Community Water Supply Resources Implementation Strategy

1. Community Water Supply Resources Implementation Strategy Lane Auditorium Albemarle County Office Building September 13, 2007

2. Objective of Meeting Tonight’s objective is to begin a dialogue with our community and its leaders regarding the priorities and the financial challenges and opportunities in implementing our Community Water Supply Plan.

3. Agenda • Where We Have Been . . . • Implementation Challenges • The Resources Challenge • Updated Cost Estimates • External Requirements • Financing Scenarios • Next Steps • Public Conversation

4. Where We Have Been . . . • 32 Water Supply Alternatives Screened • Comprehensive Alternative Analysis • Rigorous & Extensive Federal & State Legal Requirements • 9 Previous Public Meetings Since September 2004 – Significant Public Input

5. Where We Have Been . . . • Context of Selecting Preferred Alternative: • “…least environmentally damaging, practicable alternative…” • What’s Best for Local Community as a Whole • Cost Was Not the Primary Driver • RMR Alternative is Cost-Effective • RMR Alternative Amenable to Phasing

6. Where We Have Been . . . • Community: Stay in Local “Watershed” • Ragged Mountain Alternative “Retooled” • Overwhelming Community Consensus • Excellent Mitigation Plan • Balance: Human Needs and Nature

7. Implementation Challenges . . . • Prioritization and Financing of Plan Elements • Being introduced tonight, followed by future discussions • Logistical Issues of Construction • Focus of future discussions

8. In preparing for battle, I have always found that plans are useless, but planning is indispensable. -Dwight D. Eisenhower Great minds discuss ideas; average minds discuss events; small minds discuss people. -Eleanor Roosevelt The only way not to think about money is to have a great deal of it. -Edith Wharton

9. Updated Estimated Costs • Ragged Mountain Dam • Observatory Upgrade to 8 MGD and Piping • SFRR Pipeline • South Fork Expansion to 16 MGD • Observatory Expansion to 10 MGD $37.2 Million $34.0 Million $55.9 Million $127.1 Million $ 9.0 Million $ 6.0 Million $142.1 Million Note: All Estimates are in 2007=$. Estimates Subject to Change with Inflation.

10. The Resources Challenge • Existing RWSA Depreciated Water Assets: $79 Million • “Prorated” RWSA Water System ~ $33.5 Million • Proposed Community Water Supply (CWS) Plan=$142 Million (2007=$) • CWS Plan Alone is 424% of Current Total Water Assets!! • Additional $11 Million in Urban Water Needs Identified in 5-Year CIP Outside CWS

11. The Resources Challenge • Existing Debt (Water and Wastewater)=$54 Million • Anticipated Debt for CWS Plan Alone is 263% of Current Total RWSA Debt!! • Wastewater Needs and Water Distribution Needs Will Further Add Substantially Greater Debt over Next 5-10 Years

12. The Resources Challenge • Ragged Mountain Dam, Observatory Upgrade, and New Pipelines=$127 Million or 89% of Total $142 Million 50-Year Plan

13. External Requirements • Improved Stream Flow Releases • Dam Safety Requirement • Mitigation Before Impact • Safe Yield > Average Day Demand • Plant Capacity > Maximum Day Demand

14. Improved Stream Flow Releases • Extensive Work with TNC and DEQ • Future Flow Past the Dam Will More Closely Mimic Natural Conditions • Significantly Improves Stream Flow During Drier Periods • Provides for Two Conditions • After New Full Height RMR Built • After SFRR Pipeline Built

16. Dam Safety Requirement • Existing Ragged Mountain Dams Built in 1885 (Upper) and 1908 (Lower) • Existing Dams Do Not Meet Current Safety Requirements • Virginia Dam Safety = 2011 Mandate • Design of New RMR Dam Already Underway

17. Environmental Mitigation • Stream and Wetland Mitigation Must Precede Permanent Impacts • Permanent Impacts Are In Reservoir Expansion • Mitigation Cannot Be Phased

18. Safe Yield > Average Day Demand

19. Plant Capacity v. Maximum Day Demand

20. Implementation Questions • How Much Can We Afford to Build Right Away? • Is a Phased Implementation Needed? • What Are Our Priorities? • How Do We Pay for the Plan?

21. Background/Context • Aging Infrastructure • Adequacy of Water Supply • Present Customers and Future Customers • Increasing Regulatory Challenges • Local Environmental Objectives • Affordability of Urban Area

22. Implementation Scenarios • Scenario 1: Build Full Dam and SFRR Pipeline Now • Scenario 2: Phase Dam and Build SFRR Pipeline Now • Scenario 3: Build Full Dam Now and Phase SFRR Pipeline

23. Phasing the Dam? • If Ragged Mountain Dam Phased, SFRR Pipeline Required at Time of First Phase to Meet DEQ Flow Past the Dam • Phasing Dam Requires Higher Early Year Capital Costs • Building Dam in One Phase Improves Structural Integrity (Seepage) • Dam Construction Has Major Logistical Challenges – How Much is Too Much?

24. Assumptions for Scenarios • Inflation=2.8% • New Debt Terms=30 years @ 5.25% • Flow Increase=1.1% per year • Equal Annual Principal Repayment

26. Next Steps • Public Conversation Tonight • Follow-Up with Agencies on Permit • Continue with Ragged Mountain Dam Design to Meet Dam Safety Deadline • Further Conversations on Resource Implementation Plan

27. Public Conversation Focus Question: What are the benefits and challenges of the scenario options?