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HomeMy WebLinkAbout09.b EDB Proposed Financial & CIP Policy EXECUTIVE SUMMARY AGENDA ITEM: Proposed Financial Performance Management and Capital Improvement Program (CIP) Performance Management Policies for Fiscal Year(FY) 2026/2027 Date: May 14, 2026 BACKGROUND: CCUA is preparing for rapid growth, aging infrastructure, and increasing construction and borrowing costs. The proposed Financial Performance Management and CIP Performance Management Policies set clear, industry-standard targets that support long-term planning, rate stability, and responsible debt management. These policies strengthen CCUA's financial position and enable the organization to proactively manage growth and infrastructure needs. Key elements include: • Setting financial performance targets for debt, reserves, and liquidity. • Strengthening Renewal & Replacement, self-insurance, and rate stabilization funding. • Aligning CIP planning with growth forecasts and asset lifecycle needs. • Enhancing transparency through consistent financial and CIP reporting. If approved, these policies will take effect October 1, 2026, supporting the FY 2026/2027 budget and positioning CCUA to responsibly manage growth, maintain service reliability, and safeguard financial health. RECOMMENDATION: Staff respectfully requests the Board of Supervisors approval to execute the Financial Performance Management and Capital Improvement Program Performance Management Policies on October 6, 2026, effective on October 1, 2026 for FY 2026/2027. ATTACHMENTS: Draft Financial Performance Management Policy Draft Resolution 2026/2027-04 Draft Capital Improvement Program Performance Management Policy Draft Resolution 2026/2027-05 Presentation //JDJ(Author) //AE(Review) //JDJ(Final) 0,0 COU,\,,` �fl s4YAUTto* POLICY & PROCEDURES Financial Performance Management Policy Effective Date: October 1, 2026 Revision Date: N/A Section 1. Purpose 1.1. Clay County Utility Authority(the Authority) intends to maintain sustainable financial management and performance of the utility. To achieve this purpose, the Authority's Management defines within this policy the Financial Performance Management Measures they shall report to the Board of Supervisors to comply with the adopted Financial Management Resolution No. 2026/2027-04. Section 2. Policy 2.1. The Authority establishes with this policy reasonable and sustainable Financial Performance Management Measures to guide budgeting, operational decision making, performance, and reporting. Section 3. Goals and Objectives 3.1. The Authority's Management intends to lead the utility by sustainably and responsibly managing to achieve and maintain specific Financial Performance Management Measures. In achieving and maintaining these measures, the Authority will accomplish the objectives listed below. 3.1.1. Use industry accepted measures to monitor and report on the Authority's financial performance. 3.1.2. Establish and/or maintain sufficiently high bond and/or credit ratings to assure access to affordable credit and low borrowing costs. 3.1.3. Guide the Authority's Board of Supervisors and leadership regarding debt management. 3.1.4. Guide the Authority leadership and management regarding expected financial budgeting, performance, and reporting. 3.1.5. Establish appropriate levels of operational funding, contingencies, and reserves for emergency or extraordinary expenditures. 3.1.6. Establish appropriate revenue and debt ratios to maintain reasonable and competitive rates, fees, and charges to all customer classes. 3.1.7. Establish Financial Performance Management Measures the Senior Leadership Team shall report to the Board of Supervisors on a quarterly and annual basis. 3.1.8. Maintain flexibility to address future operational, capital, and financial needs of the utility. Section 4. Definitions 4.1. Bond Resolution: The Authority's Resolution Number 1993/1994-27 Utilities System Revenue Bond Resolution. Page 1 of 6 Financial Performance Management Policy 4.2. Budget: The annual operating and capital budgets prepared by the Authority's Management and presented to the Board of Supervisors to set the Authority Service and Capacity Rates, Fees, and Charges. 4.3. Capacity Fees: The fees charged by the Authority to new residential, commercial, and industrial developments to reimburse the Authority for the costs to build the water, wastewater, and reclaimed water treatment plant capital infrastructure to serve the respective developments on a per Equivalent Residential Connection (ERC) basis. Refer to the Authority's annual Rate Resolution for the specific adopted definition. 4.4. Capital Assets: The land and fixed assets (infrastructure). 4.5. Capital Improvements: The improvement of land and fixed assets to deliver water, wastewater, and reclaimed water services. 4.6. Capital Improvement Program (CIP): the Authority's program identifying, planning, budgeting, and reporting on CIP projects and their respective performance related to their scope, schedule, and budget. 4.7. CIP Budget:the sum of all the individual CIP project budgets along with a Management Reserve amount in either a single fiscal year, five (5) year, or ten (10) year period. 4.8. CIP Management Reserve: The funding identified within the CIP to serve as a final reserve contingency fund should an individual project contingency be exhausted. 4.9. Contingency: Budgeted funds intended for unexpected or unforeseen operational expenditures during a fiscal year or within the development of a CIP project. 4.10. Debt: An obligation resulting from the borrowing of money. Debt shall include bonds, notes, loans, and capital leases. 4.11. Debt Coverage Ratio: Measurement of cash flow to pay short-term debt obligations. 4.12. Debt Ratio: Measurement of total liabilities to total assets. 4.13. Debt Service:Funding needed to pay the required principal and interest of a loan during a given period. 4.14. Equivalent Residential Connection(ERC): The representation of water and wastewater demands for an equivalent residential home connecting to the utility systems operated and maintained by the Authority. Refer to the Authority's latest edition of the adopted Service Availability policy for the current water, wastewater, and reclaimed demands that make-up the ERC definition. 4.15. Fees: The amount charged by the Authority for specific services provided to customers. Refer to the latest edition of the Authority's adopted Service Availability Policy for a full list of fees. 4.16. Gross Revenue: The total dollar amount from the sales of water, wastewater, and reclaimed water services, including miscellaneous income, through application of the Authority's rates, fees, and charges described in the annual adopted Rate Resolution. 4.17. Net Debt Service: The annual amount of money required to pay or to be set aside for the payment of principle and interest on the outstanding debt less 100% of the Debt Service paid by funds not included as pledged revenues. 4.18. Operating Income: Operating revenue minus operational expenses. 4.19. Operations Expenses: Expenses from operations incurred to operate and maintain the Authority's utility systems to deliver services to customers. Page 2 of 6 Financial Performance Management Policy 4.20. Operating Ratio: Comparison of Total Operations and Maintenance Costs against Total Operating Revenue. 4.21. Operating Revenues: Revenues generated from the sale and delivery of water, wastewater, and reclaimed water services to customers plus miscellaneous income. 4.22. Rate(s) or Service Rates: The rates the Authority charges customers for the delivery of water, wastewater, and reclaimed water services as defined in the annual Rate Resolution adopted by the Board of Supervisors. 4.23. Rate Stabilization Fund: An annual fund set aside each fiscal year to mitigate spikes in rates and smooth forecasted Rate increases. 4.24. Rate Resolution: The Authority's annual resolution approved by the Board of Supervisors setting rates, fees, and charges. 4.25. Self-Insurance Fund: An annual fund set aside to insure against unexpected loss or damage to property or equipment. Section 5. Forecasting 5.1. The Authority shall maintain forecasts of population growth looking forward with one (1), five (5), ten(10), fifteen(15), and twenty (20)year intervals. 5.1.1. The Authority shall maintain consistent population growth forecasts between the operating and CIP budgeting processes. 5.2. The Authority shall consider information from the Authority's pace of meter installations, Developer Agreements, Master Utility Agreements, Development Services inquiries as well as publicly available information from available from Clay County's Building Department, the University of Florida's Bureau of Economic and Business Research(BEBR)and the United States Census Bureau in developing forecast models. 5.3. The Authority Management will maintain a five(5)year forecast of cash flows for both operational and CIP revenues and expenditures. Section 6. Operational Budgeting 6.1. The Authority's Management shall prepare and present to the Board of Supervisors an annual budget based upon estimated operational costs in accordance with the Authority's enabling legislation, Chapter 94-491, Laws of Florida, Special Acts of 1994 (Special Act), which is duly recorded for public access and reference at OR BK 1524, PG 1798, current public records of Clay County, Florida. 6.2. Within the Operating expenses, the Authority's Management shall include an operational contingency of roughly 5% of the operating expenses. Management shall base the contingency upon the information available when the budget is developed. 6.3. The Authority Management will aim to maintain 180 days of unrestricted cash on hand to maintain operations in case of extraordinary emergencies or events. 6.3.1. Should the days of unrestricted cash on hand fall below the stated target, Management shall inform the Board of Supervisors for those 30 calendar days of such occurrence along with a plan to bring the days of unrestricted cash on hand back to or above the target. Section 7. Departmental Capital Page 3 of 6 Financial Performance Management Policy 7.1. The Department Capital Budget shall include a contingency of minimum 5% at the time the budget is established. Section 8. Capital Improvement Program(CIP) 8.1. The Authority shall establish a CIP budget for the capital projects planned to commence in a fiscal year. 8.2. The Authority shall establish and maintain a CIP with five (5) fiscal years of planned capital projects with a ten (10) year list of project needs. 8.2.1. The Authority's Management shall clearly identify whether the planned projects will address system expansion with new infrastructure or renewal and replacement of existing infrastructure. 8.2.2. Management shall forecast revenues over the planning horizons to inform the Board of Supervisors on rates, fees, and charges to adequately fund the CIP. 8.3. The Authority shall establish a separate policy governing the implementation, execution, and reporting of the CIP. Section 9. Inflation Indexing using the Producer Price Index (PPI), Consumer Price Index (CPI), and other inflationary measures. 9.1. The Authority recognizes the need to maintain purchasing power over the course of time. To address this issue, The Authority's Management shall consider changes in the PPI and CPI as published by the United States Bureau of Labor Statistics when preparing budgets to establish rates, fees, and charges. 9.2. The Authority's Management may consider other inflationary measures in the preparation of budgets to establish rates, fees, and charges so long as the source of such inflationary measures are from documented and standardized source related to the utility or associated industry. Section 10. Capital Reserve for Renewal and Replacement of Capital Infrastructure 10.1. Management will in the annual operating budget maintain an additional Capital Reserve beyond the Authority's Bond Resolutions Requirements (Section 6) to fund CIP Renewal and Replacement Projects. 10.1.1. At a minimum, management will use 5% of the prior gross water, wastewater, and reclaimed water service revenue, at the time of the calculation, in addition to the Bond Resolution Requirements to fund CIP renewal and replacement projects of existing infrastructure. 10.2. The Authority's Management will aim to address Renewal and Replacement CIP through the planned Bond Resolution and Capital Reserve funding sources. Should the Bond Resolution and Capital Reserve funding sources be insufficient in a given fiscal year, the Authority's Management shall prepare a plan to address the CIP renewal and replacement funding needs on an average pay-go basis over time (five (5) year basis) with the objective of maintaining funding sources within reasonable rates, fees, and charges comparable to other utilities within the region. Section 11. Self-Insurance Fund 11.1. The Authority may elect to expand the self-insurance fund to minimize the annual expenditure for property and inland marine insurance policies. If the Authority elects to expand the self-insurance fund, Management shall prepare recommendations for consideration by the Board of Supervisors to establish the parameters itemized below. Page 4 of 6 Financial Performance Management Policy 11.1.1. Any expansion of the Self-Insurance Fund shall comply with Section 5.08 of the Authority's Bond Resolution. 11.1.2. The Authority's Management shall engage an insurance consultant to evaluate risks and recommend self-insurance amounts and insurance coverages. 11.1.2.1. The Authority's Management shall provide the recommendations of the insurance consultant to the Board of Supervisors for consideration. 11.1.3. Any Self-Insurance Funds shall be held in accounts to maintain liquidity and preserve the accumulated funds. 11.2. In the event of a declared emergency, natural disaster, malevolent act, or other type of unforeseen catastrophe warranting the use of monies from the Self-Insurance Fund, the Authority Management shall request authorization from the Board of Supervisors for the use of Self-Insurance Funds prior to use. Section 12. Rate Stabilization Fund 12.1. The Authority may elect to set aside funds on an annual basis to mitigate significant future changes in potable water, wastewater, and reclaimed water rates, fees, and charges. If the Authority elects to establish a Rate Stabilization Fund, Management shall proceed in accordance with Section 4.09 of the Authority's Bond Resolution. 12.1.1. The initial maximum value the Rate Stabilization Fund may accumulate is $3,000,000 in a given fiscal year. 12.1.1.1. The Authority shall evaluate the maximum value of the Rate Stabilization Fund during the budget process each fiscal year. The Authority's Management may propose changes to the maximum value of the Rate Stabilization Fund for consideration by the Board of Supervisors. 12.1.2. In fiscal years when a proposed increase to the Authority's rates, fees, and charges, could exceed the CPI plus three percent (CPI+3%), the Board of Supervisors may approve the use of the Rate Stabilization Fund to maintain changes within CPI plus two percent (CPI+2%). 12.1.2.1. The Authority's Management will propose the use of the Rate Stabilization Fund to minimize the impact of a proposed rate increase during the annual operating budget preparation and review process. 12.1.2.2. The Authority's use of the amount from the Rate Stabilization Fund to minimize the impact of a proposed rate increase shall be disclosed in the advertisements of the annual operating budget and proposed rates, fees, and charges. Section 13. Financial Performance and Debt Management 13.1. Management shall monitor and report financial performance and debt ratios quarterly and through the annual budget process as well as at the time of each debt issuance with a goal to maintain liquidity and stability, to meet the following policy goals: 13.1.1. Maintain liquidity with an average 180 Days of Cash on Hand, 13.1.1.1. The average Days of Cash on Hand shall be calculated each calendar month, Undesignated Cash 13.1.1.2. Days of Cash on Hand = Operating Expenses per Day 13.1.2. Maintain debt burden with respect to capital assets by maintaining a debt ratio of 40% or less, Page 5 of 6 Financial Performance Management Policy 13.1.2.1. Debt Ratio (%) = Total Liabilities Total Assets 13.1.3. Maintain a debt service coverage at 1.5 or greater as a percentage of Net Revenue Coverage. 13.1.3.1. Debt Service Coverage Ratio — Total Operating Revenue—Total O&M Costs Total Debt Service 13.1.4. Maintain Current Ratio of 2.0 or greater. 13.1.4.1. Current Ratio = Current Assets Current Liabilities Section 14. Reporting Requirements 14.1. Management shall provide the Board of Supervisors financial statements and reports on a quarterly basis. Section 15. Rate Studies 15.1. The Authority shall engage a professional consultant with demonstrated expertise in evaluating utility rates, fees, and charges at a minimum of once every five (5) years. 15.2. The professional consultant shall evaluate the Authority's rates, fees, and charges to confirm costs are covered and policy objectives are being achieved. 15.3. The professional consultant shall provide the Authority's Board of Supervisors a briefing upon completion of the evaluation of the utility's rates, fees, and charges. PROCEDURES & RESPONSIBILITIES To. CHANGE LOG Date of Change Description of Change Page 6 of 6 CLAY COUNTY UTILITY AUTHORITY RESOLUTION NO. 2026/2027-04 A RESOLUTION OF CLAY COUNTY UTILITY AUTHORITY, AN INDEPENDENT SPECIAL DISTRICT OF THE STATE OF FLORIDA ("AUTHORITY"), INCORPORATING FINDINGS; ADOPTING THE AUTHORITY'S FINANCIAL PERFORMANCE MANAGEMENT POLICY; PROVIDING FOR CONFLICTS, SEVERABILITY, AND EFFECTIVE DATE. WHEREAS, the AUTHORITY intends to maintain sustainable financial management and performance of the utility; and WHEREAS, the AUTHORITY wishes to adopt its "Financial Performance Management Policy" (herein so called) in the form as attached hereto as Exhibit "A" and hereby incorporated by this reference, establishing reasonable and sustainable Financial Performance Management Measures to guide budgeting, operational decision making, performance, and reporting. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE AUTHORITY AS FOLLOWS: SECTION I. The foregoing findings are incorporated herein by reference and made a part hereof. SECTION II. The AUTHORITY hereby adopts the Financial Performance Management Policy attached hereto as Exhibit "A" as its official Financial Performance Management Policy relating to all of the subject matter set forth therein. SECTION III. All other resolutions or part of resolutions in conflict with any of the provisions of this Resolution are hereby repealed. SECTION IV. If any section or portion of a section of this Resolution proves to be invalid, unlawful, or unconstitutional, it shall not be held to invalidate or impair the validity, force, or effect of any other section or part of this Resolution. SECTION V. This Resolution shall become effective immediately upon its passage and adoption. CCUA Resolution No. 2026/2027-04 DULY ADOPTED by the Board of Supervisors, Clay County Utility Authority, on this 6th day of October, 2026 effective as of October 1, 2026. CLAY COUNTY UTILITY AUTHORITY, BY ITS BOARD OF SUPERVISORS By: Chairman ATTEST: APPROVED AS TO FORM AND LEGALITY: By: By: Janice Loudermilk, Secretary Grady H. Williams, Jr., LL.M., Clay County Utility Authority General Counsel (Seal) CCUA Resolution No. 2026/2027-04 0,0 COU,\,,` �fl s4YAUTto* POLICY & PROCEDURES Capital Improvement Program Performance Management Policy Effective Date: October 1, 2026 Revision Date: N/A Section 1. Purpose 1.1. Clay County Utility Authority(the Authority)intends to sustain a Capital Improvement Program(CIP)to maintain the operational and financial performance of the utility. To achieve this purpose, the Authority's Management defines within this policy the CIP Performance Management Measures they shall report to the Board of Supervisors to comply with the adopted CIP Performance Management Resolution No. 2026/2027-05 Section 2. Policy 2.1. The Authority establishes with this policy reasonable and sustainable CIP Performance Management Measures to guide planning, budgeting, decision making, performance, and reporting. Section 3. Goals and Objectives 3.1. The Authority's Management intends to lead the utility in sustainably and responsibly achieving and maintaining specific CIP Performance Management Measures. In achieving and maintaining these measures, the Authority will accomplish the objectives listed below. 3.1.1. Use industry accepted measures to monitor and report on the Authority CIP performance. 3.1.2. Establish and/or maintain sufficiently high bond and/or credit ratings to assure access to affordable credit and low borrowing costs. 3.1.3. Guide the Authority's Board of Supervisors and leadership regarding debt management. 3.1.4. Guide the Authority leadership and management regarding expected CIP budgeting, performance, and reporting. 3.1.5. Establish appropriate levels of CIP funding, contingencies, and reserves for project expenditures. 3.1.6. Establish appropriate levels of CIP funding for renewal and replacement expenditures as well as forecast system expansions. 3.1.7. Establish expectations for processes and performance reporting of projects within the CIP. 3.1.8. Establish CIP Performance Management Measures, the Authority's management shall report to the Board of Supervisors on an established monthly, quarterly, or annual basis. 3.1.9. Maintain flexibility to address capital and financial needs of the utility. Section 4. Definitions Page 1 of 7 Capital Improvement Program Management Policy 4.1. Asset Management System(AMS): The system the Authority uses to track data related to the physical plant and field infrastructure to deliver potable water, wastewater, and reclaimed water services. 4.2. Capital Improvements: The improvement of land and fixed assets to deliver water, wastewater, and reclaimed water services. 4.3. Capital Improvement Program (CIP): the Authority's five-year program identifying, planning, budgeting, and reporting on CIP projects and their respective performance related to their scope, schedule, and budget. 4.4. Capital Project Review Committee(CPRC): A committee of Authority staff comprised of the Executive Director, Chief Engineer, Chief Operations Officer, Chief Financial Officer, Assistant Chief Engineer, and the Assistant Chief Operations Officer. The CPRC reviews the initiation and performance of projects listed in the CIP. 4.5. CIP Budget:the sum of all the individual CIP project budgets along with a Management Reserve amount in either a single fiscal year or total over a five (5) year period. 4.6. Contingency: Budgeted funds intended for unexpected or unforeseen expenditures during a fiscal year or within the development of a CIP project. 4.7. Equivalent Residential Connection (ERC): The representation of water, wastewater, and reclaimed water demands for an equivalent residential home connecting to the utility systems operated and maintained by the Authority. Refer to the Authority's latest edition of the adopted Service Availability policy for the current water, wastewater, and reclaimed demands that make-up the ERC definition. 4.8. Management Reserve: The funding identified within the CIP to serve as a contingency fund should individually project contingencies be exhausted. 4.9. Project Need Identification: When Authority staff identify the need for a CIP Project to address renewal, rehabilitation, or replacement of existing infrastructure or the expansion of Authority infrastructure to meet service availability demands of the community. 4.10. Project Concept Development: When Authority staff begin to develop project concepts or scope of work to address the needs stated in the Project Need Identification phase of a CIP project. 4.11. Project Basis of Design: The phase of a CIP project when Authority staff prepare either a technical memorandum or report stating the design objectives as well as performance and regulatory requirements. 4.12. Project Budget: The total cost of all planned expenses for a single CIP project to include Authority staff time and Professional Consultants performing geotechnical explorations and testing, surveying, engineering design, construction inspection or administrative services, as well as Contractors performing the physical construction of capital infrastructure. 4.13. Project Cash Flows: The estimated timing of CIP project expenditures over time whether monthly or fiscal year timeframes. 4.14. Project Design: The phase of a CIP project when either Authority staff or consultant prepares a technical design including drawings, calculations, specifications, and permit applications for construction of capital infrastructure. Page 2 of 7 Capital Improvement Program Management Policy 4.15. Project Procurement: The phase of a CIP project after the completion of the Project Design to engage a responsive and qualified contractor to construct the designed capital infrastructure. 4.16. Project Construction:The phase of a CIP project when a contractor under a construction contract physically builds capital infrastructure. 4.17. Project Close-out: The end of a CIP project occurs when Certification of Completion of Construction (CoCs) are filed with regulatory agencies, the constructed assets are accepted by the Authority and placed into operation, and Authority staff files final project documents to complete the project process removing the project from the CIP and placing the assets within the financial system. 4.18. Project Manager / Representative: The individual of the Authority's staff responsible for planning, executing, and closing projects. Section 5. Forecasting 5.1. The Authority's Development Services shall maintain forecasts of population growth looking forward with one (1), five (5), ten (10), fifteen (15), and twenty (20) year intervals. 5.1.1. The Authority shall update forecasts of population growth at least annually. 5.2. The Authority's population growth forecast looking forward one (1) year shall be consistent with the growth in customer accounts used to set the annual operating budget. 5.3. The Authority shall consider information from the Authority's pace of meter installations, Developer Agreements, Master Utility Agreements, Development Services inquiries as well as publicly available information from Clay County's Building Department, the University of Florida's Bureau of Economic and Business Research(BEBR), and the United States Census Bureau in developing forecast models. 5.4. The Authority shall maintain records of average and peak potable water demands from the Water Treatment Plants (WTP), wastewater flows to the Water Reclamation Facilities (WRFs), and reclaimed water demands from the Reclaimed Water Storage Facilities. 5.4.1. The Authority staff will base forecasts of customer potable water demands, wastewater flows, and reclaimed water demands on rolling five (5) year averages along with standard deviations and variances. 5.4.1.1. The forecasts will provide potable water demands, wastewater, flows, and reclaimed water demands in industry standard units such as ERC per Thousand Gallons (kGal.), Million Gallons per Day (MGD), etc. 5.5. The Authority shall use the forecasts of population growth and related potable water demands, wastewater flows, and reclaimed water demands to inform identification of expansion projects within the CIP. Section 6. Asset Management 6.1. The Authority shall maintain an Asset Management System (AMS) of all existing operational potable water,wastewater, and reclaimed water infrastructure. 6.2. The Authority shall use the AMS to inform the CIP regarding the renewal, rehabilitation, and replacement project needs related to existing infrastructure. Page 3 of 7 Capital Improvement Program Management Policy 6.3. The Authority staff must consider the following items to inform planning, scoping, design development, and decision making related to the renewal, rehabilitation, and replacement of existing infrastructure. 6.3.1. Asset Life Cycle 6.3.2. Condition assessments of the asset 6.3.2.1. Repair and maintenance activities on the asset 6.3.3. Risk and consequence of failure analysis of the asset Section 7. CIP Management 7.1. Management shall establish each fiscal year a summary of CIP budgeted projects expected to be advanced during a fiscal year and over a five-year period. 7.2. Management shall also prepare a list of known and anticipated CIP needs for a ten-year period. 7.3. Typical CIP Project Design Development Phases needed to develop a reasonable scope, schedule, and budget. 7.3.1. Need Identification 7.3.2. Concept Development 7.3.3. Basis of Design 7.3.4. Design 7.3.5. Procurement 7.3.6. Construction 7.3.7. Close-out 7.4. CIP Project Budgets 7.4.1. The Authority's Management shall use a standardized and documented process for development of individual CIP project budget when the need for the project has been identified by staff. 7.4.1.1. For projects that span multiple fiscal years, the Authority shall develop the total project budget first then provide information related to planned expenditures within individual fiscal years. 7.4.2. Management shall establish a CIP Engineering Project Number and Financial Job Number when a CIP Project is created at the Project Concept Development Level. 7.4.3. Project budget contingencies: Authority Management shall build budget contingencies within each individual project budget to address levels of accuracy in the cost estimating and the uncertainty of developing information. Individual project budget contingencies will align with the recommended contingencies based upon project development phase listed below. 7.4.3.1. Project Concept Development: 50% 7.4.3.2. Project Basis of Design: 40% 7.4.3.3. Project Design: 30% 7.4.3.4. Project Procurement: 10% 7.4.3.5. Project Construction: 10% Page 4 of 7 Capital Improvement Program Management Policy 7.4.3.6. Changes in the project contingencies as a project develops will not require formal change management process, so long as the project's scope, schedule, and total budget do not change. 7.4.3.6.1. Changes in a project's scope, schedule, and/or total project budget require a formal documented changed management process. 7.4.4. Change Management: The Authority's Management shall use formal processes for documenting changes in individual CIP project scope, schedules, and budgets. 7.4.4.1. The Authority's Project Manager shall be responsible for ensuring all project documentation is kept within the project files. 7.4.4.2. CIP Project Change Orders shall be processed consistently with the Authority's current Procurement Policy and contract requirements. 7.4.4.3. Use of the Management Reserve: The Authority intends for the Management Reserve (Section 8)to serve as a funding source of last resort for CIP projects. Should a CIP project experience a projected budget shortfall during the course of a project, the Authority's Project Manager shall initiate the formal Change Management process. 7.4.4.4. The Authority's Project Manager is expected to manage project changes within a reasonable amount of time from when they occur (e.g. 30 days). 7.4.4.4.1. The Authority's prohibits the practice of waiting until the end of a project to execute a single Change Management process to encompass all changes that occurred during a project. 7.4.5. CIP Project Planned Pace of Expenditures (Cash Flow) 7.4.5.1. The Authority's Project Manager shall prepare and maintain an estimated pace of expenditure for each CIP Project. 7.4.5.2. The Authority's Project Manager shall coordinate the CIP project planned pace of expenditure with the Chief Engineer, Chief Financial Officer, and the Executive Director within the CPRC. 7.4.5.2.1. Management shall use the CIP project budgets along with the planned pace of expenditures to inform decisions regarding CIP financing. 7.4.5.3. The CIP planned pace of expenditures shall inform the larger CIP especially considering projects spanning more than one fiscal year. 7.4.5.4. The Chief Engineer shall coordinate with the Chief Financial Officer regarding the planned pace of total CIP expenditure remaining consistent with the forecast cash flows over five (5) years. 7.4.6. CIP Project Close-out 7.4.6.1. The Project Manager shall reconcile the Project Budget with all contracts, Purchase Orders, and Change Orders prior to final completion and acceptance of a CIP Project. 7.4.6.1.1. The Project Manager shall use a documented Change Management process to adjust the Project Budget consistent with the final amounts of all contracts, purchase orders, and Change Orders. Page 5 of 7 Capital Improvement Program Management Policy 7.4.6.1.2. Any surplus funds in a Project Budget shall be transferred into the Management Reserve upon the Project Close-out of the CIP Project by the Chief Financial Officer. 7.4.6.2. Upon the documented final completion and acceptance of a CIP Project,the Authority's Project Manager shall provide the Chief Financial Officer and Risk and Safety Manager a written Notice of Completion and Project Close- out within 30 calendar days of approval of the final payment. 7.4.6.2.1. In the event a CIP Project is planned or designed,but the Authority's Management decides not to construct, the Authority's Project Manager shall provide the Chief Financial Officer a written Notice of Completion and Project Close-out within 30 calendar days of approval of the final payment of the work completed. 7.4.6.2.2. The Chief Financial Officer shall close the CIP Project financial job numbers upon receipt of the Notice of Completion and Project Close-out. 7.4.6.2.3. The Risk and Safety Manager shall notify, in writing, the Authority's Insurance Agent of the CIP Project completion and acceptance placing the constructed assets into operational service. 7.4.6.2.3.1. The Risk and Safety Manager shall confirm with the Insurance Agent the constructed assets are added to the list of insured assets. Section 8. Management Reserve 8.1. Authority Management shall include a Management Reserve each fiscal year of roughly 5% of the sum of the CIP project budgets within the total annual CIP budget. 8.2. The CIP Management Reserve shall not accumulate over time. Section 9. Inflation Indexing using the Consumer Price Index(CPI) 9.1. The Authority recognizes the need to maintain purchasing power over the course of time. To address this issue, The Authority's Management shall consider changes in the PPI and CPI as published by the United States Bureau of Labor Statistics when preparing and updating project budgets. 9.2. The Authority's Management may consider other inflationary measures in the preparation of project budgets so long as the source of such inflationary measures are from documented and standardized source related to the utility or associated industry Section 10. Reporting Requirements and CIP Financial Performance Management Measures (FPMM) 10.1. Management shall provide the Board of Supervisors an annual report by the first meeting in September detailing the CIP project efforts at the beginning of the fiscal year and the work completed by the end of the fiscal year. 10.1.1. If CIP Projects are not initiated as planned,Authority staff shall disclose the reason for the delay and explain in writing any adjustments in CIP scheduling and budgeting. 10.2. Management shall provide the Board of Supervisors quarterly reporting on the progress of the CIP projects. Page 6 of 7 Capital Improvement Program Management Policy 10.2.1. The quarterly reporting shall include the currently approved CIP project budget and schedules along with the elements listed in Section 7 7.3. 10.2.1.1. CIP Project Budget 10.2.1.1.1. The original Board approved project budget 10.2.1.1.2. The number of approved project budget changes/amendments 10.2.1.1.2.1. The dollar ($) value and percentage (%) changed of the approved project budget changes/amendments 10.2.1.1.3. The current Board approved project budget 10.2.1.2. CIP Project Contracts 10.2.1.2.1. The total value of contracts within the approved project budget 10.2.1.2.1.1. The total value invoiced against the approved project contracts 10.2.1.2.1.1.1. The percent (%) complete against the entire project budget including variances ($ value and % complete). 10.2.1.2.1.1.2. The percent (%) complete against the respective contracts including variances ($ value and % complete). 10.2.1.2.1.1.3. The total earned value against the approved project budget (% complete) including variance ($ value). 10.2.1.3. CIP Project Schedules 10.2.1.3.1. Total Project Schedule with Variances (days and% complete) 10.2.1.3.1.1. Contract schedules within the Project with Variances (days and% complete) CHANGE LOG Date of Change Description of Change Page 7 of 7 CLAY COUNTY UTILITY AUTHORITY RESOLUTION NO. 2026/2027-05 A RESOLUTION OF CLAY COUNTY UTILITY AUTHORITY, AN INDEPENDENT SPECIAL DISTRICT OF THE STATE OF FLORIDA ("AUTHORITY"), INCORPORATING FINDINGS; ADOPTING THE AUTHORITY'S CAPITAL IMPROVEMENT PROGRAM PERFORMANCE MANAGEMENT POLICY; PROVIDING FOR CONFLICTS, SEVERABILITY, AND EFFECTIVE DATE. WHEREAS, the AUTHORITY intends to maintain a sustainable Capital Improvement Program("CIP") to maintain the operational and financial performance of the utility; and WHEREAS, the AUTHORITY wishes to adopt its "Capital Improvement Program Performance Management Policy" (herein so called, which may also be referred to as "CIP Performance Management Policy" or simply "CIP Policy") in the form as attached hereto as Exhibit "A" and hereby incorporated by this reference, establishing reasonable and sustainable CIP Performance Management Measures to guide planning, budgeting, decision making, performance, and reporting. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE AUTHORITY AS FOLLOWS: SECTION I. The foregoing findings are incorporated herein by reference and made a part hereof. SECTION II. The AUTHORITY hereby adopts the Capital Improvement Program Performance Management Policy attached hereto as Exhibit "A" as its official Capital Improvement Program Performance Management Policy relating to all of the subject matter set forth therein. SECTION III. All other resolutions or part of resolutions in conflict with any of the provisions of this Resolution are hereby repealed. SECTION IV. If any section or portion of a section of this Resolution proves to be invalid, unlawful, or unconstitutional, it shall not be held to invalidate or impair the validity, force, or effect of any other section or part of this Resolution. SECTION V. This Resolution shall become effective immediately upon its passage and adoption. CCUA Resolution No. 2026/2027-05 DULY ADOPTED by the Board of Supervisors, Clay County Utility Authority, on this 6th day of October, 2026, effective as of October 1, 2026. CLAY COUNTY UTILITY AUTHORITY, BY ITS BOARD OF SUPERVISORS By: Chairman ATTEST: APPROVED AS TO FORM AND LEGALITY: By: By: Janice Loudermilk, Secretary Grady H. Williams, Jr., LL.M., Clay County Utility Authority General Counsel (Seal) CCUA Resolution No. 2026/2027-05 41 - q!� N}�,� -tom_. �i..t�.a J .t�. :n� :..'*.t4F.'''f'. Financial Perfbrmdnce Mañagèment and Capital Improvement Program IF Performance Management PoliciesD•scuss•on . .. • Jeremy D. Johnston, MBA, PE, Executive Director Karen Osborne, MBA, CPA, Chief Financial Officer f Darrell Damrow, PE, Chief Engineer • \ - . Darryl Muse, Chief Operations Officer �\J',N co�� T� 7 Kimberly Richardson, Chief Human Resources .Office ' 0 "UPI May 19, 2026 L PN COON), Introduction T/�111'AUTNOIS —.- • I CCUA is a utility preparing for rapid growth which will ' ' require major expansions and renewal needs. 4 o ie Infrastructure and borrowing costs impact customer 1rates. } ; 1111"%vm It fisit1 �` 1 y� � L Need to align infrastructure and financial forecasting ~� Cr ; a) � • with a longer planning horizon. -�' • ,U 1 , . . .:E •k) , Key objectives: grow responsibly, manage debt, and manage expectations in planning and performance. ' t om• %, oil, . •41, • • . . P d LPN COUNT` GT,� ' �.�� Why CCUA Needs III'A JTNO Financial Management and CIP Policies Enabling Legislation & Bond Resolution: Clear Targets: These provide authority, specifics to how Establishing clear measures and targets will certain funds can be used, and minimum guide the Board of Supervisors and coverage requirements. These documents management in balancing decision also provide for the opportunity for such making related to CIP funding, debt financial tools as a self-insurance and a management, rates. Measures and targets rate stabilization funds. also set clear expectations of performance over time. Purpose of a FnanciaI Management and CIP PoIicie Use industry-accepted measures to monitor and report CEO financial performance. Inen,berte i�ia„ !ng kdd iius1ne.Ss `ITti ts h..I.; game 5,_,S 'ill �' r S rd ���►.deti elct. . h�..lp te ,:���, - p inn Sustain an appropriate high bond and/or credit rating. �;;;t.�„�,,, - teai11I1,ork s„ process :u,'e` aches require ,i,,,. • ...... trust going 1,i: ,�� iot^ V IdCA 1 OtPIW pr part 1(w axaeln . -putting uuuu Provide guidance on debt management. group r.,�,. - -., ..-� unit cou rt g k'cess -sifiv, good research.. .,„ . , lici goal t7n.1 1;ial VIS1°1-1P • ;;:len Orl_ ,,,:g, ,,,pT1 Establish appropriate levels for operational funding, 1:0 w l �g n start i 1 1 a, , contingencies, and reserves. ffelrg.,Dt Maintain fair, sustainable and financially responsible ® rates, fees, and charges for our customers. �Ty .( COU ret.I Risks Avoiding increases to rates, fees, and charges, will result in increased operational risks that can affect the utility's customers long-term. / gi Diminished purchasing power STOPx Deferred maintenance and replacement of assets \. ..../ Reactive failures increase L Negative impact on borrowing power li Ilk. Tin Negative impact on the ability to proactively address growth patterns an er Ahead ill io Potential for public health and safety issues increases 5 Risks Increasing rates, fees, and charges unnecessarily to support growth and development or the connections of existing homes creates issues of fairness to existing customers and operational issues Affordability issues with existing customers / \ I increases STOP Increase in the capacity fees for newly constructed homes and businesses to connect for service Ak Increase possibility of speculative development Ail Danger ils, Increase possibility of stranded assets Ahead 6 US BLS, UF's BEBR. Master Utility Agreements, Developer Agreements, Building Data Permits, and CCUA's AMS Forecasting Model Intervals Models for 1 , 5, 10, 15, and 20 years 68% A 95% 1 CIP and Operating Budget 99'% Financial Cash Flow Expectations Budgets L Performance Measures •la 0 to 20 No. Change in Customer Accounts Fiscal Year 2% 3% 4% 5% 2023-2024 0 0 0 0 2024-2025 1 ,047 1 ,571 2,094 2,618 2025-2026 1 ,068 1 ,618 2,178 2,749 Forecast 2026-2027 1 ,089 1 1 ,666 2,265 2,886 2027-2028 l , 1 1 1 ,716 2,356 3,030 Custom er 2028-2029 1 , 133 1 ,768 2,450 3, 182 Account irCustomer Account Growth Growth 68,000 66,000 64,000 62,000 60,000 58,000 56,000 lk Graphics from 2024 CCUA Rate Study prepared by CDM Smith 54,000 52,000 50,000 2023-2024 2024-2025 2025-2026 2026-2027 2027-2028 2028-2029 -2% -3% -4% -5% 8 Rates, Population Growth, Regulations, and Maintaining Purchasing Power $45 CCUA revenue requirements compared to revenue generated CCUA revenue requirements compared to revenue generated by population growth alone by population growth with rate increases at 5% per year $40 c $35 �'. o • 530 Rebuilding a.) ::: $29 $30 o 5 CC I $25 cu $25 SZ2 C (1) Revenue Gap > = $20 $22 $20 $15 $15 2024 2025 2026 2027 2028 2029 2024 2025 2026 2027 2028 2029 Revenues w/rate increases(5%pop growth) Revenues w/rate increases(4%pop growth) Revenues 5% Pop Growth Revenues 4% Pop Growth Revenues 3% Pop Growth Revenues 2% Pop Growth Revenues w/rate increases(3%pop growth) Revenue w/rate increases(2%pop growth) (Revenue RequremAnt Graphics from 2024 CCUA Rate Study prepared by CDM Smith Actual Customer Account Growth Growth in Customer Accounts 1,800 1,600 c 1400 1,200 — r Ea, o >- 1,000 n U u N "- 800 - a, Z 0 600 — a • 400 Z 200 — 0 09/30/2015 09/30/2016 09/30/2017 09/30/2018 09/30/2019 09/30/2020 09/30/2021 09/30/2022 09/30/2023 09/30/2024 09/30/2025 End of Fiscal Year Adjusted Growth in Water Accounts — Adjusted Growth in Sewer Accounts — Adjusted Growth in Reclaimed Accounts 1 o Graphics from CCUA customer account data i a • - JT ___ Forecasting __ __ _ _ _= _..„ Infrastructure . Consequence of Failure LifecyclesInsignificant Minor Significant Major Severe 1 m2 3 4 5 cu Almost Certain 5 5 10 15 20 111 CO LI- o Likely 4 4 8 12 16 20 a Et Moderate 3 6 9 12 15 CC c Unlikely 2 4 6 8 10 MI a Rare 1 —IM4 5 "an ounce of prevention is worth a pound of cure" ii - Benjamin Franklin Capital Reserve and Renewal and Replacement Fund S CCUA's Bond Resolution Management typically The proposed policy The proposed policy (1993/1994-27) requires budgets additional would use a minimum would require CCUA a minimum of 5% to funds as Capital of 5% from the previous management to submit fund CIP Renewal and Reserve for R&R projects years gross, water, a five (5) year plan Replacement (R&R) because the 5% is wastewater, and when renewal and Projects. insufficient. reclaimed water service replacement does not revenue to supplement meet a pay-go basis. CIP R&R project funding. Financial Performance _ MIN.. Management -- _ -_ .4. • "ail* Inii __ Measures . - -= • - 'reCt ej / Days of Cash on Hand • r Target: 180 Days ,,.• , ir,7C. • r 1r i . i I; 1I ,it ' r ► f 4 4W I e* ENSURES LIQUIDITY .- AND EMERGENCY READINESS 13 Financial Performance Target: 40% or less Management Measures 4 1 ■ CCUA takes on debt Cost recovery to The amount of debt to construct, construct those assets and its payback over rehabilitate, or occurs over time with time determines the replace assets to the Capacity Fees. debt service charge in deliver water, the rates, fees, and wastewater, and charges. reclaimed services to our customer 14 Financial Performance Management Measures Debt Service Coverage Ratio Target: 1 .5 or greater 4 Increases in debt increases the Debt Service Charge. ri \ Increases in the Debt Service Charge likely o - means increases to rates are needed to maintain the Debt Service Coverage Ratio. Maintaining an appropriate Debt Service Coverage Ratio supports positive credit ratings for better interest rates. ( COU^,TJ- ow— $1,400,000 / PROVIDES INTERNAL FUNDING FOR ® UNEXPECTED LOSSES. $1,200,000 $1,000,000 $800,000 $600,000I REDUCES RELIANCE ON EXTERNAL fill 1 INSURANCE. $400,000 $200,000 $0 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Premium $303,262 $361,582 $406,017 $485,511 $1,178,073 $920,554 $934,158 STABILIZES FINANCIAL IMPACTS. Claims Paid $0 $0 $0 $0 $0 $0 $0 it CCUA Property and Inland Marine Policy Premiums Graphics from CCUA expenditure data Lbw COUNT` Mill 11 G,,�4Y A UTNOS Rate Stabilization Fund Supports short-term revenue shortfalls (i.e.; fuel, chemicals and utilities) le ,.. <-„ SMOOTHS RATE OFFSETS REVENUE SUPPORTS INCREASES SHORTFALLS PREDICTABLE RATES C�0 COUft Craw >'!'ry A,-mo� Close-out C I P Construction Project ProcessProcurement Design "what is measured improves" Basis of design - Peter Drucker Concept Need We attempt to quantify thousands of unknowns and decisions with a budget before the design process even starts. Concept: 50% Contingencies Basis of Design: 40% within Design: 30% Project Budgets Procurement: 10% Construction: 10% w As the information improves and decisions are made, the project contingency goes down because uncertainties go down. `SPY COUN)` _ � Project bids vs . Project budgets J J STYA-gto 2.00 1.80 1.80 1.60 1.52 1.40 ill 1.31 1.20 111 1.14 1.00 1.01 1.03 0.80 0.77 0.67 0.71 0.76 0.67 0.64 0.73 0.60 0.40 111 0.20 0.00 ?.• a e • •1/4 � � ` ` �� •eGa Aa a a , 2� ti � � � er � e oa�Qo� �� o he s1/4 ic ,�` � �� %) S �6 cp a N �C, `, ��a 0�y o �e (bp ya '� � �o. O uo a2 J k Q � Q a �, •\-4 'c• ee* .0 2.,\N- • aye 4%� a ``ate •., �`.. ,`o� Q�� a�� �a,� o iryo �9 �``a� teems ,c, � *cc` ,e��o '��•� ���S.a „&-� �\O' oG,`o�y o�sOk S�a`oC �Ga k\ Nsv Qe G �a ��e Project Ratio Bid / Budget Graphic from CCUA engineering project management data CIP Expenditures and Debt $,00,000,000 $90,000,000 $80,000,000 $70,000,000 ti $60,000,000 J a > It. $50,000,000 J o $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 FISCAL YEAR Past Capital Expenditures($) Acquired Debt($) -Average Spend ($) Graphic from CCUA financial and project management data 21 Planned CIP Total Project Values by Fiscal Year $40,000,000 $35,000,000 IIII $30,000,000 6' D $25,000,000 ci > U .0 $20,000,000 0 0 0 U $15,000,000 111 0 0 I- $10,000,000 $5,000,000 $0 2026/2027 2027/2028 2028/2029 2029/2030 2030/2031 2031/2032 2032/2033 2033/2034 2034/2035 2035/2036 Fiscal Year Planned Capital Expenditures ($) — —Targeted Annual Spend ($) This graph includes a 2.5% per year inflation factor for the targeted annual CIP spend. 22 IWRP and Growth Surface Water Additional Treatment for •DSM/Ordinances Reclaimed Additional Augmentation Alternative Supply 20 -and/or- •Indiec} •Regional Recharge Potable Partnerships 18 Reuse 0 - - •FDOT -and/or- Stay the Stormwater Course Augmentation •:ht nal Peters Creek WRF 16 and/«- Shallow -and/or- Aquifer «� •Floridan Supply Expansion: $100M +/— • Aquifer •©. - - - 14 Additional Stay the Course Stay the Supply- Course 2 •Irtlgation CUP i •DSM ProgramsAcquisition f« - - -Surface Reservoir for �0 • •DSMPrograTurf Reduction for Reclaimed Augmentation O• Stay the Course •©• Stay the Course•© Stay the New Development Course Reclaimed Augmentation: g •CUR Reclaimed Optimization •Advanced Meterin for Rclaim $1 OOM /- 8 Infrastructure Augmentation + •On-site Stormwater Reclaimed Augmentation 6 •Shallow Aquifer Supply at Peters Creek •Potable Well/Treatment Capacity Expansion 4 for Lake Asbury and Governor's Park file Water First North Florida Participation: $25M +/- ii 2023 2028 20 2038 2043 B i o s o I i d s Management.. cc,®Is water demand growth tracking higher or lower?If lower demands,stay the course.If higher demands, 7 .�r� then determine supply project feasibility and implement feasible projects. , � ;� $50M /- 23 Current Debt Service Plan lill Proposed Aggregate Debt Service 35 30 25 20 o C II . '— . C 15 r 10 i . Orib Ori OriO Orin 0aP Olb\ OIbl O'bO O'4 O'by Oibb O"; OsbO O'bc OHO Ot. O0 Otf� OD ` ODy Ot,b O0 O1O OtQ OCP O(0\ Oyu Oy1 Oyu O43 ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti 1 1 C r 2015 2015 SRF ■2018 SRF .2019 2024 2025 24 Graphic from PFM July 2025 presentation data Customer Growth and Projected Debt Service Coverage Projected Annual Debt Service Coverage 7 90 H 0 80 I r ii. 70 60 III 50 40 30 20 10 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Operating Cash Flow(current customers) Rate Increase Operating Cash Flow Operating Cash Flow(future customers) Monthly Charge for New Connections Investment Earnings Total Debt Service 25 Graphic from PFM July 2025 presentation data Maintaining Purchasing Power CCUA Rate's are impacted by items with high cost with price volatility that CCUA Rate Changes vs. CPI may not be truly reflected in the CPI. 9.00%°• Electric and Fuel (gas and diesel) 8.00% • Chemicals 7.00%• Regulatory costs such as lead and copper investigations 6 00% • Repair costs and construction 500% services a 4.00% • Health Insurance w 3.00% 2 a) 2.00% „00.0 — Supply chain challenges can add to 1.00% price volatility. 0.00% • Equipment such fire hydrants, 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 2026/2027 valves, filters, etc. Fiscal Year • Vehicles such as trucks, vac-cons, CCUA Annual Rate Increase CPI excavators, etc. Graphic from CCUA financial data 26 Reporting Requirements Quarterly Reporting • Provide financial updates • Report on CIP progress 41/ • Update project status, budgets, and contracts Q? Q3 04 Annual Reporting • Provide a comprehensive CIP review Did we accomplish what we said we were going to do? 27 Strategic gDiContext in CCUA is operating a We want to remain in this financial and operational stable, healthy position "Goldilocks zone" Habitable Zone 10. TOO HOT O JUST RIGHT TOO COLD Planet size:1-2x Earth We recognize the Strong policies and challenges ahead disciplined planning will keep us in the "zone" https://science.nasa.gov/exoplanets/habitable-zone/ 28 Discussion and Questions ? Gam/ ♦ /� /TY AUTN�� • 29