comprehensive annual financial report...etowah water and sewer authority, georgia comprehensive...

Dawsonville, Georgia

For the years ended December 31, 2017 and 2016

Prepared by: Finance Department

Comprehensive

Annual

Financial

Report

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Part I

Introductory Section

i

ETOWAH WATER AND SEWER AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT For the years ended December 31, 2017 and 2016

TABLE OF CONTENTS

INTRODUCTORY SECTION:

Page(s)

Table of Contents

i-iii

Certificate of Achievement for Excellence in Financial Reporting

iv

Principal Officials and Consultants v Organizational Core Values

vi

Etowah Water and Sewer Authority Organizational Chart

vii

Letter of Transmittal

viii-xi

FINANCIAL SECTION:

Independent Auditor’s Report

1-2

Management’s Discussion and Analysis

3-7

BASIC FINANCIAL STATEMENTS Exhibit

Page(s)

A-1 Statement of Net Position

8

A-2 Statement of Revenues, Expenses, and Changes in Net Position

9

A-3 Statement of Cash Flows

10-11

A-4 Notes to the Financial Statements 12-29 Item # Page #

1. Description of Authority 12

2. Summary of Significant Accounting Policies 12-17

3. Deposit and Investment Risk 17-18

4. Accounts Receivable 19

5. Intergovernmental Receivable 19

6. Contracts Receivable 19

7. Capital Assets 20-21

8. Long-term Debt 22-25

ETOWAH WATER AND SEWER AUTHORITY, GEORGIA COMPREHENSIVE ANNUAL FINANCIAL REPORT


Table of Contents, continued

ii

BASIC FINANCIAL STATEMENTS (continued) Exhibit

Page(s)

A-4 Notes to the Financial Statements (continued) 12-29Item # Page #

9. Capital Improvement Program 26

10. Restricted Net Position 26

11. Retirement Plans 26-27

12. Risk Management 27

13. Intergovernmental Agreements 28-29

14. Commitments and Contingencies 29

15. Subsequent Event 29

SUPPLEMENTARY INFORMATION SCHEDULES Exhibit Page(s)

B-1 Schedule of Revenue, Expenses, and Changes in Net Position – Budget (GAAP Basis) and Actual

30-31

B-2 Schedule of Construction in Progress

32

STATISTICAL SECTION:

FINANICAL TRENDS

C-1 Net Position by Component – Last Ten Fiscal Years

33

C-2 Changes in Net Position – Last Ten Fiscal Years

34-35

C-3 Top Ten Customers – Current Year and Nine Years Ago

36-37

REVENUE CAPACITY

C-4

Operating Expenses by Function – Last Ten Fiscal Years

38

C-5

Operating Revenues by Function – Last Ten Fiscal Years

DEBT CAPACITY

39

C-6 Debt Service Coverage – Last Ten Fiscal Years 40-41

ETOWAH WATER AND SEWER AUTHORITY, GEORGIA COMPREHENSIVE ANNUAL FINANCIAL REPORT


Table of Contents, continued

iii

STATISTICAL SECTION (continued):

Exhibit Page(s)

DEBT CAPACITY (CONTINUED)

C-7 Ratios of Outstanding Debt by Type

42

DEMOGRAPHIC AND ECONOMIC INFORMATION

C-8 Demographic Statistics – Last Ten Fiscal Years

43

C-9 Principal Employers – Current Year and Nine Years Ago

44

C-10 Demographic and Economic Information 45 OPERATING INFORMATION

C-11 Water and Wastewater Service

46

C-12 Capital Asset Statistics by Function – Last Ten Fiscal Years

47-48

C-13 Performance Measures 49 C-14 Number of Employees 50 C-15 Number of Active Customers 51 C-16 Charges for Service 52-53

OTHER REPORTING SECTION: Independent Auditor’s Report on Internal Control over Financial Reporting and

on Compliance and Other Matters Based On an Audit of Financial Statements Performed In Accordance with Government Auditing Standards

54-55

v

Etowah Water & Sewer Authority

Listing of Principal Officials and Consultants

On December 31, 2017

Board Members Jim King, Chairman

Tony Kellar, Vice Chairman Linda Townley, Secretary

Deborah Stowers Doug Schuster

General Manager Brooke Anderson, PE

Assistant General Manager Tim Collins

Finance Manager Rosalind Chambers, PHR

Attorney Linda Dunlavy

Auditors Chris Hollifield

Rushton and Company, LLC

vii

Administrative Clerk

EWSA Board of Directors

General Manager

Engineering

& Construction

Manager

Finance Manager

Operations

Superintendent

Treatment Systems Manager

Advisor

Construction Coordinator

Systems Coordinator

Lead WRF Operator

Operators

Lead WTF Operator

Operators

Customer Service

Manager

Accountant

Customer Service

Representative

Executive Assistant

Assistant General Manager

Future Position

Resource Manager

Crew Chief

Operations Technicians

Lead Maintenance Technician

Maintenance Technicians

Organizational Chart

EXCELLENCE INTEGRITY STEWARDSHIP COMMITMENT EFFICIENCY VISION P.O. Box 769 1162 Highway 53 East Dawsonville, GA 30534 Tel: (706) 216-8474 Fax (706) 216-6170 www.etowahwater.org

February 23, 2018

Authority Board Members Etowah Water and Sewer Authority Dawson County Georgia Dawsonville, Georgia

The Etowah Water and Sewer Authority (the “Authority) is required to publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the Authority for the year ended December 31, 2017.

This report consists of management’s representations concerning the finances of the Authority. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Authority has established a comprehensive internal control framework that is designed both to protect the Authority’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Authority’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Authority’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The Authority’s financial statements have been audited by Rushton and Company, LLC, a firm of licensed certified public accountants. The goal of independent audit was to provide reasonable assurance that the financial statements of the Authority for the fiscal year ended December 31, 2017 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Authority’s financial statements for the year ended December 31,

viii

EXCELLENCE INTEGRITY STEWARDSHIP COMMITMENT EFFICIENCY VISION

P.O. Box 769 1162 Highway 53 East Dawsonville, GA 30534 Tel: (706) 216-8474 Fax (706) 216-6170 www.etowahwater.org

2017, are presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Authority’s MD&A can be found immediately following the report of the independent auditors.

Profile of the Authority

The Authority was created by an act of the General Assembly of the State of Georgia which became effective in 1980. The Authority has five board members. Authority Board members serve a five year term. Each member must be a user of the system prior to the election. The Board appoints a nominating committee out of the five member board. This committee verifies nominations and reports to the full board. Ballots are mailed out to each system user and are mailed to an independent auditor for tabulations. The system user receiving the majority of votes immediately assumes the open position. Day-to-day operations are supervised by a General Manager appointed by the Authority’s Board.

The Authority operates under an annual Board-approved budget. The budget, which is developed on a line item program budget concept, sets out the allocation of anticipated operating revenues. The Authority utilizes a purchase order encumbrance system. All items are approved against the budget before being purchased. Encumbrances lapse at year end.

The Authority employs an enterprise fund concept to account for its operations which are financed and operated in a manner similar to private business enterprises. An enterprise fund is a proprietary fund. All proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when they are earned, and expenses recognized when the service is received, and the related liability is incurred. All utility service receivables are recorded at year end. Since the Authority operates solely on its generated revenues, there are no appropriations.

Factors Affecting Financial Condition

The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Authority operates.

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Water Source

The Authority’s main water source is the Etowah River. The Etowah River begins in the Blue Ridge Mountains near Dahlonega, Georgia, and flows for 150 miles before merging with the Oostanaula River to form the Coosa River at Rome, Georgia. The basin drains 1,860 square miles in Bartow, Cherokee, Cobb, Fannin, Floyd, Haralson, Paulding, Pickens, Polk, Union, Fulton, Gilmer, Lumpkin, Dawson, and Forsyth Counties in Georgia. Major cities in the basin include Cartersville, Kennesaw, Mountain Park and Rome. The river is dammed by Allatoona Dam about 48 miles above Rome near Cartersville, GA.

Local Economy

Dawson County is located in Northeast Georgia, on two major state highways, Highway 53 and Highway 400. Highway 400 opens a gateway for the Atlanta suburbs to expand north. This has been a major contributor to the strong economic condition of this community in the past.

The area’s largest employer is North Georgia Premium Outlets employing 1,000 to 1,200 employees. The Outlets are a major attraction for people from around the state to enjoy. Since this is a retail sales type business, it is responsible for the majority of the sales taxes collected in Dawson County.

Long-term Financial Planning

The Authority has developed a Capital Improvement Plan consisting of numerous water and sewer line improvements and upgrades to the water and wastewater treatment plants. The Authority has identified a series of projects from their Capital Improvement Plan with the highest priority for funding. To ensure that there is adequate funding available to finance these capital improvements, the General Manager and the various department managers have developed a ten-year financial plan which was approved by the Board in December 2016. Consideration has been given to expected increases in revenues as well as projecting costs of future projects.

Awards and Acknowledgements

This is the twelfth year we have submitted this report to the Government Finance Officers Association of the United States and Canada for an award of Certificate of Achievement for Excellence in Financial Reporting.

The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Authority. We would like to express our appreciation to all of the employees of the Authority who contributed to this report’s preparation. We would also like to thank the members of the Authority’s Board for their interest and support

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in planning and conducting the financial operations of the Authority in a responsible and progressive manner.

Respectfully submitted,

Brooke Anderson Rosalind Chambers General Manager Finance Manager

xi

Part II

Financial Section

www.RushtonandCompany.com

Rushton & Company, LLC | P.O. Box 2917 | 726 South Enota Drive, Suite A | Gainesville, GA 30503, USA | +1.770.287.7800 [P] | +1.770.287.7801 [F]

ACCOUNTING & BUSINESS ADVISORS | CERTIFIED PUBLIC ACCOUNTANTS

Rushton

Independent Auditor's Report To the Board of Directors Etowah Water and Sewer Authority Dawsonville, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the Etowah Water and Sewer Authority, as of and for the years ended December 31, 2017 and 2016, and the related notes to the financial statements which collectively comprise the Authority’s financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation off the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Etowah Water and Sewer Authority, as of December 31, 2017 and 2016, and the respective changes in financial position and cash flows thereof for the years then ended in conformity with accounting principles generally accepted in the United States of America.

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Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 7 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that comprise the Etowah Water and Sewer Authority’s basic financial statements. The introductory section, schedule of revenue, expense, and change in financial position budget and actual, schedule of construction in progress, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The schedule of revenue, expense, and change in financial position budget and actual and the schedule of construction in progress are the responsibility of management and are derived and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Governmental Auditing Standards, we have also issued our report dated February 23, 2018, on our consideration of Etowah Water and Sewer Authority’s internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Etowah Water and Sewer Authority’s internal control over financial reporting and compliance.

Rushton & Company, LLC Certified Public Accountants Gainesville, Georgia February 23, 2018

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EXCELLENCE INTEGRITY STEWARDSHIP COMMITMENT EFFICIENCY VISION P.O. Box 769 1162 Highway 53 East Dawsonville, GA 30534 Tel: (706) 216-8474 Fax (706) 216-6170 www.etowahwater.org

MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the Etowah Water and Sewer Authority (“Authority”), we offer readers of the Authority’s financial statements this narrative overview and analysis of the financial activities of the Authority for the year ended December 31, 2017. We encourage readers to consider the information presented here in conjunction with the financial statements and footnotes. Operating Highlights The Authority treats and distributes water and collects and treats sewage in Dawson County (“the County”). To accomplish these functions the Authority:

Operates the Hightower Water Treatment Facility which is capable of treating up to 5.5 million gallons per day (MGD) to meet peak day demands. The principal source of raw water is the Etowah River which flows through the County

Serves approximately 5,540 active metered water customers through a distribution system which contains 188.19 miles of water mains

Operates the Dawson Forest Water Reclamation Facility which is capable of treating up to 1.0 MGD

Serves approximately 629 active wastewater customers through a wastewater collection system that includes 30.08 miles of sewer lines

Financial Highlights

The Authority’s net position (amount assets exceeded liabilities) at the close of the fiscal year amounted to $34,084,807. Of this amount, $1,932,305 is restricted for debt service payments on revenue bonds.

The Authority’s total net position increased by $4,467,317 during the fiscal year ended December 31, 2017.

This is due mostly to an increase in capital assets during the fiscal year

The Authority’s total long-term debt (including current maturities) increased by $2,162,031, from $54,891,712 to $57,053,743 during the current year. This change is mostly due to the Authority obtaining debt financing from Georgia Environmental Finance Authority for various projects to expand operations.

The Authority had operating revenues of $6,507,368 during the current year. Operating revenues increased

by 2% or $125,962 compared to annualized revenues of the prior period total of $6,381,406. This increase is due to an increase in water and sewer volumes sold.

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Overview of the Financial Statements This Discussion and Analysis is intended to serve as an introduction of the Etowah Water & Sewer Authority’s basic financial statements. The Statement of Net Position presents information on all of the Authority’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial condition of the Authority is improving or weakening. The Statement of Revenues, Expenses and Changes in Net Position presents information showing how the Authority’s net position has changed during the most recent fiscal year. All changes in net position are reported on an accrual basis. Financial Statements Net Position: The following table reflects the overall financial condition of the Authority as of the last three (3) fiscal years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively.

12/31/2017 12/31/2016 12/31/2015

Other assets 13,949,203$ 15,647,956$ 14,895,554$ Capital assets 79,666,023 71,528,807 70,822,418 Total Assets 93,615,226 87,176,763 85,717,972

Current liabilities 4,022,937 3,248,137 2,982,117 Non-current liabilities 55,507,482 54,311,136 55,121,619 Total Liabilities 59,530,419 57,559,273 58,103,736

Net investment in capital assets 26,779,703 22,648,379 21,645,293 Restricted for debt service 1,932,305 1,550,600 749,047 Unrestricted 5,372,799 5,418,511 5,219,896

34,084,807$ 29,617,490$ 27,614,236$

The Authority’s other assets decreased from $15,647,956 at December 31, 2016, to $13,949,203 at

December 31, 2017, a decrease of $1,698,753. During fiscal year 2016, other assets increased from $14,895,554 at December 31, 2015 to $15,647,956 at December 31, 2016, which is an increase of $752,402. The reason for the decrease in 2017 is due to the payments made to acquire capital assets and payments made on debt financing during the year, resulting in a decrease of cash and cash equivalents.

Capital assets increased by $8,137,216 from $71,528,807 at December 31, 2016 to $79,666,023 at December 31, 2017. This increase includes the aggregation of property and equipment net of depreciation, land, and construction in progress. A large portion of this increase is due to developer contributed lines to the Authority from new development. Capital assets increased by $706,389 from $70,822,418 at December 31, 2015 to $71,528,807 at December 31, 2016. This increase includes the aggregation of property and equipment net of depreciation, land, and construction in progress. Construction in progress increased from $3,491,828 at December 31, 2016 by $3,306,612 to $6,798,440 at December 31, 2017, compared to an increase of $419,756 from $3,072,072 at December 31, 2015 to $3,491,828 at December 31, 2016. Depreciation expense of $1,910,461, $1,840,130, $1,738,123 was incurred during the years ended December 31, 2017, 2016, 2015, respectively. See Note 7 of the financial statements for additional details. The Authority’s net position increased from $29,617,490 at December 31, 2016 to $34,084,807 at December 31, 2017. The increase is attributable to the current period change in net position in the amount of $4,467,317. A large portion of the increase in current year change in net position is the large infrastructure contribution of capital assets in the amount of $3,610,405. The Authority’s net position increased from $27,614,236 at December 31, 2015 to $29,617,490 at December 31, 2016. The increase is attributable to the period ended December 31, 2016 change in net position in the amount of $2,003,254.

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The Authority’s non-current liabilities totaled $55,507,482, $54,311,136, and $55,121,619 at December 31, 2017, 2016, and 2015, respectively. This caption reflects liabilities of the Authority not projected to be due and payable during the next fiscal year. Non-current liabilities increased by $1,196,346 from $54,311,136 at December 31, 2016 to $55,507,482 at December 31, 2017, compared to the decrease of $810,483 from $55,121,619 at December 31, 2015 to $54,311,136 at December 31, 2016. The majority of the increase in the current fiscal year is due to the increase of notes payable due to acquiring debt financing for projects. See Note 8 of the financial statements for additional details. The decrease in fiscal year ended December 31, 2016 is due to the reduction of bonds payable and notes payable through the payments of principal, reducing the outstanding balances. The Authority’s total current liabilities were $4,022,937, $3,248,137, and $2,982,117, at December 31, 2017, 2016, and 2015, respectively. Current liabilities increased by $774,800 during the current year from $3,248,137 at December 31, 2016 to $4,022,937 at December 31, 2017. The majority of this difference is attributable to the Authority’s short term portion of bonds payable. Current liabilities increased by $266,020 from $2,982,117 at December 31, 2015 to $3,248,137 at December 31, 2016 during the fiscal year ended December 31, 2016. Current liabilities include liabilities which are due and payable within the next fiscal year. Total unearned revenue was $1,048,119, $1,258,901, and $1,485,897 at December 31, 2017, 2016, and 2015, respectively. Total unearned revenue decreased from $1,258,901 at December 31, 2016 to $1,048,119 at December 31, 2017, for a total difference in the amount of $210,782, compared to a decrease of $226,996 from $1,485,897 at December 31, 2015 to $1,258,901 at December 31, 2016. The decrease in the current year is attributable to earning revenue on prepaid sewer taps during the current year. The Authority sold 82, 28, and 25 of these sewer taps during 2017, 2016, and 2015, respectively. Capital Assets and Debt Administration Capital Assets: The Authority’s investment in depreciable capital assets as of December 31, 2017, amounts to $61,398,615 (net of accumulated depreciation), $11,468,968 in land and $6,798,440 in non-depreciable capital assets. This investment in capital assets includes land, buildings and systems, improvements, vehicles and equipment. See Note 7 of the financial statements for additional information. Major capital events during the current fiscal year included the completion of the SR 53 and SR 400 Utilities Relocation Project and the completion of the fourth year of the Water Distribution Storage Tanks Maintenance Project, completion of permitting process with the U.S. Army Corps of Engineers for the Russell Creek Reservoir Project, and design and ongoing construction for the 2017 Water System Improvement and Hightower Water Treatment Facility Power System Improvements. The Authority received a large infrastructure capital contribution from Dawson County in the current year in the amount of $3,610,405. See note 13 of the financial statements for additional details on the contribution from the County. Debt Administration: As an Authority created by an act of the General Assembly of the State of Georgia, long term borrowing by the Authority is provided through revenue bonds issued by the Authority and debt incurred to the Georgia Environmental Facilities Authority (GEFA) for construction of various water and sewer system projects. At the end of the current year, the Authority had total long term debt outstanding of $57,053,743. This was comprised of $51,953,307 in revenue bonds payable, $1,388,794 payable to Bank of the Ozarks for land purchased through an intergovernmental agreement with Dawson County, $1,270,000 payable to GEFA for the Hwy 400 and 53 Utility Relocation Project, and $2,441,642 also payable to GEFA for the Russel Creek Reservoir project. See Note 8 of the financial statements for additional information. Revenues, Expenses and Changes in Net Position: The Authority realized an increase in operating revenue and an increase in the operating expenses. Operating revenues increased by approximately 2% or $125,962 to annualized revenues of $6,381,406 at December 31, 2016 and $6,507,368, at December 31, 2017 compared to an increase of $1,072,498 or 20% for the year ended December 31, 2016. The increase in water and sewer revenues is an increase in customer base for the year ended December 31, 2017. Total operating expenses of the Authority increased from $ 5,193,805 at December 31, 2016 to $5,537,635 at December 31, 2017 for a total increase of $343,830 compared to an increase from $4,897,018 at December 31, 2015 to $5,193,805 at December 31, 2016 for a total increase of $296,787. This represents an increase 7% and 6% during

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the fiscal year ended at December 31, 2017 and 2016, respectively. The increases are attributable to an increase overall in cost of sales and services, personal services and depreciation. Non-operating income (expense) includes interest income and expense on the Authority’s debt as well as revenue (expense) associated with contractual agreements with other local governments. Capital contributions include contributions by developers. Revenues, Expenses and Changes in Net Position: The following tables illustrates the history of revenues, expenses and changes in net position for the past three (3) fiscal years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively.

December 31,

2016 December 31,

2016 December 31,

2015

Operating revenues: Water revenues $ 4,871,318 $ 4,917,737 $ 4,050,174 Tap fees water 80,224 76,911 31,707 Late fees 58,058 64,502 49,414 Service charges 42,236 48,462 42,494 Other income 76,940 36,572 32,405 Sewage revenues 1,378,592 1,237,222 1,102,714 Operating revenues 6,507,368 6,381,406 5,309,908 Operating expenses: Water plant 277,011 292,795 282,205 Water distribution 228,385 190,257 179,360 Water supply 52,750 46,702 43,217 Water administration 425,711 353,582 316,757 Sewer plant 286,221 271,472 256,231 Sewer collection system 29,894 13,610 4,205 Sewer lift stations 46,647 42,062 66,281 Sewer administration 305,809 294,569 276,659 Administrative and general 1,974,746 1,848,626 1,733,980 Depreciation 1,910,461 1,840,130 1,738,123 Operating expenses 5,537,635 5,193,805 4,897,018 Operating income (loss) 969,733 1,187,601 411,890 Non-operating income (expense) Interest income 154,861 120,931 105,442 Interest expense (2,322,588) (2,336,795) (2,293,573)

Gain (loss) on disposition of capital assets 2,471 (158,568)

0

Other 289,455 248,168 229,676 Non-operating expense, net (1,875,801) (2,126,264) (1,958,455) Capital contributions 5,373,385 2,941,917 771,024 Change in net position 4,467,317 2,003,254 (775,541) Net Position (Beginning of Year) 29,617,490 27,614,236 28,389,777 Net position (Year End) $ 34,084,807 $ 29,617,490 $ 27,614,236

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Currently Known Condition Affecting Future Operations

The Authority completed the permitting process with the U.S. Army Corps of Engineers for the 137 Acre Russell Creek Reservoir project. This reservoir will provide approximately 11.5 MGD of water supply and a reliable source of water for Dawson County for the future. The Authority has acquired the land necessary to construct the reservoir. The Authority plans to begin construction of the reservoir within the next five years.

The Authority plans to annually replace existing water mains that have reached their useful life and to extend and loop water mains to improve water service to existing customers and the citizens of Dawson County. Further Information This financial overview is designed to provide readers with a general overview of the Authority’s finances and to show accountability. If you have questions or would like further information about this financial report, you may contact officials at P.O. Box 769, Dawsonville, Georgia, 30534. The Authority’s street address is 1162 Hwy. 53E, Dawsonville, Georgia, 30534. For copies of this report, visit our website at www.etowahwater.org. Sincerely,

Rosalind Chambers Rosalind Chambers, PHR Finance Manager

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The accompanying notes are an integral part of these financial statements. Exhibit A-1

ASSETSCurrent assets

Cash and cash equivalents $ 4,074,667 $ 4,356,341Certificates of deposit 1,024,416 1,017,995Receivables

Accounts 883,142 810,226Contract 15,000 15,000Intergovernmental 51,007 51,062Interest 29,468 31,216

Restricted assetsCash and cash equivalents 4,077,871 5,545,253Certificates of deposit 457,839 420,730

Prepaid items 60,932 91,529

Total current assets 10,674,342 12,339,352

Noncurrent assets Capital assets

Non-depreciable 18,267,408 14,248,060Depreciable, net 61,398,615 57,280,747

Contract receivables 2,850,000 2,865,000Prepaid items 424,861 443,604

Total noncurrent assets 82,940,884 74,837,411Total assets 93,615,226 87,176,763

LIABILITIESCurrent liabilities

PayablesAccounts 60,157 95,583Retainage 73,211 55,516

Accrued salaries and taxes 42,946 40,785Compensated absences 53,469 50,456Unearned revenue 1,048,119 1,258,901Current liabilities payable from restricted assets

Customer deposits payable 437,025 408,161Interest 755,929 752,553

Bonds payable 1,385,000 515,000Notes payable 167,081 71,182

Total current liabilities 4,022,937 3,248,137

Non-current liabilitiesCompensated absences 5,820 5,606Bonds payable 50,568,307 51,949,321Notes payable 4,933,355 2,356,209

Total non-current liabilities 55,507,482 54,311,136

Total liabilities 59,530,419 57,559,273NET POSITION

Net investment in capital assets 26,779,703 22,648,379Restricted for debt service 1,932,305 1,550,600Unrestricted 5,372,799 5,418,511

Total net position $ 34,084,807 $ 29,617,490

2016

ETOWAH WATER AND SEWER AUTHORITYSTATEMENTS OF NET POSITION

December 31, 2017 and 2016

2017

8

The accompanying notes are an integral part of these financial statements. Exhibit A-2

OPERATING REVENUESCharges for sales and services

Water and sewer sales $ 6,177,770 $ 6,085,569Tap fees 80,224 76,911Other charges for services 249,374 218,926

Total operating revenues 6,507,368 6,381,406

OPERATING EXPENSESCost of sales and services 1,609,849 1,456,129Personal services 2,017,325 1,897,546Depreciation 1,910,461 1,840,130

Total operating expenses 5,537,635 5,193,805

Operating income (loss) 969,733 1,187,601

Non-operating revenues (expenses)Interest revenue 154,861 120,931Interest expense (2,322,588) (2,336,795)Gain (loss) on disposition of capital assets 2,471 (158,568)Intergovernmental revenue 289,455 248,168

Total non-operating revenues (expenses) (1,875,801) (2,126,264)

Net income (loss) before capital contributions (906,068) (938,663)

Capital contributionsCapital contributions 3,929,192 1,592,203Capital recovery fees 1,444,193 1,349,714

Total capital contributions 5,373,385 2,941,917

Change in net position 4,467,317 2,003,254

Net position, January 1 29,617,490 27,614,236

Net position, December 31 $ 34,084,807 $ 29,617,490

2017 2016

ETOWAH WATER AND SEWER AUTHORITYSTATEMENTS OF REVENUES, EXPENSES AND

CHANGES IN NET POSITIONFor the years ended December 31, 2017 and 2016

9

The accompanying notes are an integral part of these financial statements. Exhibit A-3, continued

Cash flows from operating activities:Receipts from customers $ 6,252,535 $ 6,019,739Payments to suppliers (1,566,624) (1,485,688)Payments to employees (2,011,937) (1,887,615)

Net cash provided (used) by operating activities 2,673,974 2,646,436

Cash flows from capital and related financing activities:Receipts from other government 204,029 368,491Receipts of capital recovery fees 1,444,193 1,349,714Receipts from the sale of capital assets 2,471 0Payments for acquisitions of capital assets (5,995,118) (960,483)Payment of capital related accounts payable (123,385) (150,026)Interest paid (2,156,323) (2,213,967)Principal payments on bonds payable (500,000) 0Proceeds from promissory notes 2,715,251 137,743Principal payments on promissory notes (42,206) (411,787)

Net cash provided (used) by capital and related financing activities (4,451,088) (1,880,315)

Cash flows from investing activities:Interest received 71,588 33,272Proceeds from certificates of deposit 1,438,725 1,434,358Purchases of certificates of deposit (1,482,255) (1,438,725)

Net cash provided (used) by investing activities 28,058 28,905

Net increase (decrease) in cash and cash equivalents (1,749,056) 795,026

Cash and cash equivalents, January 1 9,901,594 9,106,568

Cash and cash equivalents, December 31 $ 8,152,538 $ 9,901,594

Reconciliation of operating income (loss) to net cashprovided (used) by operating activities:Operating income (loss) $ 969,733 $ 1,187,601

Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation expense 1,910,461 1,840,130(Increase) decrease in accounts receivable (72,916) (148,859)(Increase) decrease in prepaid items 30,597 327Increase (decrease) in accounts payable 12,629 (29,887)Increase (decrease) in payroll liabilities 5,388 9,931Increase (decrease) in unearned revenue (210,782) (226,996)Increase (decrease) in deposits payable 28,864 14,189

Total adjustments 1,704,241 1,458,835

Net cash provided (used) by operating activities $ 2,673,974 $ 2,646,436

2017 2016

ETOWAH WATER AND SEWER AUTHORITYSTATEMENTS OF CASH FLOWS


10

Cash and cash equivalents reconciliation:Cash and cash equivalents $ 4,074,667 $ 4,356,341Restricted cash 4,077,871 5,545,253

Total cash and cash equivalents $ 8,152,538 $ 9,901,594

Noncash investing, capital and financing activities:Contributions of capital assets $ 3,929,192 $ 1,592,203Acquisition of capital assets through accounts payable 93,026 123,385Debt service payments made by Dawson County, Georgia 185,501 144,144


2017 2016

ETOWAH WATER AND SEWER AUTHORITYSTATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements. Exhibit A-3, continued11

ETOWAH WATER AND SEWER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS


Exhibit A-4, continued

1. Description of Authority

The Etowah Water and Sewer Act of the 1980 General Assembly of Georgia created the Etowah

Water and Sewer Authority (the Authority), which is a political subdivision of the State of Georgia

and a public corporation. The purpose of the Authority is to acquire, construct, operate, and

maintain self-liquidating projects embracing sources of water supply and the distribution and sale

of water and related facilities and to acquire, construct, operate, and maintain sewer systems.

The financial statements of the Authority have been prepared in conformity with generally

accepted accounting principles (GAAP) as applied to government units. The Governmental

Accounting Standards Board (GASB) is the accepted standard setting body for establishing

governmental accounting and financial reporting principles. The more significant accounting

policies of the Authority are described below.

2. Summary of Significant Accounting Policies

A. Basis of Presentation

The statement of net position and the statement of revenues, expenses and changes in net

position display information in the format of a business type activity. Such activities are financed

through exchange transactions in whole or in part by fees charged to each participant. Exchange

transactions are those in which each party receives and gives up essentially equal values. Non-

operating revenues and expenses, such as subsidies, investment earnings and interest expense,

result from non-exchange transactions or ancillary activities.

B. Reporting Entity

The financial statements present the Authority as a business-type activity in accordance with

Governmental Accounting Standards Board Statement No. 34.

12




2. Summary of Significant Accounting Policies (continued)

C. Fund Financial Statements

The Authority is accounted for as an enterprise fund on a flow of economic resource

measurement focus. The accounting objective is a determination of net income, financial position

and changes in cash flow. All assets and liabilities associated with the Authority’s activities are

included in its balance sheet.

Enterprise funds are established to account for operations that are financed and operated in a

manner similar to private business enterprises, where the intent is that costs of providing goods

and services to the general public on a continuing basis are to be financed or recovered primarily

through user charges.

D. Measurement Focus, Basis of Accounting, and Financial Statement

Presentation

These statements are reported using the economic resources measurement focus and the

accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when

earned and expenses are recorded when a liability is incurred, regardless of the timing of related

cash flows.

Proprietary funds distinguish operating revenues and expenses from non-operating items.

Operating revenues and expenses generally result from providing services and producing and

delivering goods in connection with a proprietary fund’s principal ongoing operations. Operating

expenses for enterprise funds include the cost of sales and services, administrative expenses,

and depreciation on capital assets. All revenues and expenses not meeting this definition are

reported as non-operating revenues and expenses.

13





E. Cash and Investments

Cash and cash equivalents, as reported in the statement of cash flows, includes amounts in

demand deposits, amounts with fiscal agents and investments with an original maturity at three

months or less. Investments are reported at fair value with accrued interest shown under a

separate caption on the balance sheet. Reinvested interest on certain debt service and capital

project investments is included in the investment accounts. Investments are stated at fair value in

accordance with generally accepted accounting principles. U.S. treasury notes and U.S. agency

obligations are valued at quoted market.

F. Receivables and Payables

Receivables and payables are recorded as revenue and expenses for the period that they are

earned and incurred.

G. Prepaid Items

Payments made to vendors for services that will benefit periods beyond reporting year are

recorded as prepaid items using the consumption method by recording an asset for the prepaid

amount and reflecting the expense in the year in which services are consumed.

14





H. Capital Assets

All capital assets are valued at historical cost or estimated historical cost if actual historical cost is

not available. Donated capital assets are valued at their acquisition values. The Authority’s

infrastructure consists of treatment facilities and water and sewer lines. All infrastructure since

inception of the Authority in 1980 has been capitalized. Improvements to capital assets are

capitalized. The costs of normal maintenance and repairs that do not add to the value of the

asset or materially extend an asset’s life are expensed. Interest incurred during the construction

of capital assets utilized by the enterprise fund is capitalized. All reported capital assets are

depreciated except for land, rights-of-way and construction in progress. Improvements are

depreciated over the remaining useful lives of the related capital assets. Useful lives for

infrastructure were estimated based on the Authority’s historical records of necessary

improvements and replacement.

Depreciation is computed using the straight-line method over the estimated useful lives of the

respective assets ranging as follows:

Useful Life Capitalization

in Years Threshold

Buildings and improvements

Infrastructure - treatment facilities

10-60

50-55

$ 25,000

$ 25,000

Infrastructure – water mains and

sanitary sewers 50-55 $ 1

Machinery and equipment 5-20 $ 1

Office furniture and equipment 5-20 $ 5,000

Vehicles 5 $ 1

Intangibles 10-40 $ 5,000

Computer software and equipment

3-10 $ 5,000

15





I. Restricted Assets

Assets are reported as restricted when limitations on their use change the nature or normal

understanding of the availability of the asset. Such constraints are either externally imposed by

creditors, contributors, grantors, or laws of other governments, or are imposed by law through

constitutional provisions or enabling legislation. Restricted assets also represent cash and cash

equivalents and investments set aside for repayment of deposits to utility customers.

J. Compensated Absences

It is the Authority’s policy to permit employees to accumulate earned but unused vacation

benefits which will be paid to the employees upon separation from Authority service.

Accumulated unpaid vacation pay amounts are accrued when incurred by the Authority in the

proprietary fund financial statements. The liability is recorded as an expense and a liability of the

fund as the benefits accrue to the employees.

K. Net Position

Net position represents the difference between assets and liabilities. Net investment in capital

assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding

balances of any borrowing used for the acquisition, construction or improvement of those assets.

Net position is reported as restricted when there are limitations imposed on its use either through

the enabling legislation adopted by the Authority or through external restrictions imposed by

creditors, grantors, or laws or regulations of other governments. All other components of net

position are reported as unrestricted.

The Authority applies restricted resources when an expense is incurred for purposes for which

both restricted and unrestricted assets are available.

16





L. Capital Contributions

Federal, state and local government assistance in the form of grants that are permanent in nature

and restricted for the construction or acquisition of specific property and equipment is recorded as

an asset and as non-operating revenue.

M. Estimates

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect certain reported

amounts and disclosures. Accordingly, actual results could differ from these estimates.

N. Comparative Data and Reclassifications

Comparative total data of the prior period has been presented in the financial statements in order

to provide an understanding of changes in the Authority’s financial position and operations.

Certain 2016 amounts have been reclassified to conform to the 2017 presentation.

3. Deposit and Investment Risk

Custodial Credit Risk – Deposits

Custodial credit risk is the risk that in the event of a financial institution failure, the Authority’s

deposits may not be returned. The Authority’s investment policy follows the State of Georgia

requirement that all deposits be federally insured or fully collateralized. At December 31, 2017,

the Authority had no uninsured or uncollateralized deposits. At December 31, 2016, the Authority

had uninsured deposits in the amount of $4,382,025. These deposits are collateralized with

securities not held in the Authority’s name. These deposits are held by the pledging financial

institution’s agent, the Georgia Bankers Association, in the State of Georgia Pledging Pool. The

State of Georgia Pledging Pool is collateralized by securities within the pool at 111% of deposits.

Interest Rate Risk

The Authority’s investment policy limits investment maturities as a means of managing its

exposure to fair values from increasing interest rates.

17




3. Deposit and Investment Risk (continued)

Credit Risk

State of Georgia law limits investments to include certificates of deposit, repurchase agreements,

direct and agency obligations of the United States, obligations of the State of Georgia or other

states, obligations of other political subdivisions of the State of Georgia, and pooled investment

programs of the State of Georgia. The Authority has not adopted a formal credit risk policy.

Concentration of Credit Risk

The Authority’s policy does not limit the amount the Authority may invest in any one issuer, but it

does require that the Authority monitor the credit worthiness of each institution at least annually.

The Authority participates in the State of Georgia Local Government Investment Pool (Georgia

Fund 1). Assets in this pool are invested in the Georgia Fund 1, created by OCGA 36-83-8, which

is a stable net asset investment pool that follows Standard and Poor’s criteria for AAAf rated

money market funds. However, Georgia Fund 1 operates in a manner consistent with Rule 2a-7

of the Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not

registered with the SEC as an investment company.

The pool’s primary objectives are safety of capital, investment income, liquidity and diversification

while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to

ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and

determines participant’s shares sold and redeemed based on $1.00 per share. Georgia Fund 1 is

managed by the Georgia Office of the State Treasurer. The investment policies of Georgia Fund

1 are established by the Georgia State Depository Board.

The Georgia Fund 1 is rated AAAf by Standard & Poor’s. The weighted average maturity at

December 31, 2017 and 2016, was 9 days and 34 days, respectively. At December 31, 2017 and

2016, the Authority’s balance in Georgia Fund 1 was $4,077,872 and $5,156,023, respectively.

Foreign currency risk

The Authority has no investments denominated in a foreign currency.

18




4. Accounts Receivable

Accounts receivable consists of $883,142 and $810,226 at December 31, 2017, and 2016

respectively. All receivables are considered fully collectible; therefore, no allowance for doubtful

accounts has been established.

5. Intergovernmental Receivables

Intergovernmental receivables consist of the following at December 31:

2017 2016

US Treasury - Build America Bonds Subsidy $ 51,007 $ 51,062

6. Contracts Receivable

The Authority entered into an intergovernmental agreement with Dawson County to assist in the

financing of the Series 2012 Revenue Bonds. The bonds, in the amount of $2,930,000 were

issued to refund previously issued revenue bonds with interest at 2.96% maturing from March 1,

2013 through March 1, 2027. The purpose of the bonds is to finance the improvements to the

water and sewer system. The balance at December 31, 2017 and 2016 of contracts receivable

was $2,865,000 and $2,880,000, respectively.

The annual requirements to amortize contracts receivable as of December 31, 2017 are as

follows:

YearEnding

December 31, Principal Interest Total2018 15,000$ 84,582$ 99,582$ 2019 105,000 82,806 187,806 2020 270,000 77,256 347,256 2021 275,000 69,190 344,190 2022 285,000 60,902 345,902

2023-2027 1,915,000 166,870 2,081,870 Totals 2,865,000$ 541,606$ 3,406,606$

19




7. Capital Assets

Capital asset activity for the year ended December 31, 2017 was as follows:

Non-depreciable assets:

Land $ 10,756,232 $ 712,736 $ 0 $ 11,468,968

Construction in progress 3,491,828 5,334,907 (2,028,295) 6,798,440

Total non-depreciable assets: 14,248,060 6,047,643 (2,028,295) 18,267,408

Depreciable assets:

Building and improvements 1,136,684 0 0 1,136,684

Machinery and equipment 264,041 0 (8,000) 256,041

Office furniture and equipment 277,486 0 0 277,486

Vehicles 341,492 70,843 (20,500) 391,835

Intangibles 1,491,691 0 0 1,491,691

Infrastructure 72,615,921 5,957,486 0 78,573,407

Total depreciable assets 76,127,315 6,028,329 (28,500) 82,127,144

Less accumulated depreciation

Buildings and improvements (366,658) (30,592) 0 (397,250)

Machinery and equipment (167,060) (26,557) 8,000 (185,617)

Office furniture and equipment (211,521) (26,584) 0 (238,105)

Vehicles (203,375) (42,772) 20,500 (225,647)

Intangibles (513,118) (145,166) 0 (658,284)

Infrastructure (17,384,836) (1,638,790) 0 (19,023,626)

Total accumulated depreciation (18,846,568) (1,910,461) 28,500 (20,728,529)

Total depreciable assets, net 57,280,747 4,117,868 0 61,398,615

Capital assets, net $ 71,528,807 $ 10,165,511 $ (2,028,295) $ 79,666,023

Decreases

Balance

Ending

Balance

Beginning Increases

The Authority capitalized interest in the amount of $30,343 and $29,016 during 2017 and 2016,

respectively.

20




7. Capital Assets (continued)

Capital asset activity for the year ended December 31, 2016 was as follows:

Non-depreciable assets:

Land $ 10,756,232 $ 0 $ 0 $ 10,756,232

Construction in progress 3,072,072 770,329 (350,573) 3,491,828

Total non-depreciable assets: 13,828,304 770,329 (350,573) 14,248,060

Depreciable assets:

Building and improvements 1,031,329 105,355 0 1,136,684

Machinery and equipment 262,249 9,792 (8,000) 264,041

Office furniture and equipment 267,832 9,654 0 277,486

Vehicles 297,451 125,919 (81,878) 341,492

Intangibles 1,329,250 162,441 0 1,491,691

Infrastructure 70,902,319 1,872,170 (158,568) 72,615,921

Total depreciable assets 74,090,430 2,285,331 (248,446) 76,127,315

Less accumulated depreciation

Buildings and improvements (341,333) (25,325) 0 (366,658)

Machinery and equipment (149,319) (25,741) 8,000 (167,060)

Office furniture and equipment (183,865) (27,656) 0 (211,521)

Vehicles (251,444) (33,809) 81,878 (203,375)

Intangibles (381,916) (131,202) 0 (513,118)

Infrastructure (15,788,439) (1,596,397) 0 (17,384,836)

Total accumulated depreciation (17,096,316) (1,840,130) 89,878 (18,846,568)

Total depreciable assets, net 56,994,114 445,201 (158,568) 57,280,747

Capital assets, net $ 70,822,418 $ 1,215,530 $ (509,141) $ 71,528,807

Decreases

Balance

Ending

Balance

Beginning Increases

21




8. Long-Term Debt

Notes Payable

The Authority entered into a loan agreement with the Georgia Environmental Finance Authority

(GEFA) in the amount of $1,270,000 for improvements to the Authority’s water and sewer system.

As of December 31, 2017, the Authority has drawn $1,270,000, the full amount available. Monthly

installments of principal and interest in the amount of $7,062, January 1, 2018 through December

1, 2037; interest at 3.03%.

On May 15, 2012, the Authority, in conjunction with Dawson County, entered into a renewed

lending arrangement with Bank of the Ozarks to refinance the purchase of land in the original

amount of $6,798,434. This land is currently leased to Dawson County through an

intergovernmental agreement. On August 1, 2017 this note was refinanced with Bank of the

Ozarks. Under terms of the agreement, the County pays the monthly principal and interest

payments and will make additional principal payments at various times with proceeds from the

sale of wetland credits that exist on the land or the land itself. Monthly installments in the amount

of $14,463 began on September 1, 2017 and will end on August 1, 2022 with a balloon payment

at the end of the five year term; interest at 4%. The outstanding balance at December 31, 2017 is

$1,388,794.

On October 25, 2017, the Authority entered into a loan agreement with the Georgia Environmental

Finance Authority (GEFA) in the amount of $10,000,000 for creation of a pumped-storage

reservoir, part of the Authority’s infrastructure. On February 13, 2018, the loan agreement was

amended to a total loan amount of $20,000,000. As of December 31, 2017, the Authority has

drawn $2,441,642 on this agreement. Principal and interest will be payable in 395 consecutive

monthly installments, which are expected to commence on the earlier of either the completion of

the project or February 1, 2024; interest at 2.03%. The final installment will consist of a balloon

principal payment combined with any unpaid interest expense. This note is still in drawdown

phase; therefore, the maturity schedule below does not include this note.

22




8. Long-Term Debt (continued)

Notes Payable (continued)

Annual debt service requirements for notes payable are as follows:

Year

EndingDecember 31,

2018 $ 167,081 $ 91,227 $ 258,3082019 173,418 84,890 258,3082020 179,999 78,309 258,3082021 186,833 71,475 258,3082022 930,912 54,144 985,056

2023-2027 290,197 133,552 423,7492028-2032 337,603 86,146 423,7492033-2037 392,751 30,997 423,748

Totals $ 2,658,794 $ 630,740 $ 3,289,534

Principal Interest Total

Revenue Bonds

Revenue bonds issued are comprised of the following individual issues at December 31, 2017:

$2,930,000 2012 Refunding Revenue series bonds due in annual installments of $15,000 to

$705,000 through March 1, 2027; interest at 2.96% ($2,865,000 outstanding). These bonds were

used to finance improvements to the Authority’s water and sewer system and to refund the

Authority’s Revenue Bonds, Series 2002. The Authority entered into an intergovernmental

agreement contract with Dawson County in which the County will pay the debt service on behalf

of the Authority. See Note 6 for details.

$38,690,000 2010 Revenue series A bonds due in annual installments of $500,000 to $2,735,000

commencing March 1, 2017 through March 1, 2037; interest at 2.5% to 5.7% ($38,190,000

outstanding). These proceeds were used to repay outstanding GEFA loans and fund future

system expansion.

23




8. Long-Term Debt (continued)

Revenue Bonds (continued)

$10,985,000 2010 Revenue series B (Build America Bonds (BAB)) bonds due in annual

installments of $1,740,000 to $3,195,000 commencing March 1, 2037 through March 1, 2040;

interest at 5.7% ($10,985,000 outstanding). Interest payments are subsidized by the federal

government in the amount of 35% of annual interest debt service payments. The Authority

expected to receive a total of $6,175,989 in subsidies from the federal government to offset a

portion of the debt service on the Series 2010B, Build America Bonds (BAB). However, this

subsidy is not guaranteed and the amount is established annually by the federal government.

During the year ended December 31, 2017 and 2016, the Authority recognized $203,975 and

$204,522 in BAB subsidies revenue, respectively. These proceeds were used to repay

outstanding GEFA loans and fund future system expansion.

Under the terms of the bond resolution, the Series 2010 Bonds are secured by a pledge of and

lien on the revenues derived by the Authority in the original amount of $49,675,000. During 2017

and 2016, $2,665,716 and $2,171,966 of principal and interest was required from the total

revenue of the Authority, respectively.

Annual debt service requirements to maturity for revenue bonds are as follows:

Year

Ending Build AmericaDecember 31, Principal Interest Bond Subsidy Total

2018 1,385,000$ 2,023,419$ (203,975)$ 3,204,444$ 2019 1,510,000 1,984,187 (203,975) 3,290,2122020 1,715,000 1,928,662 (203,975) 3,439,6872021 1,780,000 1,865,358 (203,975) 3,441,3832022 1,840,000 1,797,408 (203,975) 3,433,433

2023-2027 10,730,000 7,807,518 (1,019,875) 17,517,6432028-2032 10,695,000 5,722,573 (1,019,875) 15,397,6982033-2037 13,140,000 3,205,250 (1,009,676) 15,335,5742038-2040 9,245,000 522,128 (279,446) 9,487,682

Totals 52,040,000$ 26,856,501$ (4,348,747)$ 74,547,754$

The above Build America Bond Subsidy is projected based on the amount of subsidy the

Authority received from the federal government during the current year.

24




8. Long-Term Debt (continued) Changes in Long-Term Debt

The following is a summary of changes in long-term debt of the Authority for year ended

December 31, 2017: Balance Balance

Beginning Additions Deductions Ending

Revenue bonds $ 52,555,000 $ 0 $ (515,000) $ 52,040,000 $ 1,385,000Unamortized bond discount (90,679) 0 3,986 (86,693) 0Notes payable 2,427,391 2,715,251 (42,206) 5,100,436 167,081Compensated absences 56,062 53,683 (50,456) 59,289 53,469

Total business-type activities $ 54,947,774 $ 2,768,934 $ (603,676) $ 57,113,032 $ 1,605,550

Due WithinOne Year

Revenue discounts/premiums are amortized over the life of the related debt using the straight-

line method. The total interest incurred and charged to expense for the years ended December

31, 2017 and 2016 was $2,322,588 and $2,336,795, respectively. Total interest capitalized to

construction projects for the years ended December 31, 2017 and 2016 was $30,343 and

$29,016, respectively.

The following is a summary of changes in long-term debt of the Authority for year ended

December 31, 2016:

Balance Balance

Beginning Additions Deductions Ending

Revenue bonds $ 52,570,000 $ 0 $ (15,000) $ 52,555,000 $ 515,000Unamortized bond discount (94,665) 0 3,986 (90,679) 0Notes payable 2,701,435 137,743 (411,787) 2,427,391 71,182Compensated absences 51,341 50,929 (46,208) 56,062 50,456

Total business-type activities $ 55,228,111 $ 188,672 $ (469,009) $ 54,947,774 $ 636,638

Due WithinOne Year

25




9. Capital Improvement Program

In December 2016, the Board of Directors approved a ten year Capital Improvement Program

along with an Associated Funding Program. The total for water and sewer projects is

$57,830,000, which includes a reservoir and upgrades and improvements to existing

infrastructure. The funding will be through internal cash, developers' contributions and revenue

bonds. This plan is reviewed and adjusted annually based on the economic conditions and

changing needs of the Authority.

10. Restricted Net Position

Restricted net position consisted of the following at December 31:

Restricted for:Debt service $ 1,932,305 $ 1,550,600

2017 2016

11. Retirement Plans

Effective January 1, 2006, the Authority adopted a retirement plan. The Etowah Water & Sewer

Authority 457 Deferred Compensation Plan, a defined contribution plan, and is administered by

TD Ameritrade. All established plans and amendments must be authorized by the Board of

Directors. All employees who have completed 90 days of service are eligible. The employees are

100% vested on their elective deferral contributions. During the year ended July 31, 2009, the plan

was revised to allow employees to roll over up to 50% of their unused vacation time on their

anniversary date. Employee contributions to this plan were $70,872 and $66,864 during the years

ended December 31, 2017 and 2016, respectively.

26




11. Retirement Plans (continued)

Effective January 1, 2006, the Authority adopted the Etowah Water & Sewer Authority 401(a)

Plan, a defined contribution plan, administered by TD Ameritrade. This plan allows the employer

to make matching contributions for eligible employee contributions. All established plans and

amendments must be authorized by the Board of Directors. Effective August 1, 2008, the

employer matches employees’ contributions up to 5% of compensation. All employees with one

year of service are eligible for this plan. This plan also uses the three year cliff vesting schedule.

During the year ended July 31, 2009, the Authority revised the 401(a) plan to include a health

reimbursement account, allowing employees to have funds available to them at retirement for

insurance premiums and medical expenses. This benefit is funded by an employer contribution of

1.5% of eligible salaries. Employees can also voluntarily roll over up to 50% of their unused sick

leave at their anniversary date. Total employer contributions to the 401(a) plan, including the

health reimbursement contribution of $19,769 and $17,004, amounted to $81,153 and $76,643

during the years ended December 31, 2017 and 2016, respectively.

12. Risk Management

Material estimates have been made by management about the life of depreciated capital assets.

Management has used a conservative approach on these estimates.

The Authority is exposed to various risks of loss related to torts; theft of, damage to and

destruction of assets; errors and omissions; and natural disasters. The Authority has elected to

manage its risk financing activities through the purchase of commercial insurance.

There have been no insurance settlements exceeding insurance coverage for any of the past

three fiscal years.

Management estimates liabilities for unpaid claims based on the probability of losses exceeding

the occurrence limits and the reasonableness of estimating those losses. At December 31, 2017

and 2016, the Authority has no losses that are probable or estimable and accordingly has not

recognized any liability.

27




13. Intergovernmental Agreements

On January 26, 1999, the Authority purchased 1,236 acres of real estate along the Georgia

Highway 9 area in order to establish a sewage collection system for the GA 53/GA 400 corridor

area with an outfall about 5 miles to the west along Dawson Forest Road, then crossing the

Etowah River and extending about 2 miles further west on the north side of the river to the tract of

the proposed sewage treatment plant and spray field adjacent to the Dawson Forest

Management Area, or airport property of the Authority of Atlanta. The purchased price for the

property was $6,798,534. The funds were obtained from a 100% loan from a local financial

institution.

The Authority has also signed an intergovernmental agreement with Dawson County to make

annual lease payments in an amount equal to total debt due under secured debts. In the terms of

the agreement Dawson County is to pay the interest on a bank note used to acquire 1,236 acres

of land. The note has been modified several times. See Note 8 for additional details on the

current terms on the note payable. Currently, the County makes monthly principal and interest

payments, and makes additional principal payments at various times from the sale of wetland

credits on the land and the land itself, but is not directly liable for the debt. For the years ending

December 31, 2017 and 2016, the County made principal payments in the amount of $42,206

and $0, respectively.

To date a total of 290.59 acres have been sold, the proceeds of which have been applied to the

outstanding loan balance, 142.7 acres are being leased, and 372 acres are in use by the

Authority. At December 31, 2017, 430.788 acres remain unencumbered. Wetland credits sold

through the Etowah River Mitigation Preserve are also applied to the outstanding note.

In conjunction with the purchase of the aforementioned property, Etowah Water & Sewer

Authority and Dawson County agreed to establish the Etowah River Mitigation Preserve (ERMP).

The property is owned by the Authority and leased to the County. The ERMP includes 175 acres

of ecologically prime waterways, wetland and adjacent uplands. This property originally had

27,430 units of stream bank credits and 303.76 wetland credits that could be sold to replace

properties related to other projects. During the year ended December 31, 2017 and 2016, 0

stream bank credits were sold, leaving 1,562 available for sale. There are 0 wetland credits

remaining to sale.

28




13. Intergovernmental Agreements (continued)

In March 2017, the Authority entered into an intergovernmental agreement with Dawson County to

establish an understanding that the Authority has ownership of, the rights and obligation for

operation, and the responsibility for maintenance and repair of the Taffer Road Interceptor

Sanitary Sewer gravity line. The agreement resulted in the recording of a capital contribution in

amount of $3,610,405 to record the capital assets on the Authority’s financial statements.

14. Commitments and Contingencies Contingencies The Authority’s legal counsel has stated that there are presently no determinable lawsuits.

Commitments

The Authority has active construction projects as of December 31, 2017. The Authority is

committed to spending an additional $740,004 on several construction projects currently in

progress.

15. Subsequent Event

On January 22, 2018, the Authority was approved for a loan through the Georgia Environmental

Finance Authority in the amount of $10,000,000. The proceeds will be used to finance the

Authority’s Russell Creek Reservoir project.

29

Supplementary Information

OPERATING REVENUESCharges for sales and services

Water and wastewater sales $ 6,262,974 $ 6,177,770 $ (85,204)Tap fees 37,500 80,224 42,724Late fees 50,000 58,058 8,058Service charges 103,000 151,046 48,046Sprinkler fees 35,000 40,270 5,270

Total operating revenues 6,488,474 6,507,368 18,894

OPERATING EXPENSESCost of sales and services

Auto 54,900 52,519 2,381Bank charges 71,450 70,756 694Contract labor 411,850 410,359 1,491Engineering 10,500 10,453 47Government fees 11,000 9,850 1,150Insurance 74,850 74,811 39Legal and accounting 56,200 56,107 93Advertising 16,200 16,129 71Public relations 22,300 22,253 47Repairs and maintenance 77,050 74,922 2,128Schooling 24,750 23,264 1,486Sludge disposal 30,400 30,289 111Telephone 40,200 38,388 1,812Contingency 30,000 0 30,000Chemicals 82,300 82,152 148Utilities 308,590 307,371 1,219Meters 78,400 78,313 87Office supplies 10,600 9,021 1,579Supplies 171,150 168,490 2,660Postage 29,050 28,410 640Board expense reimbursement 14,000 13,750 250Travel and food 33,800 32,242 1,558

Total cost of sales and services 1,659,540 1,609,849 49,691

Personal servicesSalaries 1,525,061 1,499,953 25,108Employee benefits 550,400 517,372 33,028

Total personal services 2,075,461 2,017,325 58,136

Variance with

Actual BudgetBudget

BUDGET (GAAP) AND ACTUAL

Final

ETOWAH WATER AND SEWER AUTHORITYSCHEDULE OF REVENUES, EXPENSES AND

CHANGE IN NET POSITION

For the year ended December 31, 2017

Final

Exhibit B-1, continued30

Exhibit B-1, continued

OPERATING EXPENSESDepreciation $ 1,958,750 $ 1,910,461 $ 48,289

Total operating expenses 5,693,751 5,537,635 156,116

Operating income (loss) 736,773 969,733 232,960

Non-operating revenues (expenses)Interest revenue 15,000 154,861 139,861Interest expense (2,312,792) (2,322,588) (9,796)Loss on disposal of capital assets 0 2,471 2,471Intergovernmental revenue 340,026 289,455 (50,571)

Total non-operating revenues (expenses) (1,957,766) (1,875,801) 81,965

Net income (loss) before capital contributions (1,220,993) (906,068) 314,925

Capital contributionsCapital contributions 250,000 3,929,192 3,679,192Capital recovery fees 836,300 1,444,193 607,893

Total capital contributions 1,086,300 5,373,385 4,287,085

Change in net position (134,693) 4,467,317 4,602,010

Net position, January 1 134,693 29,617,490 29,482,797

Net position, December 31 $ 0 $ 34,084,807 $ 34,084,807

BUDGET (GAAP) AND ACTUAL

ETOWAH WATER AND SEWER AUTHORITYSCHEDULE OF REVENUES, EXPENSES AND

CHANGE IN NET POSITION


Variance withFinal Final

Budget Actual Budget

31

Exhibit B-2

Project

NRCS Reservoir $ 1,843,265 $ 3,553,775 $ 5,397,040 $ 0

Hightower Sedimentation Basins 50,240 12,560 0 62,800

Cleve Wright Road 0 47,918 47,918 0

LAUE Watershed 2017-2018 0 55,099 55,099 0

Etowah River Sanitary Sewer Extension 0 55,825 55,825 0

Hightower Power System Improvements 0 587,533 587,533 0

Water Systems Storage Tanks 94,241 107,746 0 201,987

Black's Mill Lift Station 33,289 291,404 324,693 0

2017 Water Treatment Improvements 0 263,697 263,697 0

2018 Water Treatment Improvements 0 41,012 41,012 0

SR 400 and SR 53 Utilities Relocation 1,461,163 302,345 0 1,763,508

Small Projects 9,630 15,993 25,623 0

$ 3,491,828 $ 5,334,907 $ 6,798,440 $ 2,028,295

Construction ConstructionIn Progress Construction In Progress Jobs

CompletedYearBeginning Current

ETOWAH WATER AND SEWER AUTHORITYSCHEDULE OF CONSTRUCTION IN PROGRESS


Ending

32

Part III

Statistical Section

(Unaudited)

This section of the Etowah Water and Sewer's comprehensive annual financial report presentsdetailed information as a context for understanding this year's financial statements,note disclosures, and supplementary information. This section includes data for the Authority only. This information has not been audited by the independent auditor.

ContentsPage

Financial TrendsThese tables contain trend information that may assist the reader in assessing the Authority's current financial performance by placing it in historical perspective. 33-37

Revenue CapacityThese tables contain information that may assist the reader in assessing the viability of the Authority's most significant "own-source"revenue sources and trends of these sources. 38-39

Debt CapacityThese tables present information which may assist the reader in analyzing the Authority's current levels of outstanding debt and the Authority'sability to issue additional debt in the future. 40-42

Demographic and Economic InformationThese tables offer demographic and economic indicators that can beused for financial analysis and to provide a better understanding of the Authority's present and ongoing financial status. 43-45

Operating InformationThese tables contain service and infrastructure data to help the readerunderstand how the information in the government's financial reportrelates to the services the government provides and the activities it 46-53performs.

Source: Unless otherwise noted, the information in these tables is derived from theannual financial reports for the corresponding years.

Note: Columns labeled 2011A on the following pages correspond to the Authority's2012A internal budget documents.

Etowah Water and Sewer AuthorityStatistical Section

2017 2016 2015 2014 2013

Net investment in capital assets 26,779,703$ 22,648,379$ 21,645,293$ 22,768,167$ 23,325,641$ Restricted 1,932,305 1,550,600 749,047 716,060 707,009 Unrestricted 5,372,799 5,418,511 5,219,896 4,905,550 5,991,688 Total Net Assets 34,084,807$ 29,617,490$ 27,614,236$ 28,389,777$ 30,024,338$

2012 2011A (1) 2011 2010 2009

Net investment in capital assets 24,039,416$ 24,731,765$ 26,079,946$ 30,342,197$ 28,612,937$ Restricted 1,110,672 2,546,509 2,504,886 2,285,818 2,143,902 Unrestricted 6,781,640 6,056,099 5,905,780 3,799,105 5,731,685 Total Net Assets 31,931,728$ 33,334,373$ 34,490,612$ 36,427,120$ 36,488,524$

Note (1) : based on 5 months of data

FISCAL YEAR

Etowah Water and Sewer Authority

Net Position by ComponentLast Ten Fiscal Years


Exhibit C-133

2017 2016 2015 2014 2013Operating RevenuesWater and Wastewater sales 6,177,770$ 6,085,569$ 5,071,989$ 4,599,798$ 4,059,269$ Tap fees 80,224 76,911 31,707 37,544 24,316Late fees 58,058 64,502 49,414 47,842 49,315Service charges 151,046 48,462 42,494 47,173 50,109Other income 40,270 105,962 113,304 32,630 32,458

Total Operating Revenues 6,507,368 6,381,406 5,308,908 4,764,987 4,215,467 Operating Expenses:Personal services and benefits 2,017,325 1,897,546 1,782,426 1,749,716 1,733,249Direct and indirect costs 1,609,849 1,456,129 1,376,469 1,341,214 1,317,750Depreciation 1,910,461 1,840,130 1,738,123 1,726,003 1,559,855Other expense 0 0 0 0 0

Total operating expense 5,537,635 5,193,805 4,897,018 4,816,933 4,610,854

Total Operating income 969,733 1,187,601 411,890 (51,946) (395,387)

NON-OPERATING INCOME (EXPENSE)Amortization (18,744) (18,744) (18,744) (18,744) (18,744)Interest Income 154,861 120,931 105,442 103,899 128,306Gain (loss) on sale of capital assets 2,471 (158,568) 0 0 0Sale of credits & easements 0 0 0 0 0Intergovernmental revenue 289,455 248,168 229,676 241,273 253,509Interest expense on long-term debt (2,303,844) (2,318,051) (2,274,829) (2,285,235) (2,134,036)Grant proceeds 0 0 0 0 0Other revenue 0 0 0 0 0Intergovernmental revenue 0 0 0 0 0Intergovernmental expense 0 0 0 0 0

Total non-operating revenue (expense) (1,875,801) (2,126,264) (1,958,455) (1,958,807) (1,770,965)

Net income before capital contributions (906,068) (938,663) (1,546,565) (2,010,753) (2,166,352)

Capital contributionsGrant proceeds 0 0 0 0 0Intergovernmental revenue 0 0 0 0 0Capital recovery fees 1,444,193 1,349,714 487,467 12,634 233,409Capital contributions 3,929,192 1,592,203 283,557 363,558 25,553

Total capital contributions 5,373,385 2,941,917 771,024 376,192 258,962

Change in net position 4,467,317 2,003,254 (775,541) (1,634,561) (1,907,390)

Net position (Beginning of Year) 29,617,490 27,614,236 28,389,777 30,024,338 31,931,728

Prior period adjustments 0 0 0 0 0

Net postion (restated Beginning ) 29,617,490 27,614,236 28,389,777 30,024,338 31,931,728

Net position (End of Year) 34,084,807$ 29,617,490$ 27,614,236$ 28,389,777$ 30,024,338$

Note: Items on the changes net position presentation have been adjusted or reclassified to present a more accurate picture of actual results.Note (1) : based on 5 months of data

FISCAL YEAR

Etowah Water and Sewer AuthorityDawsonville, GeorgiaChanges in Net Position

Last Ten Fiscal Years

Exhibit C-234

2012 2011A (1) 2011 2010 2009 2008

4,290,006$ 1,678,666$ 3,844,479$ 3,419,049$ 3,106,717$ 2,958,534$ 12,325 7,100 23,345 29,740 26,880 71,57054,067 20,465 45,852 38,687 37,604 38,63646,169 20,916 70,150 57,771 61,829 72,81833,380 24,164 13,464 3,538 11,819 2,869

4,435,947 1,751,311 3,997,290 3,548,785 3,244,849 3,144,427

1,855,187 713,297 1,582,720 1,525,630 1,518,866 1,404,1521,469,147 622,265 1,398,936 1,411,600 1,137,580 1,192,4051,457,119 698,176 1,391,810 880,937 864,879 844,571

0 6,055 67,367 26,932 11,994 11,490

4,781,453 2,039,793 4,440,833 3,845,099 3,533,319 3,452,618

(345,506) (288,482) (443,543) (296,314) (288,470) (308,191)

(18,744) (29,859) (24,239) (1,596) (4,646) (4,646)190,850 14,036 87,977 121,368 193,856 802,048

0 0 0 (443) (142) 2,0440 0 150,349 106,583 271,305 590,917

1,294,200 0 0 0 0 0

(2,205,852) (992,790) (2,283,817) (432,237) (426,989) (447,868)0 91,313 224,574 0 0 0

274 0 0 0 0 00 23,958 112,248 116,109 437,269 205,7920 (23,958) (115,122) (140,183) (446,023) (270,907)

(739,272) (917,300) (1,848,030) (230,399) 24,630 877,380

(1,084,778) (1,205,782) (2,291,573) (526,713) (263,840) 569,189

0 0 0 0 61,444 00 0 95,716 227,120 235,015 244,380

78,534 40,023 236,481 156,343 0 010,158 9,520 22,868 81,846 1,608,755 4,843,361

88,692 49,543 355,065 465,309 1,905,214 5,087,741

(996,086) (1,156,239) (1,936,508) (61,404) 1,641,374 5,656,930

33,334,373 34,490,612 36,427,120 36,488,524 34,847,150 29,190,220

(406,559) 0 0 0 0 0

32,927,814 34,490,612 36,427,120 36,488,524 34,847,150 29,190,220

31,931,728$ 33,334,373$ 34,490,612$ 36,427,120$ 36,488,524$ 34,847,150$

FISCAL YEAR

Exhibit C-235

CustomerAverage Daily

Water Usage (1)Total Water

BillingTotal Sewer

Billing Total BillingPercentage of System Billing

3Mind Dawson Forest Apartments 68,115 146,731.55$ 147,955.10$ 294,686.65$ 4.68%

BTD ( Impulse) 73,412 128,057.12$ 121,118.65$ 249,175.77$ 3.96%

Chelsea GCA Realty (Outlets) 43,308 90,360.62$ 95,418.95$ 185,779.57$ 2.95%

Walmart 19,430 41,658.83$ 32,626.43$ 74,285.26$ 1.18%

Riverwood Properties 14,714 29,819.89$ 30,569.45$ 60,389.34$ 0.96%

Dawson Village Inn 12,073 22,649.72$ 24,059.81$ 46,709.53$ 0.74%

Vishal Dawson Village 11,407 22,275.94$ 22,948.16$ 45,224.10$ 0.72%

Auto Craze Carwash 11,761 20,366.10$ 21,739.82$ 42,105.92$ 0.67%

Super 8 9,396 18,463.25$ 19,590.74$ 38,083.99$ 0.60%

North Ga Premium Carwash 9,052 16,159.71$ 17,217.09$ 33,376.80$ 0.53%

Total 272,668 536,543$ 533,244$ 1,069,817$ 16.99%

Note (1): Water Usage stated in gallons

Etowah Water and Sewer AuthorityDawsonville, Georgia

Top Ten Active CustomersCurrent Year and Ten Years Ago

2017

Exhibit C-336

CustomerAverage Daily

Water Usage (1)Total Water

BillingTotal Sewer

Billing Total BillingPercentage of System Billing

City of Dawsonville 167,859 129,800.00$ -$ 129,800.00$ 5.00%

Dawson 400 Associates 23,736 61,123.00$ 54,920.00$ 116,043.00$ 3.92%

Chelsea GCA Realty 55,250 55,858.00$ 50,720.00$ 106,578.00$ 3.60%

Bubbles Car Wash 11,091 22,405.00$ 21,177.00$ 43,582.00$ 1.47%

Impulse Manufacturing 9,071 17,658.00$ 16,673.00$ 34,331.00$ 1.15%

Ernst Cobb 14,053 30,318.00$ -$ 30,318.00$ 1.02%

FCC Inc 13,752 29,493.00$ -$ 29,493.00$ 0.99%

Riverwood Properties 6,971 16,800.00$ 9,969.00$ 26,769.00$ 0.90%

RMC Allied Materials 11,152 24,869.00$ -$ 24,869.00$ 0.84%

Lumpkin County Water 10,831 10,174.00$ -$ 10,174.00$ 0.34%

Total 323,766 398,498$ 153,459$ 551,957$ 19.23%

2007

Exhibit C-337

FiscalYear Total

2017 983,857$ 668,571$ 1,974,745$ 1,910,461$ 5,537,635$ 2016 956,189 621,713 1,775,773 1,840,130 5,193,8052015 821,450 603,376 1,733,979 1,738,123 4,897,0182014 727,782 554,676 1,808,473 1,726,003 4,816,9332013 813,632 529,515 1,707,853 1,559,855 4,610,8542012 910,812 568,065 1,845,457 1,457,119 4,781,453

2011A (1) 336,488 193,221 811,909 698,176 2,039,7942011 623,284 532,639 1,893,110 1,352,743 4,401,7762010 768,500 262,032 1,397,287 880,937 3,308,7562009 1,222,281 659,056 787,103 864,879 3,533,319


Etowah Water and Sewer Authority, Georgia

Operating Expenses by Function Dawsonville, Georgia


Water Adminstration DepreciationWastewater

Water18%

Wastewater12%

Adminstration38%

Depreciation31%

2017 OperatingExpenses by Function

Exhibit C-438

Fiscal Year Water Wastewater Total

2017 4,871,318$ 1,306,452$ 6,177,770$ 2016 4,917,737 1,167,832 6,085,569 2015 4,050,173 1,021,815 5,071,988 2014 3,626,466 973,332 4,599,798 2013 3,240,429 818,840 4,059,269 2012 3,591,834 698,172 4,290,006

2011A (1) 1,405,484 273,182 1,678,666 2011 3,217,655 626,824 3,844,479 2010 2,870,550 548,499 3,419,049 2009 2,594,056 512,661 3,106,717



Last Ten Fiscal YearsOperating Revenues by Function

Water 79%

Wastewater21%

2017 Operating Revenue by Function

Exhibit C-539

2017 2016 2015 2014 2013

Net operating income before depreciation 2,880,194$ 3,027,731$ 2,150,013$ 1,674,057$ 1,164,468$

Tap fees and capital contributions 1,444,193 1,349,714 487,467 376,192 258,962

Debt Service - Dawson County 85,021 85,468 85,837 86,137 86,506

Interest income and gain on investments 69,841 35,464 19,605 17,761 42,190

Available for debt service 4,479,249 4,498,376 2,742,922 2,154,147 1,552,126

Annual Debt Service on 2012 revenue Bonds 85,021 85,468 85,837 86,137 86,506

Debt Service Coverage on 2012 revenue Bonds 52.68 52.63 31.96 25.01 17.94

Annual Debt Service on 2002 revenue Bonds - - - - -

Debt Service Coverage on 2002 revenue Bonds - - - - -

Annual Debt Service on 2010 revenue Bonds 2,467,992 1,967,444 2,002,842 1,974,219 1,078,262

Debt Service Coverage on 2010 Revenue Bonds 1.78 2.24 1.33 1.05 1.36

Annual Debt Service on revenue bonds and other capital loans 2,568,013$ 2,067,912$ 2,098,679$ 2,070,356$ 1,164,768$

Total long-term debt service coverage 1.74 2.18 1.31 1.04 1.33

Note (1) : based on 5 months of dataNote : The format for Debt Service Coverage Ratio presentation was modified in 2011.

Etowah Water and Sewer AuthorityDawsonville, GeorgiaDebt Service CoverageLast Ten Fiscal Years

Exhibit C-640

2012 2011(A)1 2011 2010 2009 2008

1,111,613$ 409,693$ 998,694$ 740,966$ 576,409$ 536,380$

88,692 43,573 240,031 173,193 1,734,321 2,128,958

101,430 108,667 178,874 486,426 527,642 513,109

45,124 14,036 235,539 203,877 419,417 1,327,850

1,346,859 575,969 1,653,138 1,604,462 3,257,789 4,506,297

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

75,365 108,667 150,730 389,654 1,164,019 1,989,737

17.87 5.30 10.97 4.12 2.80 2.26

1,173,608 397,355 933,012 0 0 0

1.08 1.18 N/A N/A N/A N/A

1,275,038$ 506,022$ 1,148,394$ 492,508$ 1,296,389$ 2,143,983$

1.06 1.14 1.44 3.26 2.51 2.10

Exhibit C-641

Percentage ofFiscal Revenue GEFA Notes Financial Institution Personal Year Bonds Payable Notes Payable Total Income (3) Per Capita (4)

2017 51,953,307$ $3,711,642 1,388,794$ 57,053,743$ 57.78% 1,364

2016 52,464,321 996,391 1,431,000 54,891,712 63.98% 1,492

2015 52,475,335 858,648 1,842,787 55,176,770 61.47% 1,411

2014 52,481,349 0 1,885,883 54,367,232 69.32% 1,572

2013 52,487,363 0 1,927,466 54,414,829 74.91% 1,680

2012 52,498,377 0 1,967,039 54,465,416 97.98% 2,201

2011A (1) 52,454,391 0 2,992,915 55,447,306 100.33% 2,240

2011 52,452,110 0 3,002,061 55,454,171 100.34% 2,241

2010 6,575,000 34,170,683 549,174 41,294,857 53.49% 1,206

2009 6,845,000 30,825,478 2,647,394 40,317,872 55.12% 1,213

Note : See the Schedule of Demographic Statistics on Exhibit C-8 for personal income and population data.Note (1) : based on 5 months of dataNote (2) : information not availableNote (3) : total Authority debt divided by total personal income of Dawson County, Georgia Note (4) : total Authority debt divided by per capita personal income of Dawson County, Georgia



Ratios of Outstanding Debt by Type

Exhibit C-742

Per

Capita

Personal Personal Unemployment

Fiscal Population Income Income Rate

Year (1) (2) (3) (4)

2016 23,604 $987,473 41,835 4.3%

2015 23,312 857,905 36,801 5.4%

2014 22,957 897,550 39,097 6.1%

2013 22,686 784,346 34,574 7.7%

2012 22,422 726,361 32,395 7.7%

2011 22,459 555,860 24,750 10.0%

2010 22,330 552,668 24,750 10.1%

2009 22,555 772,058 34,230 9.7%

2008 22,006 731,501 33,241 5.9%

2007 21,484 696,877 32,437 3.6%

Data sources:

(1) US Bureau of the Census

(2) Amount expressed in thousands

(4) State Department of Labor

(3) Federal Bureau of Economic Analysis (2015 not available, estimated based on Compound Annual Growth Rate for the period 2013 through 2014)

Etowah Water and Sewer Authority, GeorgiaDawsonville, GeorgiaDemographic StatisticsLast Ten Fiscal Years

Exhibit C-843

Percentage Percentage

of Total County of Total County

Employer Employees Rank Employment Employees Rank Employment

North Georgia Premium Outlet Mall 1,100 1 9.65% 1,100 1 10.40%

Gold Creek Foods LLC 600 2 5.26% 300 4 2.84%

Dawson County Board of Education 543 3 4.76% 410 2 3.88%

Wal-Mart 350 4 3.07% 350 3 3.31%

Dawson County Commissioner's Office 306 5 2.68% 280 5 2.65%

Kroger CO 280 6 2.46% 126 7 1.19%

BTD Manufacturing LLC (Formerly Impulse) 225 7 1.97% 115 8 1.09%

Ingles Markets Inc 150 8 1.32%

SleeveCo, Inc 125 9 1.10%

World Wide Manufacturing Co Inc 107 10 0.94% 100 9 0.95%

Publix Supermarkets, Inc 100 0.88%

The Home Depot 90 0.79%

MESH Engineering 65 0.57%

Food Lion 55 0.48%

Northeast Georgia Medical Center 38 0.33%

United Community Bank 32 0.28%

Nordson Corporation 150 6 1.42%

Amicalola Falls State Park Lodge (DNR) 100 10 0.95%

All other employers 7,231 63.45% 7,541 71.33%

Total 11,397 100.00% 10,572 100.00%

Source: Dawson County Chamber of Commerce


PRINCIPAL EMPLOYERSCurrent Year and Nine Years Ago

2016 2007


Exhibit C-944

Date Etowah Water & Sewer Authority was legislatively created 1980

Form of government:Members elected by users of the system: 5

Number of employees: 27 Number of individuals participating in the Pension Plan as of December 31,2017: 26

Retirees and beneficiaries currently receiving benefits: 1 Vested terminated employees not yet receiving benefits: - Fully Vested: 22 Non Vested: 4

Total: 26

Water System:Miles of water mains: 188.19Number of water treatment facilities: 1 Maximum gallons of water permitted to withdraw from Etowah River per day: 5,500,000 Maximum treatment capacity: 5,500,000 Average annual volume of gallons treated per day: 1,483,000 Peak number of gallons treated in one day during the year: 2,300,000 Maximum gallons of water storage:

Blueridge Overlook 250,000 Hwy 53 500,000 Auraria 500,000 Burt Creek 250,000 Hwy 9 North 250,000 Water Plant 750,000 Water Plant 150,000 Amicalola 250,000 Total Storage: 2,900,000

Number of active water users: 5,540 Average daily volume of water consumed by users: 1,065,265 Whole Sale users:

City of DawsonvilleLumpkin County

Sewer System:Miles of gravity sewer lines: 22.38Miles of force main lines: 7.7Number of Sewer treatment facilties: 1Number of major pumping stations: 9

Black Mill Creek/Red Rider Lift StationBlacksmill School Lift StationThompson Creek Lift StationDawson Forest Water Reclamation Facilty Lift StationDawson Point Lift Station Kroger Lift StationOakmont Lift StationRiverview Lift StationTel-Tek Lift Station

Maximum gallons permitted plant capacity: 1,000,000 Average annual volume of gallons treated per day: 514,000 Peak Number of gallons treated in one day during the year: 326,000 Number of active sewer users: 629 Average daily volume of sewage sent for treatment by users: 281,750

Source: Various Authority departments

Demographic and Economic InformationDecember 31, 2017


Exhibit C-1045

Gallons* of Gallons* of Gallons* of Gallons* of Average Gallons* of

Fiscal Water Water Water Water Percent Wastewater

Year Pumped to System Consumed Unmetered Unbilled Unbilled Treated

2017 518.10 419.33 44.85 53.92 10.41% 110.42

2016 536.14 432.27 56.07 47.80 8.92% 103.87

2015 511.18 374.70 68.20 68.28 13.36% 99.32

2014 512.02 367.49 60.60 83.93 16.39% 96.49

2013 465.10 333.98 67.59 63.53 13.66% 93.30

2012 481.64 364.75 45.50 71.39 14.82% 80.68

2011 470.02 374.11 23.55 72.36 15.40% 80.75

2010 446.94 361.28 9.65 76.01 17.01% 84.35

2009 431.86 351.88 - 79.80 18.48% 83.23

2008 403.58 361.98 - 90.35 22.39% 87.32

2007 506.83 415.35 - 91.48 18.05% 80.15

* Gallons in Millions

Source: Authority Water and Sewer departments

Etowah Water and Sewer AuthorityDawsonville, GeorgiaOperating Information

Water & Wastewater Service

Exhibit C-11

46

2017 2016 2015 2014FunctionWATERWater mains (miles) 188.19 187.17 184.428 183.87

Fire hydrants 888 888 861 850

Maximum daily Treatment capacity (thousands of gallons) 5,500 5,500 5,500 5,500

SEWERSanitary sewers (miles) 30.08 24.11 23.00 22.58

Maximum daily treatment capacity (thousands of gallons) 1,000 1,000 1,000 1,000



Fiscal Year


Operating Information

Capital Asset Statistics by Function


Exhibit C-1247

2013 2012 2011A (1) 2011 2010 2009

183.19 182.64 174.81 174.79 174.78 174

826 809 760 760 759 745

5,500 5,500 5,500 5,500 3,000 3,000

22.58 22.58 22.58 22.58 22.54 22.00

1,000 1,000 500 500 500 500

Fiscal Year

Exhibit C-1248

2017 2016 2015 2014 2013 2012 2011A (1)

2011

WATER DISTRIBUTION & SEWER COLLECTION

# of Feet of Sanitary Sewer System Inspected by Camera 400 0 0 0 0 1,100 0 0

# of Fire Hydrants Repaired/Replaced/Installed 18 31 4 24 1 40 0 2

# of Feet of Sewer Line Rodded & Flushed 400 0 100 0 200 1,100 0 832

ENGINEERING MANAGEMENT

# of Water & Sewer Capacity Evaluations 60 50 46 38 26 19 7 15

# of Plans Reviewed 63 48 29 6 13 15 3 7

# of Developments Installing Water & Sewer Under Contract 7 6 5 0 14 1 2 2

# of Inquiries Received 2,520 2,246 2,178 2,034 1,967 2,017 813 2,161

METER MANAGEMENT

# of Water & Sewer Stubs Installed 21 37 35 4 6 1 2 7

# of Meters Replaced Through Meter Replacement Program 0 0 0 0 245 4,567 712 0

# of New Water Meters Installed 148 128 75 107 49 13 3 83

WATER BUSINESS OFFICE

# of Water & Sewer Bills Prepared 72,909 69,794 61,892 61,323 60,793 59,457 26,996 60,578

# of Customers Assisted by Customer Service Staff 14,890 10,196 9,058 13,542 8,697 21,579 6,935 16,644

# of Customers Disconnected 433 431 416 453 473 563 271 643

# of Customers that Transferred Service 798 758 720 608 560 563 229 527

WASTEWATER PLANT

Millions of Gallons of Wastewater Treated 118.953 103.87 99.317 96.49 93.30 80.68 80.75 81.181

# of Wet Tons of Biosolids Composted 824.39 890.79 620.33 650.34 422.81 288.49 364.89 370.48

# of Lab & Industrial Samples Analyzed 7,064 7,807 6,987 7,813 7,337 7,605 7,219 6,405

WATER TREATMENT PLANT

Millions of Gallons of Potable Water Produced 542.26 567.29 545.81 543.65 502.76 517.62 501.74 477.06

Leaks in System 149 252 157 311 97 97 60 299



Fiscal Year

Etowah Water and Sewer AuthorityDawsonville, GeorgiaOperating InformationPerformance Measures

Exhibit C-1349


2015

2016

2011

2007

2017

26

27

2010

2009

2008

28

27

29

27

2011A (1)


Operating InformationSchedule of Number of Employees

26

29

28

27


2013

Fiscal Year Number of Employees

2014

27

27

2012

Exhibit C-1450


1995

1987

1986

1993

1992

1991

1990

1989

1988

2008

2007

2006

2,122

1,387

1994

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

2012

2011A (1)

2011

2010

2009

3,071

2,742

2,546

1061

981

1,353

1,253

1,160

1,104

4,250

3,910

3,780

3,520

3,267

Number of Active Customers


2013


Operating Information

2014

2017 5,540

2015 5,238

2016 5,390

980

5,062

4,993

Year Number of Active Customers

5,049

5,147

5,136

5,187

5,094

5,052

5,044

2,322

4,767

4,539

4,399

Exhibit C-1551

0 – 500 gallons $ 25.50 minimum 501 – 7,000 gallons $ 7.56 per thousand 7,001 – 15,000 gallons $ 9.52 per thousand Over 15,000 gallons $ 11.42 per thousand

0 – 500 gallons $ 25.50 minimum 501 – 7,000 gallons $ 7.56 per thousand 7,001 – 15,000 gallons $ 9.52 per thousand Over 15,000 gallons $ 11.42 per thousand

0 gallons $25.50 minimum Over 0 gallons $ 8.51 per thousand

0 gallons $ 55.00 minimum Over 0 gallons $ 8.51 per thousand



0 gallons $ 450.00 minimum

Over 0 gallons $ 8.51 per thousand





Charges for Services

Residential Water

1”

3/4”

6”

8”

3”

4”

2

Commercial Water

3/4”

1”

Exhibit C-1552

0-15,000 gallons $9.52 per thousandOver 15,001 gallons $11.42 per thousand

0 – 1,500 gallons $25.50 minimum Over 1,500 gallons $ 9.15 per thousand

0 – 1,500 gallons $ 55.00 minimum Over 1,500 gallons $ 9.15 per thousand







0 – 1,000 gallons $ 476.10 minimum

Over 1,000 gallons $ 9.15 per thousand

0 – 1,000 gallons $ 805.50 minimum

Over 1,000 gallons $ 9.15 per thousand

Residential Sewer Rates

Irrigation Water

4”

6”

8”

3”

3/4”

1”

Commercial Sewer Rates

2”

3/4”

1”

Exhibit C-1553

Part IV

Other Reporting Section

www.RushtonandCompany.com

Rushton & Company, LLC | P.O. Box 2917 | 726 South Enota Drive, Suite A | Gainesville, GA 30503, USA | +1.770.287.7800 [P] | +1.770.287.7801 [F]

ACCOUNTING & BUSINESS ADVISORS | CERTIFIED PUBLIC ACCOUNTANTS

Rushton

Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed In Accordance with Government Auditing Standards To the Board of Directors Etowah Water and Sewer Authority Dawsonville, Georgia We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the Etowah Water and Sewer Authority, as of and for the years ended December 31, 2017 and 2016, and the related notes to the financial statements which collectively comprise the Authority’s basic financial statements and have issued our report thereon dated February 23, 2018. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Etowah Water and Sewer Authority’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Authority’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Etowah Water and Sewer Authority’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.

54

The Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Rushton & Company, LLC Certified Public Accountants Gainesville, Georgia February 23, 2018

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comprehensive annual financial report...etowah water and sewer authority, georgia comprehensive...

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