Fiscal Year 2004 Proposed Budget

PAY-AS-YOU-GO CAPITAL
UTILITY CAPITAL PROJECTS FUND

The Department of Public Works and the Department of Environmental Services are responsible for managing the Utilities Fund which includes providing water and maintaining a water distribution system, a sewage collection system, and a wastewater treatment plant. The Proposed FY 2004 Utility Fund PAYG Budget Summary, program budget appropriation distribution graph, project descriptions, and fund statement is included on the following pages.

FY 2004 PROPOSED UTILITIES BUDGET

Water Distribution System Improvements (Expansion) $3,600,000

The water main projects in this program are designed to improve overall capacity or operation of the water distribution system. These projects are part of the Water Master Plan. Funding for these projects is generated from hook-up fees charged to new users who increase demands on the water distribution system. In FY 2004, projects include:

• Replacement of the Chain Bridge water main ($3,000,000),

• Planning for a new Fairfax County and Fall Church interconnection that will serve as a backup source for Arlington ($400,000), and

• Phase II funding for the Minor Hill Pressure Zone improvement project ($200,000).

• Fiscal Impact 1 - Capital maintenance, replacement or upgrade program – no increase to FY 2004 operating costs.

Sanitary Sewer System Improvements (Expansion) $2,580,000

The sanitary sewer improvements proposed are intended to provide additional capacity to existing sanitary sewer lines to accommodate new development in Arlington County. These projects were identified in the recently updated Sanitary Sewer Master Plan. Funding for this program is generated from hook-up fees charged to new users who increase demands on the sewer system. The FY 2004 projects include:

• Infiltration and Inflow (I &I) program ($1,400,000), this is the second year the I & I program is presented as part of the Sewer Improvements program, as a means to simplify and consolidate CIP programs;

• Various smaller projects that were identified in the recently updated Sanitary Sewer Master Plan which focused on improvements required to support future or current development throughout the County ($830,000);

• Four Mile Run Junction Chambers project ($300,000) to install gates and chambers to redirect flows;

• Project planning, developer coordination and specification development to support future sewer system expansion ($50,000).

• Fiscal Impact 1 - Capital maintenance, replacement or upgrade program – no increase to FY 2004 operating costs.

Wastewater Treatment Plant Improvements $3,245,376

The Water Pollution Control Division (WPCD) manages three capital programs for the benefit of Arlington County's wastewater treatment: (1) Plant Expansion Capital Program - installation, upgrade and expansion of major process components (2) Plant Non-Expansion Capital Program - repair, replacement and upgrade of existing process equipment and infrastructure (3) Blue Plains Plant Capital - Arlington County's share of capital costs for Blue Plains Facility

Plant Expansion Capital Program. The ongoing expansion capital program is currently embodied in the Master Plan 2001 Update, which addresses future capacity and regulatory requirements. Voters approved $12.3 million in bond funding in November 2002 for the program's first year of program management and design engineering costs. Of the total $3.2 million requested, $1.7 million is the appropriation of reimbursement revenue from the County's three inter-jurisdictional partners' pro-rata share of the capital costs.

Plant Non-expansion Capital Program. The non-expansion capital program provides for the annual repair, replacement and upgrade of current equipment and infrastructure at the Plant and lift stations. Major program components include refurbishing or replacing equipment to prevent premature failure, infrastructure improvements and automating treatment processes to increase operational efficiency, reliability, and redundancy. Non-expansion capital, in conjunction with daily plant operations and the ongoing expansion capital program, ensures continued operations and compliance with the Virginia Pollution Discharge Elimination System (VPDES) Permit. The program is completely funded through the Utilities Fund with no General Fund impact. Of the total $3.2 million requested, $1.6 million is for the annual plant non-expansion capital program.

The FY 2003-FY 2008 Adopted CIP's FY 2004 PAYG budget for Plant Non-Expansion Capital is $1.3 million. Since the time of that submission, additional projects were identified that require completion to safeguard plant operations regarding wet weather management, failing infrastructure in the primary clarifiers and the failed gravity filter clear well pumps. These additional needs resulted in a net increase of $0.3 million.

The Plant's management team is pursuing the Arlington County vision of becoming a model wastewater treatment facility. This required a shift in the management paradigm from reactive maintenance to proactive maintenance. Therefore, maintenance expenditures in both the operating and non-expansion capital budgets will increase. A model wastewater treatment facility has a proactive maintenance program that includes preventive maintenance inspections and predictive maintenance/planned equipment overhauls to minimize the risk of premature equipment failure. Proactive maintenance includes failure analysis, maintenance planning, effective preventive maintenance, employee development and the use of performance measures.

Blue Plains Plant Capital. The District of Columbia Water and Sewer Authority Blue Plains Plant processes a portion of Arlington County's sewage after transmission through Fairfax County mains. The Water Pollution Control Division capital program funds Arlington's annual payment through Fairfax County to the Blue Plains Plant for capital improvements. Payment is due under the terms of the October 3, 1994 Sewage Conveyance, Treatment, and Disposal Agreement with Fairfax County. Payment is made through the Utilities Fund PAYG process and has no impact on the General Fund.

The County's FY 2004 capital contribution for the Blue Plains Plant Capital program of $564,000 is not included in the proposed funding request. The County's prior year PAYG funding for a large capital upgrade at the Blue Plains Plant has been deferred for several years and the FY 2004 contribution will be funded out of previously appropriated Utility PAYG funds.

• Fiscal Impact 1 - Capital maintenance, replacement or upgrade program – no increase to FY 2004 operating costs.

System Non-Expansion Capital $3,161,000

Projects that do not provide system expansion are not eligible for hook-up fee funding. The funding for these projects comes from a transfer from the Utilities Operating Fund, which is an enterprise fund. The revenues for this enterprise fund are derived primarily from water/sewer rates (based on consumption), water service connection fees, and other fees for services.

The following projects and programs are planned to address water main problems:

• Funding for the replacement of aging undersized mains under George Mason Drive, Columbia Pike to Four Mile Drive ($400,000).

• Funding for design and replacement of severely deteriorated mains under 19^th Street South, S. Randolph Street to S. Quincy Street ($100,000).

In addition, this funding continues four ongoing capital maintenance programs:

• Four-inch and smaller water main replacement program ($125,000).

• Cleaning and Re-lining projects ($650,000).

• Large diameter water main rehabilitation ($300,000).

• Washington Aqueduct capital annual payment ($1,586,000) for capital improvements to their infrastructure. The County pays approximately 16% share for this regional facility.

• Fiscal Impact 1 - Capital maintenance, replacement or upgrade program – no increase to FY 2004 operating costs.

TOTAL UTILITIES BUDGET $12,586,376