2014 PNCWA Conference Utilizing an Industrial Incentive Policy to Achieve Nampa’s Strategic Goals October 28 | 2014 Matthew Gregg, P.E. 208.389.7717 mgrgg@BrwnCald.com

Outline Background Industrial Incentive Policy Capacity Optimization Fee Results and Next Steps Brown and Caldwell | 2014 PNCWA Conference

Background

City of Nampa, ID 83,557 residents 2nd largest city in Idaho Recently adopted Strategic Plan to help City achieve strategic goals Brown and Caldwell | 2014 PNCWA Conference

Nampa’s Strategic Goals Economic development identified as top priority for the City of Nampa How can Public Works or Wastewater Program help or hurt City’s strategic goals? Wastewater system is the City’s single, largest asset Brown and Caldwell | 2014 PNCWA Conference

Nampa Wastewater Program City expecting renewed NPDES permit with stringent discharge limits Total phosphorus Expected Limit: 70 µg/L Current discharge: 5 – 6 mg/L Temperature Expected Limit: 19 ºC for July – August Current discharge: 23 – 24ºC City implemented Wastewater Program to manage implementation of upgrades necessary to meet new permit limits Brown and Caldwell | 2014 PNCWA Conference

Brown and Caldwell | 2014 PNCWA Conference

The $150M Decision Brown and Caldwell | 2014 PNCWA Conference

Finding the Best Fit for Nampa Economic Development User Rates Capital and O&M Costs Technical Regulatory Public Outreach Sustainability Bond Rating Nampa has a unique “bar code” that defines its best fit solution Brown and Caldwell | 2014 PNCWA Conference

Potential Rate Impacts Need typical rates Brown and Caldwell | 2014 PNCWA Conference

Industrial Incentive Policy

Nampa’s Industrial Customers Brown and Caldwell | 2014 PNCWA Conference

Industrial Working Group Industrial customer goals Distribute cost of necessary upgrades equitably to users Provide certainty in sewer rates and connection fees Provide the ability to optimize their operations to suit their business interests City’s Wastewater Program Management team worked with industrial customers to develop Industrial Incentive Policy Brown and Caldwell | 2014 PNCWA Conference

Industrial Incentive Policy Goals The industrial incentive policy should be complementary with Nampa’s economic development strategy The incentive policy should provide real value for industrial development and existing industry expansion The financial impact of the implementation of the incentive policies must balance costs and benefits to prevent the degradation of the financial integrity of the Wastewater Enterprise Fund Brown and Caldwell | 2014 PNCWA Conference

Industrial Incentive Policy Provisions of the Industrial Incentive Policy Inter-customer capacity transfers Options for acquiring capacity Capacity Optimization Fee Customers required to show economic development impacts to use policy provisions Brown and Caldwell | 2014 PNCWA Conference

Options for Capacity Acquisition Loan of Capacity Lease to Purchase Amortized Purchase of Capacity Duration Up to 2 years Up to 5 years Up to 10 years Interest Costs No interest cost Set through negotiations with City Council City’s Ability to Recall Capacity Full recall of capacity Recall of unpaid capacity No recall of capacity Certainty for Industry Capacity retention is unpredictable to industry Only purchased capacity retention is predictable Capacity retention is predictable Additional Requirements Industry must meet requirements for economic development benefit Brown and Caldwell | 2014 PNCWA Conference

Capacity Optimization Fee

Used vs. Allocated Industrial Capacity 85% Planning Threshold Brown and Caldwell | 2014 PNCWA Conference

Real Value in Unused Industrial Capacity Constituent Plant Capacity Unused Industrial Capacity Value in Unused Industrial Capacitya Flow (mgd) 18.0 1.04 $5,039,364 BOD (ppd) 54,625 6,859 $2,627,019 TSS (ppd) 46,650 7,357 $4,171,643 TKN (ppd) 6,980 472 $1,387,908 TP (ppd) 1,397 220 $4,238,452 TOTAL VALUE $182,219,175 -- $17,464,386 Brown and Caldwell | 2014 PNCWA Conference

Capacity Optimization Fee Optimal efficiency is reached when available capacity is fully utilized Full utilization occurs at 85% of total capacity Lowest overall cost of operation Minimizes impacts of rate increases on customers City bears a ‘make ready’ cost for allocated industrial capacity that is not used Brown and Caldwell | 2014 PNCWA Conference

Capacity Optimization Fee How is a new fee an incentive? Unused industrial capacity increases costs for all other system users Reduced available capacity increases connection fees Economic development potential limited by capacity Goal: Reduce unused allocated industrial capacity to more closely align with used capacity Brown and Caldwell | 2014 PNCWA Conference

Capacity Optimization Fee PERMITTED CAPACITY CAPACITY SUBJECT TO CAPACITY OPTIMIZATION FEE CONSTITUENT LOADING 15% HIGHEST USAGE LAST 12 MONTHS ACTUAL CONSTITUENT USAGE TIME Brown and Caldwell | 2014 PNCWA Conference

Capacity Optimization Fee Constituent Industrial Usage Rate Capacity Optimization Fee Rate Flow (mgd) $2,264.05 $444.67 BOD (ppd) $0.198 $0.044 TSS (ppd) $0.160 $0.036 TKN (ppd) $1.384 $0.329 TP (ppd) $0.146 $0.076 Brown and Caldwell | 2014 PNCWA Conference

Incentivizing Economic Development Flexibility in purchasing terms spreads out capital costs for industries Capacity Optimization Fee and secondary capacity market allows method for industrial customers to optimize operational costs Existing customers incentivized to find new users for existing capacity Brown and Caldwell | 2014 PNCWA Conference

Results and Next Steps

Industrial Incentive Policy Timeline City Council adopted policy on September 11, 2012 Effective October 1, 2013 Capacity Optimization Fee effective October 1, 2014 Brown and Caldwell | 2014 PNCWA Conference

FY14 Capacity Optimization Fee Projections Customer Projected FY14 Capacity Optimization Fee Industry #1 $106,896 Industry #2 $40,167 Industry #3 $10,257 Industry #4 $25,352 Industry #5 $39,450 Industry #6 $53,188 TOTAL $275,310 Brown and Caldwell | 2014 PNCWA Conference

Ex. Impact of No Discharge Constituent Permitted Capacity Projected Capacity Optimization Fee No Discharge Capacity Optimization Fee Flow (mgd) 1.10 $0 $178,535 BOD (ppd) 12,800 $9,116 $205,568 TSS (ppd) 9,900 $29,428 $130,086 TKN (ppd) 1,050 $126,089 TP (ppd) 400 $1,622 $11,096 TOTAL -- $40,167 $651,374 Simplot example Brown and Caldwell | 2014 PNCWA Conference

Industrial Incentive Policy Results Policy serves as an economic development tool for the City Used in nearly all industrial site visits since adoption Eliminates a disincentive for potential customers One more way Public Works can contribute to the Strategic Plan of the community Brown and Caldwell | 2014 PNCWA Conference

Acknowledgements City of Nampa Industrial Working Group Steve Burgos – City of Boise Bill Jarocki – Voltaic Solutions Rosemary Curtin and Kate Nice – RBCI John Ghilarducci and Nihat Dogan – FCS Group Matthew Johnson – White Peterson, Attorneys at Law Brown and Caldwell | 2014 PNCWA Conference

Questions? Please use this as the closing slide