 years Reuse / dispose of dried product in a renewable method

CIP budget is for construction costs only

Ongoing operation and maintenance costs will be in O&M budget

City of Detroit Water & Sewerage Department

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WWTP Capital Flowchart

Existing Capital Condition Assessment and Restoration Program Schedule Replacement Program Maintenance Engineering

A B

Capital Replacement Program

C
New Capital Master Plans Needs Assessment (WWTP) Regulations System Changes
New Capital Program

Capital Improvement Program

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Wastewater Treatment Plant Allowance

Contracts: Approx 22 contracts, to be issued through DWSD purchasing this year, size $50,000 - $1M Delivery Method

Design-Build; Furnish & Install; Furnish

Project Drivers

Need for an efficient delivery method for projects <$1M Emphasis on competition Both planned replacements and emergent needs

Page 42 of CIP Document Budget $30 Million

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Wastewater Treatment Plant Allowance

Funds both Scheduled Replacement Projects (SRP) and Small Dollar Capital Projects SRP Examples Replacement of head motor pulley, vacuum pump motor, ash silo pump drive Rehabilitation of venturi meter building Replacement of sludge feed pumps

Small Dollar Capital Examples Stair replacement at WWTP buildings Replacement of Ferric Chloride storage tanks New used oil storage tank and containment

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