Fairway Oaks Annual Financial Report 2020 SDSD Reduced

SOUTH DAVIS SEWER DISTRICT West Bountiful, Utah Annual Financial Report For the Fiscal Years Ending December 31, 2020 and 2019 SOUTH DAVIS SEW ER DISTRICT North Treatment Plant West Bountiful ,Utah Annual Financial Report South Davis Sewer District West Bountiful, Utah For the Fiscal Years Ending December 31, 2020 and 2019 Office Location: 1800 West 1200 North West Bountiful, UT 84087-2501 801-295-3469 Mailing Address: PO Box 140111 Salt Lake City, UT 84114-0111 Prepared By: Administration and Accounting Departments Dal D. Wayment, P.E.

General Manager/Treasurer Mark R. Katter, CPA Accounting Manager/Clerk TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal .............................................................. .......... 1-30 Certificate of Achievement for Excellence in Finan cial Reporting .......... 31 Awards and Achievement Recognition ............... ................................... 32 Organization Chart ............................... .................................................. 33 Board of Trustees ................................ .................................................. 34 Board of Trustees, 2020 Meeting Schedule ......... .................................. 35 District Full-Time Employees ..................... ................................ ........... 36 District Map ..................................... ....................................................... 37 Pictures ......................................... .................................................... 38-42 FINANCIAL SECTION Independent Auditor ’s Report ....................................................... 43-44 Management ’s Discussion and Analysis ..................................... ...... 45-55

FINANCIAL SECTION Independent Auditor ’s Report ....................................................... 43-44 Management ’s Discussion and Analysis ..................................... ...... 45-55 Basic Financial Statements: Statement of Net Position ................................................................. 56-57 Statement of Revenues, Expenses and Changes in Net Position ......... 58 Statement of Cash Flows .......................... ........................................ 59-60 Notes to Financial Statements ....................................................... 61-80 Required Supplemental Information: Modified Approach for Eligible Infrastructure Assets ........................ 81.86 Net Pension Liability and Measurement Date (URS) . ....................... 87-89 Supplementary Information: Schedule of Revenues and Expenses, Budgetary and A ctual .......... 90-91 Schedule of Impact Fees and Certification ....................................... 92-95 SOUTH DAVIS SEWER DISTRICT Annual Financial Report For the Years Ended December 31, 2020 and 2019 I STATISTICAL SECTION PAGE Statistical Section Table of Contents ............ ......................................... 96 Statement of Net Position (Schedule 1) ................................................... 97 Statement of Changes in Net Position (Schedule 2) ......................................... 98 Operating Revenues (Schedule 3) ............................................................ 9 9 Non Operating Revenues (Schedule 4) .................................................. 100 Revenue by Source Bar Graph ’s (Schedules 5 & 6) ......................... 101-102

................... 9 9 Non Operating Revenues (Schedule 4) .................................................. 100 Revenue by Source Bar Graph ’s (Schedules 5 & 6) ......................... 101-102 Property Tax Levies and Collections (Schedule 7) ................................. 103 Sewer Service and Impact Fee Rates (Schedule 8) ............................... 104 Principle Wastewater Contributors (Schedule 9) .................................... 105 Principle Rate Payers (Schedule 10) ...................................................... 106 Revenue Bond Coverage (Schedule 11) ............................................................ 107 Outstanding Debt (Schedule 12) ............................................................. 108 Deb t to Asset Ratios (Schedule 13) ........................................................ 109 Debt Service to Total Expenses Ratios (Schedule 14) ............................ 110 Bond Debt Service (Schedule 15) ............................................................ ............ 111 Davis County Demographic and Economic Statistics (Schedule 16) ...... 112 Davis County Principle Employers (Schedule 17) ................................... 113 Overlapping and Direct Tax Rates (Schedule 18) ................................... 114 Davis County Tax Factors (Schedule 19) ................................................ 115 Principle Tax Payers (Schedule 20) ........................................................ 116 Operator Certifications (Schedule 21) ..................................................... 117 Public Treasurer Investment Fund Interest Rates (Schedule 22) ............ 118 Davis County Permit-Authorized Construction Statis tics (Schedule 23) .. 119

...................................... 117 Public Treasurer Investment Fund Interest Rates (Schedule 22) ............ 118 Davis County Permit-Authorized Construction Statis tics (Schedule 23) .. 119 Employees Full-Time Equivalent by Function (Schedule 24) .......... ........... 120 Equivalent Dwelling Units (EDU’s) (Schedule 25) ..................................... 121 Net Investment in Capital Assets Balances (Schedule 26) .............. ............ 122 Net Investmen t in Capital Asset Schedules (Schedules 27-30) ..... .. 123-126 Expenses by Function (Schedule 31) ...................................................... 127 Expenses by Function Graphs (Schedule 32) ........................................ 128 Summary of Insurance Coverage (Schedule 33) .................................... 129 COMPLIANCE SECTION Report on Compliance & Internal Controls ......... .......................... 130-131 Auditors Report on State Legal Compliance ................................. 132-133 II SOUTH DAVIS SEWER DISTRICT Annual Financial Report For the Years Ended December 31, 2020 and 2019 TABLE OF CONTENTS INTRODUCTORY SECTION 1 June 17, 2021 To the Chairman, members of the Board of Trustees, and the Citizens of the South Davis Sewer District: State law requires that all local governments publish within si x months of the close of each fiscal year a complete set of financial statements present ed in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licen sed certified accountants. The South Davis Se wer District (District) hereby submits this Annual

(GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licen sed certified accountants. The South Davis Se wer District (District) hereby submits this Annual Financial Report for the year ended December 31, 2020, in compliance with these requirements. District management assumes full responsibility for the complet eness and reliability of the information contained in this report, based upon a compr ehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolut e, assurance that the financial statements are free of any material misstatements. The data presented is accurate in all material respects and in a manner designed to set forth clearly the results of op erations of the District.

This report fairly presents the financial position of the District and all disclosures necessary to enable the reader to gain an understanding of the Distric t’s financi al activities. Karren, Hendrix, Stagg, Allen, and Company, P.L.L.C., a firm of licensed, certified public accountants has audited the District’s financial statements. The goal of the independent audit is to provide reasonable assurance that the f inancial statements of the District for the fiscal y ear ended, December 31, 2020, are free of material misstatement. The independent a udit involved examining on a te st basis, evidence supporting the amounts and discl osures in the financial stateme nts, assessing the accounting principles used and significant estimates made by ma nagement, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a

g principles used and significant estimates made by ma nagement, 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 District’s financial statements for the fiscal year ended December 31, 2020, fairly represent conformity with GAAP. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the for m of Management’s Discussion and Analysis (MD&A). This letter of transmittal com plements the MD&A.

Please read the transmittal lett er in conjunction with the MD&A .

2 The Annual Financial Report consists of four main sections: 1. Introductory Section, which is unaudited, includes this transmittal letter and provides general information about the District ’s organizational structure, a list of the District’s elected and appointed officials, and a history of District operations.

2. Financial Section includes the certified public accountant’s report, Management’s Discussion and Anal ysis, the basic financial state ments, notes thereto, other required supplementary information, as well as a schedule of revenues and expenditures.

3. Statistical Section contains additional unaudited financial and general information presented on a multi-year basis.

4. Compliance and Internal Control Section includes the independent audito r’s reports on internal control , bond resolution compliance and State legal compliance.

Background In the late 1950’s , Bountiful City was the only area of South Davis County, consi sting of Bountiful, Centerville, North Salt Lake, West Bountiful, Woo ds Cross, and the

legal compliance.

Background In the late 1950’s , Bountiful City was the only area of South Davis County, consi sting of Bountiful, Centerville, North Salt Lake, West Bountiful, Woo ds Cross, and the unincorporated areas south of Lund Lane, that was served by a s ewer system. The treatment facility serving that system was at capacity and not capable of meeting proposed future discharge requirements. Local government leaders could see that on-site septic tank systems could not support this anticipated growth. The five cities and Davis County formed the District in 1959 to meet these area -wide needs for wastewater collection and treatment.

The District began construction of the North Plant at 1800 West 1200 North in West Bountiful in December 1960 and completed its construction in Au gust 1962. The District began construction of the South Plant located at 1380 West Center Street in North Salt Lake in June 1961 and completed its construction in October 1962. The District constructed collection systems in Centerville, North S alt Lake, West Bountiful, and Woods Cross and trunk lines connecting all five collection systems in the District to the two treatmen t plants. The District owned a nd operated the collection system for all areas e xcept for Bountiful City, whic h retained ownership of the existing lines in their city. On January 1, 2004, Bountiful City transferred ownership of their system to the District. The District’s coll ection system now consists of 372 miles of sewer, 4 miles of force main and 8,650 manholes.

The District currently serves a total population of approximate ly 105,000 (Facilities Plan 2020 update). The 1990s plant expansion project designed the combined treatment plants to serve a population of 100,000 with a reasonable allowance for

tion of approximate ly 105,000 (Facilities Plan 2020 update). The 1990s plant expansion project designed the combined treatment plants to serve a population of 100,000 with a reasonable allowance for commercial and industrial users. Since the last Plant upgrades in the 1990s, per capita flows have decreased. Th e Plants are operating at appro ximately 75% capacity. At current per capita flows, plant design capacity w ould support a 3 population of approximately 130,000 not considering new require ments for nutrient, nitrogen and phosphorus, removal. The South Plant is currently operating at capacity. For some time, the District has been accommodating g rowth, as planned, by pumping excess flows to the North Plant from the 2600 South trunk line.

The District has seen very significant increases in density in new subdivision and apartment projects throughout the District. To account for hig her densities the District inventoried the remainin g vacant land in the District along with its planned use and density in March and April 2020. From this inventory, the District estimates the saturation population to be 120,486. This agrees closely with the Wasatch Front Regional Council’s current estimate for the year 2040 population of 120,155. Buil dout will almost certainly occur during the next 20 to 25-year d esign horizon for plant rehabilitation. A Wasatch Fron t Regional Council report states , “Davis County has the smallest land area of any county in the State and will be t he first in the State to have to deal with countywide build out ”. The District will be using a population of

tates , “Davis County has the smallest land area of any county in the State and will be t he first in the State to have to deal with countywide build out ”. The District will be using a population of 120,000 for planning and design purposes. Compliance with the recent changes in discharge permit limits for phosphorus and nitrogen require significant upgrading of our treatment process es. It has been 26 years and 29 years since the South Plant and the North Plant re spectively were expanded and rehabilitated. We have been waiting for the nutri ent removal requirement issue to be better d efined. Now that nutrient removal requirements have been adopted, the District is proceeding with plant upgrad es and rehabilitation to meet these new requirements. Total cost was estimated in 2020 to be approximately $50,000,000. A recent review of the cost estimat e indicates that the total cost may be $60,000,000 to $65,000,000. This is due to c onstruction cost and equipment cost inflation due to COVID-19 impacts and the enormo us amount of light and heavy construction taking place both locally and nationally .

Over the last several years inquiries have been made by propert y owners and developers as to the District’s ability and willingness to provide services outside the existing District boundary to the west of our South Plant, acro ss the Jordan River in Salt Lake County. There are over 1,000 acres that might sewer to the District rather than Salt Lake City. North Salt Lake City has been asked to co nsider annexing some of this area. The Distric t does not have any existing cap acity to serve this area. New capacity would have to be built. This is complicate d by the new requirements to provide nutrient removal. How this capacity wo uld be created, and

ve any existing cap acity to serve this area. New capacity would have to be built. This is complicate d by the new requirements to provide nutrient removal. How this capacity wo uld be created, and its cost requires a significant engineering study.

The District is empowered to levy a property tax on both real a nd personal property.

It has the power of eminent domain and may extend its boundaries by annexation. The District has annexed all property within its natural limits of growth, except for small parcels annexed by our memb er cities from time to time. The District subsequently annexes these parcels as well.

4 Governance Davis County organized the District as an independent special d istrict in response to petitions by the member cities of the District under Title 17, Part 6 of the Utah Code.

All special district statutes we re recodified dur ing the 2008 L egislative Session. This statute is now Title 17B of the Utah Code. Under the new statu te, the South Davis Sewer District is considered a “local district”.

A seven-member Board of Truste es governs the District. Each Ci ty within the District appoints one Board Member for a four-year term. The t wo remaining Board Members are elected from the District at large. These Board Me mbers are elected in municipal elections held in odd numbered years. Elected ter ms are also for four years. Board terms are staggered to provide continuity. The B oard elects a chairman and vice-chairman from its members to serve two-year t erms. A General Manager who serves at the pleasure of the Board directs day-to- day operations.

rovide continuity. The B oard elects a chairman and vice-chairman from its members to serve two-year t erms. A General Manager who serves at the pleasure of the Board directs day-to- day operations.

The District is required to adopt a budget in December of each year. The approved budget must be submitted to the State Auditor by December 31. The tentative budget is submitted to the Board at the October Board meeting. The Board can adjust the current year’s budget up to December of that budget year providing it is done with the appropriate notices and hearings. The annual budget serves as the basis for the District ’s financial planning and control.

Utah code requires annual training for Board Members. The Association of Special Districts represents districts a t the Legislature and provides training for special district board members and management. On-line training is als o available. All Board members comply with this requirement. Finance Financial Guidelines The Board of Trustees has adopted the following: x Revenues should be enough to support current expenditures, including deb t service and other obligations of the system.

x Debt should be used only for capital expansion and improvement of plant and not for current expenses.

x Contingency reserves should be maintained at levels sufficient to provide for unanticipated, non-recurring cos ts such as major equipment fail ures.

x Capital projects funded through the issuance of bonds should b e financed for a period not to exceed the expected useful life of the project.

x Net revenues (gross revenue less O&M expenses) available for debt service should be generated at a level of 1.2 to 1.5 times the average annual debt service requirement.

seful life of the project.

x Net revenues (gross revenue less O&M expenses) available for debt service should be generated at a level of 1.2 to 1.5 times the average annual debt service requirement.

x Net revenues that exceed operating expenses and debt service s hould be used for capital expenditures, restoration of contingency reser ves of the wastewater system, and other wastewater purposes.

5 x Capital financing should be provided through debt financing, c urrent revenues, and contributions from developers, customers, and oth er governmental entities.

x Cost of service studies shoul d be performed periodically and t he relation of revenues to cost be reviewed annually .

Reserves Policy The District’s reserve balances have been established by Board actions, bond covenants, and by informal historical procedures. The purpose of this policy is to strengthen the District’s financial position, keep funds available to respond to emergencies, and accumulate funds to meet anticipated repair, r eplacement and improvements needs.

The basic goals for reserve balances are: x Operating Capital- 50 percent of one year’s operations & maint enance budget.

x Self-Insurance Reserve-The Distr ict is self-insured for vehicl e casualty and accepts responsibility for sewer backups on a no-fault basis. Fund balance set by Board action.

x Emergency Reserve-While the District is insured for many risk exposures and liabilities and can rely on FEMA aid for major disasters; it ta kes time for claims to be processed. This reserve provides funds to address emergencies immediately. Fund balances set by Board action.

x Equipment Replacement-Some major equipment is replaced on a sc heduled basis. This reserve fund accumulates monies for this purpose. The target

ies immediately. Fund balances set by Board action.

x Equipment Replacement-Some major equipment is replaced on a sc heduled basis. This reserve fund accumulates monies for this purpose. The target balance is based on budgeting for those purchases.

x Capital Projects- The District’s operations involve large capital assets. These assets must be replaced at intervals. From time to time capacity needs and changing technologies must be addressed. This reserve fund acc umulates funds for this purpose. The targ et balance is based on plannin g and forecasts for these needs.

These funds are accumulated and design ated at the Board’s sole discretion. Any of these funds can be used for any lawful purpose as directed by t he Board.

This capital reserves policy shall be reviewed at a minimum of every five years.

Investments Moreton Asset Management, LLC, is the Distr ict’s investment advisor. Moreton assists the District in seeking investments that have a higher return than the Public Treasures Investment Fund (PTIF). Due to PTIF’s limitation to very short -term investments, higher returns are possible if the District has fu nds that can be invested with a term of a year or more.

6 Reserves & Debt Schedule of Reserves For the Period Ending December 31, 2020 Zions A/P Checking $ 169,090.02 Zions P/R Checking 49,806.46 Zions ACH Checking 44,531.46 Zions Rev Checking 565,005.71 Zions WRR Expenses Checking (1/2) 14,204.92 Zions WRR Revenue Checking (1/2) 18,322.46 PTIF (Outflow) 13,303.19 PTIF (Inflow) 1,730,874.33 PTIF (Project Reserve) 2,029,549.90 Moreton Asset Advisors 1,826,170.81

.46 PTIF (Outflow) 13,303.19 PTIF (Inflow) 1,730,874.33 PTIF (Project Reserve) 2,029,549.90 Moreton Asset Advisors 1,826,170.81 Zions Trust Series 2019 Bond Construction 10,068,063.23 Total $ 16,528,922.49 Outstanding Debt for the Period Ending 12/31/20 2017 Revenue Bonds (Par Value) $ 21,195,000.00 Issue Discount (94,363.55) Underwriters Discount (340,912.50) Net Proceeds After Discount $ 20,759,723.95 Issue Costs (483,101.41) Operating Account Deposit (500,000.00) Equity Contribution 862,902.51 Net Proceeds $ 20,639,525.05 Construction Draws (20,639,525.05) Interest Income Carrying Value 12/31/20 $ Outstanding Debt $ 19,226,615.84 2019 Revenue Bonds (Par Value) $ 12,179,000.00 Construction Draw (6) (2,215,677.42) Interest Income 104,740.65 Carrying Value 12/31/20 $ 10,068,063.23 Total Carrying Value 12/31/20 $ 10,068,063.23 Outstanding Debt $ 12,179,000.00 7Long Term Financial Planning The District has a written Facilities Maintenance and Finance P lan. This plan is reviewed at five-year intervals . The existing condition of all District facilities is assessed. It also assesses the current and projected wastewate r flows and strengths and reviews this informa tion against the capacity of the collection system and treatment plants. It also evaluates known and anticipated discharge permit requirements. We then project future maintenance and capital i mprovement needs.

The ability of existing and projected District reserves and rev enues to support the

and anticipated discharge permit requirements. We then project future maintenance and capital i mprovement needs.

The ability of existing and projected District reserves and rev enues to support the anticipated financial needs is then assessed. If necessary, the D istrict would then adjust impact fees, user fees, and tax assessments. This plan wa s most recently updated in its entirety in 2019.

RatesThe District had not raised user fees since 1988 when they were r aised from $2 to $5 per month per residence and residential equivalent. Bonding f or funding of the nutrient removal and rehabilitation projects discussed later in the Annual Financial Report require annual debt service. These projects along with incr eased wastewater flows and inflation will increase operation and maintenance cost s. District sewer rates were inadequate to meet these funding needs.In 2017 the District retained Zions Capital Finance to begin a rate study. Despite having extremely low rates, the District has historically had a comfortable positive cash flow and made steady contributions to its reserves. Howev er, increasing responsibilities, facilities age a nd inflation had reduced our n et operating revenues to a small margin.

The purpose of the study was to review rates relative to bondin g requirements for expected capital improvement nee ds, increased operating and main tenance costs over time, and internal equity between different customer class es such as residential versus industrial customers. The study concluded that the basi c rate would have to be raised from $5 per month to $10 per month to cover debt servic e for the first project.In early 2018 the District scheduled a public hearing and published the required

the basi c rate would have to be raised from $5 per month to $10 per month to cover debt servic e for the first project.In early 2018 the District scheduled a public hearing and published the required public notices to propose this increase. In addition, the Board sought further transparency by requiring that all user accounts be notified by mail of the proposed rate increase. The public response was very supportive the nut rient removal project and of the rate increase. The rate was increased effective July 1, 2018. This was 30-years to the day of the last rate increase.

In October of 2019 Zions Capital Finance was asked to perform a rate study to address funding needs for North Plant rehabilitation and nutrie nt removal, projected operation and maintenance cost increases due to nutrient remova l, and short-term cash flow impacts of the Wasatch Resource Recovery food waste t o energy project.

8The study produced an eight-year schedule of revenue requiremen ts and proposed sewer service fee and property tax rate alternatives to generat e the required revenue. After the required public hearings, the District adopted a rate increase for 2021 of 55%. Residential sewer rates increased to $15.50 from $10.00 per month.

Rates are expected to rise at least 3% per year through 2027.

The District has initiated a rate study for 2022. This study w ill update construction costs and project schedules. It will particularly focus on the equity of industrial rates vs. residential rates.Tipping fees and energy sales from the Wasatch Resource Recover y project and algae sales from the North Plan t nutrient removal project will eventually contribute toward stabilizing or reducing these costs.

Property Tax

rgy sales from the Wasatch Resource Recover y project and algae sales from the North Plan t nutrient removal project will eventually contribute toward stabilizing or reducing these costs.

Property Tax After the required public notice and public hearings, the Distr ict adopted a property tax increase of 45%. The median house value is currently $317,30 0 and would pay an annual tax of $51.66 (at an assessed valuation of 55%). This is a total sewer user cost, sewer fee plus property tax of $19.80 per month. This is still the absolute lowest sewer rate on the Wasatch Fro nt and probably in the State of Utah. This rate ranks in the bottom 3% of sewer rates nationwide. This rate is 52% of the Wasatch Front average based on 2020 data. All entit ies across the Wasatch Front are undertaking major projects and their rates will rise as well.Impact FeesIn 2012, the District with the assistance of Zions Bank Public F inance completed a review of its impact fees in accordance with State Statute. Th e impact fee was increased from $1,456 for a single-family residence to $1,596. This impact fee represents the value of the infrastructure provided to a new ho me that has been built and financed by existing District users.Due to the time that has elapsed since the last study and the amount of capital improvement that has been done and is being contemplated, the D istrict has asked Zions Capital Finance to conduct a new Impact Fee study.

BondingThe construction of the Wasatch Resource Recovery (WRR) project discussed below is a Public Private Part nership. The District and ALPRO SD, our private partner, share equally in all pr oject expenses. Each partner m ade a $2,000,000 cash equity contribution to the project. The debt financing fo r the balance of the

istrict and ALPRO SD, our private partner, share equally in all pr oject expenses. Each partner m ade a $2,000,000 cash equity contribution to the project. The debt financing fo r the balance of the projects costs is also shared equally.

9To finance its portion of the project the District issued 20-ye ar Revenue bonds in the amount of $21,195,000. These Taxable Combined Utility System Revenue Bonds, Series 2017A were rated “A /Stable ” by Standard and Poors. The All-Inclusive Cost (AIC) interest rate is 4.7079159%. The annual debt service is $ 1,650,000.

The District also sponsored “private purpose” Taxable Combined Utility System Revenue Bonds on ALPRO SD’s behalf in the amount of $26,775,000. The Distric t is not liable for the debt service on these bonds.

In December 2019, the District closed on bond funding for the No rth and South Plant rehabilitation and nutrient removal projects in the amount of $1 2,179,000. This was a private placement bond. The All-Inclusive Cost (AIC) interest rate is 2.2450316% The approximate annual debt service is $789,000.

The Advanced Biological Nutrient Removal (ABNR) project and the rehabilitation project at the North Plant are also funded by District reserves an d $14,176,000 in bond financing from the Utah Div ision of Water Quality (UDWQ) S tate Revolving Loan Fund (SRF). The SRF bond has an interest rate of 0.25% with an annual payment of $727,553. The SRF loan has not been closed. Additiona l bonding of approximately $20,000,000 will be needed to complete the project .

Current Major Activities - Accounting Annual Financial ReportThe District has chosen to produce this Annual Financial Report in support of its required annual audit. The purpose of the Annual Financial Report is to assist the

Accounting Annual Financial ReportThe District has chosen to produce this Annual Financial Report in support of its required annual audit. The purpose of the Annual Financial Report is to assist the user in assessing the District’s financial condition and perfor mance. This Annual Financial Report is not required, but according to GASB Codification Sec. 2 200.101, “every government entity should prepare and publish, as a matter of public record, anAnnual Financial Report that encompasses all funds of the primary government.”

In addition to this transmittal letter the Management’s Discuss ion and Analysis (MD&A) and the Notes to the Financial Statements contain useful detail about the Districts policies and activities.Governmental Accounting Standards BoardGASB Mission Established in 1984, the Governmental Accounting Standards Boar d (GASB) is the independent, private-sector organization based in Norwalk, Conn ecticut, that establishes accounting and fina ncial reporting standards for U. S. state and local governments that follow Generally Accepted Accounting Principles (GAAP).

The GASB standards are recognized as authoritative by state and local governments, state Boards of Accountancy, and the American Insti tute of CPAs (AICPA). The GASB develops and issues accounting standards thro ugh a transparent and inclusive process intended to promote financial reporting that 10provides useful information to taxpayers, public officials, inv estors, and others who use financial reports.

The Financial Accounting Foundation (FAF) supports and oversees the GASB.

Established in 1972, the FAF is the independent, private-sector, not-for-profit organization based in Norwalk, C onnecticut responsible for the oversight,

dation (FAF) supports and oversees the GASB.

Established in 1972, the FAF is the independent, private-sector, not-for-profit organization based in Norwalk, C onnecticut responsible for the oversight, administration, financing, and appointment of the GASB and the Financial Accounting Standards Board (FASB).

The collective mission of the GASB, the FASB, and the FAF is to establish and improve financial accounting and reporting standards to provide useful information to investors and other users of financial reports and educate stak eholders on how to understand and implement those standards most effectively.

The GASB, the FASB, the FAF Trustees, and the FAF management co ntribute to the collective mission according to each one's specific role: xThe GASB and the FASB are charged with setting the highest-quali ty standards through a process that is robust, comprehensive, and inclusive.

xThe FAF management is responsible for providing strategic counse l and services that support the work of the standard-setting Boards.

xThe FAF Trustees are responsible for providing oversight and pro moting an independent and effective standard-setting process.

More information can be fo und in the Strategic Plan, at www.accountingfoundation.org/strategicplan .

New GASB Pronouncements : GASBS No. 87 Leases This Statement is effective for periods beginning after June 30 , 2022.

The District will put this Statement into effect beginning fiscal year 2023.

GASBS No. 88 Certain Discl osures Related to Debt This Statement is effective for periods beginning after June 30 , 2020.

The District will put this Statement into effect for fiscal yea r 2021.

GASBS No. 89 Accounting for Inte rest Cost Incurred Before the End of a Construction Period

ds beginning after June 30 , 2020.

The District will put this Statement into effect for fiscal yea r 2021.

GASBS No. 89 Accounting for Inte rest Cost Incurred Before the End of a Construction Period This Statement is effective for periods beginning after Decembe r 31, 2021. The District will put this Statement into effect for fiscal year 202 1.

GASBS No. 90 Majority Equity Interests-An Amendment of GASBS No.14 and No.15 The requirements of this Statement will take effect for the fina ncial statements starting with the fiscal year that ends December 31,2020. This Statement is being implemented for fiscal year 2020.

11GASBS No. 91 Conduit Debt Obligations The requirements of this Statement will take effect for the fin ancial statements starting with the fiscal year that ends December 31, 2022. The District will put this Statement into effect beginning fiscal year 2022.

Local EconomyConstruction & DevelopmentIncreased wastewater flows from residential, commercial, and in dustrial developments affect collection system and treatment plant capaci ty, operations and maintenance costs, and revenues. There is also a significant workload from site plan reviews, construction inspections, CCTV inspections, and cl eaning of completed projects. Therefore, development activities are close ly followed.

Despite the impacts of the pandemic, the District saw a signific ant increase in the number of new residential units, which increased 67.8% from 2019. H owever, the total value only decreased 4.3%. This could reflect the emphasis on multifamily units over single family dwellings. This reverses a trend from the previous four years

67.8% from 2019. H owever, the total value only decreased 4.3%. This could reflect the emphasis on multifamily units over single family dwellings. This reverses a trend from the previous four years where the number and value of residential construction decreased significantly. The decreases in the last four years were thought to be more of a reflection on the decreasing land available for development rather than influences f rom the overall economy. The amount and cost of land available for development c ould also be an influence on the higher density projects.

The District is seeing more, large apartment projects than in th e past. In addition, there are numerous projects where older single-family residence s and lots are converted to duplexes, fourplexes and other multi-family housing. These increases in housing density could affect planning for the collection system and treatment plants.

Apartments continue to be an important factor in 2019-20. If t he trend in the construction of large apartment complexes and other high-densit y projects continues, we will need to monitor treatment plant capacity. W e may also have to monitor sewer trunk line capacities in specific areas.

12 The following table summarizes construction activity in the Dis trict for 2020: The number of large apartment complexes has been an important factor in the level of impact fees collected in recent years. Impact fees were $61 9,865 in 2018 and $636,705 in 2019. Impact fees increased 42% to $903,643 in 202 0. The pace of subdivision development and housing construction has slowed through June of 2021. Impact fees to date in 2021 are $257,440.

Total nonresidential construction in the District declined by 1 8.2% from 2019 to

sion development and housing construction has slowed through June of 2021. Impact fees to date in 2021 are $257,440.

Total nonresidential construction in the District declined by 1 8.2% from 2019 to 2020. This follows steady and si gnificant decreases in the yea rs since 2008. The years 2008 through 2012 were cert ainly a reflection of the over all economic slowdown. Current decreases are likely due to the very limited amount of undeveloped industrial property remaining in the District. Non residential construction does not significantly affect District revenue or operations.

Employment Since 2010, Utah’s job growth has remained well above the U.S. average. The average growth rate from 2010 through 2018 has been a little ov er 3.0%. Utah’s job growth was 3.8% between November 2017 and November 2018. It wa s 2.37% between November 2018 and November 2019. Job growth rate from April 2019 to April 2020 was -7.1%. The job growth rate for the US was -12.9 %.

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2013 2014 2015 2016 2017 2018 2019 2020Impact Fees 13The unemployment rate for Utah was 2.8% in April 2019 as pandemic restrictions really began to be implemented. Unemployment in Utah peaked in Ap ril 2020 at 10.1%. Unemployment for April 202 1 was 2.9%, a dramatic recove ry. The Utah job contraction from 2019 to 2020 was about -1.0% the lowest in the Country.

Before the pandemic, most industries were facing a tight labor mark et. In-migration and a full educational pipeline will help to mitigate any labor shortages. Labor force participation for Utah has averag ed 69.4% for the last 35 years , immediately before the recession it was 72%. Dur ing the recession labor force par ticipation dropped to

bor shortages. Labor force participation for Utah has averag ed 69.4% for the last 35 years , immediately before the recession it was 72%. Dur ing the recession labor force par ticipation dropped to a low of 67.2%. Utah has the fifth highest labor participation r ate in the nation.

Utah’s personal income increased by 11.2% from the second quarter in 2019 to the second quarter in 2020. Utah’s personal income reached an estimated $173 billion according to the U.S. Department of Commerce, Bureau of Economi c Analysis.

Current Economic ConditionsThe Kem C. Gardner Policy Institute reports that "the impact of COVID-19 has significantly affected U.S. employment, GDP, and other economic factors. While the Utah economy has not escaped these unique circumstances, the st ate has fared better compared with national average metrics." In the Institute s 2021 Economic Report to the Governor , Jim Wood and Darin Mellott report, “Utah’s decade long expansion, the longest on record, ended in 2020 with the emergen ce of COVID-19.

The public health crisis presented the greatest challenge to the Utah economy since the Great Recession. In the early spring, the forecast for 2020 w as bleak as the unemployment rate in April climbed to roughly 10%. But as the ye ar unfolded, the resiliency of the Utah economy was on full display. By November, Utah’s year -over employment was down -0.2%, one of the smallest employment declin es of any state, and the unemployment rate had dropped to 4.3%. Nationally the unem ployment rate was 6.7%.Utah exports in 2020 are forecast to reach $17.6 billion, the th ird-highest year on record. Notably, the value of other export commodities (excludes gold) at $8.7 billion will be the high est ever, with electronics and agricultural products among Utah’s

n, the th ird-highest year on record. Notably, the value of other export commodities (excludes gold) at $8.7 billion will be the high est ever, with electronics and agricultural products among Utah’s major export products. The forecast for residential construction shows a record of 30,745 dwelling units, surpassing the previous record high of 28,285 in 2005. The value of residential construction will top $6.3 billion. The housing boom in apartments and condominiums continues, and single-family construction will have the best year since 2006. Housing demand has not slowed with COV ID-19, as historically low mortgage rates attract buyers to the market. Th e strong demand has pushed up housing prices. The med ian sales price of a single-family home in Utah will be up by 11% to $385,000 in 2020. The construction boom inc ludes nonresidential construction with $2.3 billion in value in 2020. The total value of permit authorized construction (residential, nonresidential, and additions, alterations, and repairs) will be $10.3 billion in 2020, a record year as wel l. While the public health crisis has been tragic, the impact of the pandemic on the Utah economy has 14been much milder than initially expected. And, a strong recovery is forecast for 2021, with employment increasing by 58,000 jobs, which would be the lar gest single-year increase in employment in Utah’s history” Current Major Activities –Human Resources Staffing The District currently has a full-time staff of 38. Current staff consists of: District Staffing Activity Incumbents Office & Management 7 Engineering 2 North Plant Operations 5 South Plant Operations 5 Maintenance 4 Pretreatment 1 Collection System 7 Water Quality Research 1 Wasatch Resource Recovery 6 TOTAL 38

nts Office & Management 7 Engineering 2 North Plant Operations 5 South Plant Operations 5 Maintenance 4 Pretreatment 1 Collection System 7 Water Quality Research 1 Wasatch Resource Recovery 6 TOTAL 38 One of the key elements in the Dis trict's success is the qualit y of its workforce. There will be approximately six employees retiring over the next five-y ears and ten employees over the next seven-years. As nutrient removal facil ities come on-line at both plants, additional operators and maintenance personnel will be required.

Finding qualified and motivated replacements is likely to be a p roblem. There is no established pathway leading to employment in the resource recov ery industry. The District's compensation is competitive, but we must make a concerted effort to locate and recruit suitable replacements. Salary budgets will be high er in the near term as we hire replacements early enough to be adequately trained befo re existing employees retire and to staff Wasatch Resource Recovery. Because of the pandemic and the Federal stimulus program, Utah is experiencing extraordinarily tight conditions in the labor market. The Wasatch Front is also experiencing a very high level of growth and construction with resulting low levels of unemployment. The response to recent recruiting efforts has been poor.

Retirement Benefits The District contributes to the Local Governmental Contributory Retirement System and Local Governmental Non-Contributory Retirement System cost- sharing defined benefit pension plans administered by the Utah Retirement Systems (URS). URS provides retirement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement st atutes established and amended by the Utah State Legislature.

irement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement st atutes established and amended by the Utah State Legislature.

15Retirement benefits for District employees who began employment prior to July 1, 2011, are “Tier 1” employees. “Tier 2” employees are those who begin initial employment on or after July 1, 201 1. Retirement benefits for the se employees are significantly reduced. Additional information is contained in th e Notes to the Financial Statements.

The District does not provide any other post-employment benefits.Medical InsurancePerhaps because of the nature of our work we are particularly s ensitive to health issues. The District provides me dical, dental, and vision insu rance. The District covers the entire premium for the employees and their families. The District, like all employers, is concerned by the tremendous inflation in medical and insurance costs.

We periodically request underwritten proposals from all Utah Health Insurance carriers. This was done for 2018. The Utah Public Employees H ealth Plan, which is a part of the Utah Retirement Systems, was very competitive with the commercial market and was again selected to be our insurer. By dropping a tier in coverage and reducing the number of provide rs available in the system, we we re able to reduce our renewal premium significantly.

The District offers a high deductible health plan (HDHP) as well a s a traditional plan.

In the HDHP plan, a high deductible is combined with a Health Savi ngs Account (HSA). Funds are contributed to the HSA before taxes. Contribu tions can be made by both the employer and the employee. If funds in the account are used for

combined with a Health Savi ngs Account (HSA). Funds are contributed to the HSA before taxes. Contribu tions can be made by both the employer and the employee. If funds in the account are used for qualifying medical expenses, they are not taxed. Savings from th e reduced premiums of HDHPs allows the Distr ict to fund the maximum allowabl e annual contribution to the HSA. The District has offered the high deductible option toemployees since 2012. Most District employees have chosen the hig h deductible program. Some employee’s personal circumstances do not permit participation in a HDHP.

The high deductible health plan gi ves the employee an incentive t o shop and otherwise manage medical utilization. It also removes a signif icant portion of the cash flow for medical transactions from insurance company rules and overhead.

The resulting savings and benefits to employees are very signifi cant.

The District or its health insurance covers all immunizations. Employees are urged to maintain all common immunizat ions such as flu, MMR, and teta nus. Employees are encouraged to have immunizations for any disease such as hepatitis that concerns them. In addition to concerns about contacting communic able diseases at work, it is felt that because of the essential service nature o f wastewater treatment it is important that as many employees and their family members as possible remain healthy in an emergency so that employees are available to main tain and operate District facilities.

16Current Major Activities - Regulatory Issues Emerging Constituents of Concern The presence of pharmaceuticals known as endocrine disruptors in the surface waters is a concern for environmentalists, regulators, and the was tewater industry.

ssues Emerging Constituents of Concern The presence of pharmaceuticals known as endocrine disruptors in the surface waters is a concern for environmentalists, regulators, and the was tewater industry.

Most medications are incompletely utilized in the body and trac es end up in sewage.

Outdated medications are often flushed down the toilet. These residues are not completely removed by conventional wastewater treatment. This practice has been happening as long as there have been medications and sewers. H owever, the effects of these very low numbers (parts per billion or trillion) have not been widelystudied.

The District is urging residents to follow new Federal, prescri ption drug, disposal guidelines. These guidelines urge Americans to: ƒTake unused, unneeded, or expired prescription drugs out of their original containers.

ƒMix the prescription drugs with an undesirable substance, like used coffee grounds or kitty litter, and put them in impermeable, non-descr ipt containers, such as empty cans or sealable bags, further ensuring that the drugs are not diverted or accidentally ingested by children or pets.

ƒThrow these containers in the trash.

ƒFlush prescription drugs down th e toilet only if the accompanyi ng patient information specifically instructs it is safe to do so. This is very unlikely to be the case.

ƒReturn unused, unneeded, or expired prescription drugs to pharm aceutical take-back locations that allow the public to bring unused drugs to a central location for safe disposal –Bountiful City, Centervi lle City and West Bountiful City have disposal facilities at their respective police statio ns.

The most recent Emerging Constituents of Concern (ECC) are Polyfluoroalkyl Substances (PFAS). PFASs include many chemicals that are used in f ood

posal facilities at their respective police statio ns.

The most recent Emerging Constituents of Concern (ECC) are Polyfluoroalkyl Substances (PFAS). PFASs include many chemicals that are used in f ood packaging and making things grease- and stain-resistant. They are also used infirefighting foams and in a wide range of manufacturing process es.

The District’s existing trickling filter plants are not capable of treating these constituents to the low levels being discussed. If the District m ust treat any of these constituents, extensive treatment plant modifications could be required. Universityresearchers and wastewater treatment equipment manufacturers ar e developing processes that can be added to existing treatment plants to remove both Utah Pollutant Discharge Elimination System (UPDES) Permit Renewal The UPDES Permit for the North Plant and the South Plant expire d on January 31, 2015. Application for permit renewal was made in a timely mann er. Since that time, the District has been working with the DWQ Staff to complete th e renewal process.

Several nutrient related issues have made this a long and diffic ult process.

17New UPDES Permits were issued for both plants, effective January 3, 2020. Both permits included new phosphorus limits. In addition, water qual ity, based limits for ammonia have been reduced at both plants. Meeting these limits r equires additional treatment capacity and technology to achieve consistent complian ce. Limits for flow were also implemented. The UPDES permit for the North Plant was r eissued effective December 1, 2020. The amended permit set mass-based l imits for ammonia for the months of November through February.

The District had been following a policy of minimizing treatment plant upgrades and

ecember 1, 2020. The amended permit set mass-based l imits for ammonia for the months of November through February.

The District had been following a policy of minimizing treatment plant upgrades and improvements until the outcome of these issues becomes clearer. With new limits in place rehabilitation of the South Plant and construction of amm onia removal facilities was begun and is approximately 50% complete. The new ammonia removal process will be commissioned by the end of December. The engine ering design report for the rehabilitation a nd nutrient removal facilities a t the North Plant was recently approved by the Division of Water Quality. Engineerin g design is now underway. The North Plant projects are expected to be complete d in 30-Months.

The Wasatch Front Water Quality Council The District has joined nine other Publicly Owned Treatment Works (POTW) discharging to Utah Lake, the Jordan River and/or Farmington Ba y of the Great Salt Lake in an interlocal agreement. In this agreement, these POTWs commit to an organized approach to the many issues arising out of water qual ity concerns surrounding these water bodies. The group provides ongoing fun ding to hire a fulltime, PhD level scientist to assist the group in understand ing and responding to the many technical issues and to direct research contracts funde d by the group.

The Water Quality Council requested the District to act as their agent. The District collects and accounts for all funds contributed to the Group. The District hires and pays all the Group’s employees. We also take care of logistics issues such as procuring equipment, materials, transportation, etc. We provi de day-to-day supervision of employees as needed. Other members of the group provide in-kind

lso take care of logistics issues such as procuring equipment, materials, transportation, etc. We provi de day-to-day supervision of employees as needed. Other members of the group provide in-kind laboratory services, sponsor additional research projects, and other in-kind assistance.

Treatment Plants –Compliance The primary duty of the District is compliance with its UPDES p ermit. Currently the permits for both plants contain pe rmit limits for biochemical ox ygen demand, total suspended solids, ammonia, dissolved oxygen, oil and grease, E. coli,pH, percent removal, and total residual chlorine. The plants must also rout inely conduct Whole Effluent Toxicity (WET) testing. This is a biological test invol ving very sensitive sentinel species to detect any toxicity in the treatment plant effluent.

Violation of these permit limits can result in significant fines . Because of the complexity and variability of wastewater and the biological nat ure of our treatment plant processes permit violations are inevitable. Permit viola tions are taken 18extremely seriously, and aggressi ve remedial actions are always taken when they occur.

North Plant The plant exceeded its ammonia limit by 0.2 mg/l in November 201 9 and by 2.5 mg/l in December 2019. The deterioration in performance was likely tied to colder weather. The plant exceeded its ammonia limit by 0.1 mg/l in J anuary 2020 and by 2.6 mg/l in March 2020. The plant exceeded its daily maximum f or ammonia on three occasions in January 2020.

The Division of Water Quality (Division) issued a Notice of Vio lation (NOV) for these permit violations on August 28, 2020. A settlement agreement w as executed by the Division and the District on March 23, 2021. The agreement reads in part:

sued a Notice of Vio lation (NOV) for these permit violations on August 28, 2020. A settlement agreement w as executed by the Division and the District on March 23, 2021. The agreement reads in part: A. The Division calculated a total penalty of $18,921.00. SDSD s hall pay a penalty in the amount of $9,584.00 and associated investigative costs in the a mount of $1,980.00 for a total of $11,564.00, which was calculated and adjusted for circumstan ces in conformance with the penalty policy outlined in Utah Administrative Code R317-1-8.

B. The Director agrees to hold in abeyance $9,337.00 in civil p enalties, so long as SDSD completes the follow terms within the time frames outlined: i. Meets all the payment terms ou tlines above in item A of the O rder.

ii. The SDSD N. Plant does not vio late the Act, rules or UPDES Permit No. UT0021636 for a period of 12 months from the effective date of this agreement. If new violations occur within this time frame, the penalty amounts listed below will no longer be held in abeyance and following amounts will become due and payable t o the State of Utah, in addition to any penalti es imposed for the new violatio ns. In no event will the total amount due under this section exceed the penalties held i n abeyance.

(a) $9337 per violation per day for discharge violations, includ ing but not limited to UPDES Permit limit e xceedances, spills, or overflows . For the purposes of this agreement, an exceedance of a monthly averageeffluent limit will be considered one (1) day.

(b) $500 per occurrence for recor dkeeping violations or other vi olations determined by the Director to be minor.

The North Plant failed its 3rdquarter biomonitoring test. A follow up test passed and routine quarterly sampling was resumed.

g violations or other vi olations determined by the Director to be minor.

The North Plant failed its 3rdquarter biomonitoring test. A follow up test passed and routine quarterly sampling was resumed.

DWQ performs on-site detailed audits of plant maintenance, the industrial pretreatment program, and biosol ids disposal each year. All au dits were routine with only minor, if any, deficiencies noted.South Plant Beginning in July 2020 through March 2021, the South Plant exceed ed its permit limits for ammonia, both 30-day average and daily maximum. Thi s put The District in Significant Non-Compliance (SNC) with its discharge permit. DW Q issued the District a Notice of Violation (NOV) on December 18, 2020. This was followed by a Notice of Violation and Compliance Order (NOV/CO) on March 17,2 020. The 19NOV/CO required the District to take immediate steps to bring th e plant into compliance.

The District and DWQ reached a settlement agreement March 30, 2021. The agreement specifies steps and deadlines for bringing the South P lant and WRR into full compliance. The agreement reads in part: 1. The Division calculated a total penalty of $232,831,00. The South Davis Sewer District shall pay a penalty in the amount of $38,805.00 and associated invest igative costs in the amount of $15,345.00 for a total of $54,150.00, which was calculated and adjusted for circumstances in conformance with the penalty policy outlined in Utah Admini strative Code R317-1-8.

2.SDSD shall apply an additional $38,805.00 to fund a mitigation project(s)…… 3. The Director agrees to hold in abeyance $155,221.00, so long as SDSD completes the following terms within the timeframes listed below…… WRR began receiving food waste in February 2019. By July WRR was discharging

agrees to hold in abeyance $155,221.00, so long as SDSD completes the following terms within the timeframes listed below…… WRR began receiving food waste in February 2019. By July WRR was discharging enough ammonia to the South Plant to cause it to violate its ammonia permit limits.

It was anticipated that ammonia would be produced by the anaero bic digestion process and an ammonia removal process was included in the WRR project. The ammonia produced in the digesters has been more than anticipate d and the ammonia removal process less efficient and harder to operate th an expected.

Forced aeration was added to the first-stage trickling filter a t the South Plant. This has increased its ability to remove ammonia. At the same time significantimprovements in WRR ammonia remo val facilities as well as impro vements in operations and maintenance have significantly reduced WRR disch arges to the South Plant. The plant has been in compliance with its dischar ge permit since April 2021.

An innovative, algae based nutrient removal process was planned for the South Plant to handle the increased ammonia loading from WRR and to m eet new, lower discharge permit limits. Difficulties in the pilot testing of the proposed nutrient removal technology delayed the implementation of the planned im provements by more than a year. The algae-based system had to be abandoned and an alternative system evaluated and selected. The new nutrient removal process and needed plant rehabilitation projects were engineered and construction h as been underway for eight-months. Startup of t he nutrient removal process will be complete by the end of December 2021.

There were no exceedences for the routine chronic biomonitoring tests. Weekly

s been underway for eight-months. Startup of t he nutrient removal process will be complete by the end of December 2021.

There were no exceedences for the routine chronic biomonitoring tests. Weekly acute biomonitoring tests were required by the NOV/CO. These te sts showed no acute toxicity.

DWQ performs on-site detailed audits of plant maintenance, the industrial pretreatment program, and biosolids treatment and disposal each year. All audits were routine with only minor deficiencies noted.

20Current Major Activities - Wasatch Resource Recovery (WRR) Resource Recovery The Water Environment Federation (WEF), the professional association for the wastewater industry, has undertaken rebranding wastewater treatm ent plants as resource recovery facilities. This has been done to encourage a change in thinking about the role of these facilities in the economy and the envir onment. Wastewater and its constituents are not a pollutant to be gotten rid of, bu t resources to be recovered and reused.

Food waste is the largest waste stream in the United States, and it is the least recycled. According to the EPA, 97% of all food waste is landfilled. Food waste occupies from 15 to 30% of all l andfill space where it becomes anaerobic and generates enormous quantities of the greenhouse gasses methane and carbon dioxide. Food Waste is a tremendous opportunity to recover ener gy, plant nutrients and organic carbon.

Over 100 resource recovery facili ties in the U.S. have become ne t energy exporters in addition to providing all their own energy requirements. Thi s has been achieved by: oIncreased capture of raw biosolid s before any aerobic treatment of the wastewater oPretreatment of biosolids to enhance digestibility oAdvanced digestion technologies such as phased digestion

d by: oIncreased capture of raw biosolid s before any aerobic treatment of the wastewater oPretreatment of biosolids to enhance digestibility oAdvanced digestion technologies such as phased digestion oImport organic material such as Fats, Oil, and Grease (FOG) fro m grease traps oAdvanced gas-scrubbing technolog ies to increase utilization opt ions oUtilization of digester gas (methane) to generate power oSale of methane as renewable natu ral in the natural gas utility grid oPublic/Private Partnerships to provide technical and business e xpertise as well as capital Wasatch Resource RecoveryBeginning in 2015 the District began to explore the potential for a food waste to energy project. The District collaborated with ALPRO; a Utah comp any founded to develop resource recovery projects. An initial feasibility study was performed which found that a project to produce energy from imported organic wa stes was sufficiently promising to pursue further. Research, preliminary design, and development of each element needed to implement the project and further assess its feasibility were undertaken.

ALPRO identified enough sources of organic waste that are highl y likely to divert their waste to the Resource Recovery Project once it is operati onal to make the project feasible. The major sources of organic waste for the pro ject are: 21oFood processing waste oSource Separated Organics (SSOs) from grocery stores, restauran ts, schools, etc.

oFats, oil, and grease from grease trap pumping oBottled beverages from bottling companies oAerobic biosolids from wastewater treatment plants These organic wastes are extensively pretreated and then anaerobi cally digested.

The methane gas produced by diges tion is scrubbed of impurities and injected into

ds from wastewater treatment plants These organic wastes are extensively pretreated and then anaerobi cally digested.

The methane gas produced by diges tion is scrubbed of impurities and injected into the natural gas utility system. The project will ultimately pr oduce 3,000,000 cubic feet of renewable natural gas (RNG) per day. This is enough to supply natural gas for a population of 40,000.

ALPRO developed contracts with Dominion Energy and British Petr oleum for the transport and sale of the RNG pro duced by the project. WRR has contracts with Dominion Energy to transport the RNG and a 12-year purchase agre ement with British Petroleum of the sale of its RNG.

During 2016 the District commissioned E3, a consulting firm that specializes in evaluating the feasibility and economics of alternative energy projects, to provide a third-party evaluation of overall project feasibility and economi cs. Their assignment was to document and opine on all aspects of the project that wo uld be required to support a bond rating for sale of bonds to finance the project. T he District made the decision to proceed with the Pr oject and began the process of procuring bond financing.

On March 6, 2017, the District entered a Public Private Partnership (P3) with ALPRO to execute the project. This is a 50/50 equity partnership with each entity equally responsible for equity contributions, debt financing, operational costs, and maintenance costs. ALPRO is responsible for the outside-the-fe nce operations of feedstock procurement, customer service, permits, biosolids mar keting and delivery and energy sales. The District is responsible for the operatio n and maintenance of the waste receiving, anaerobic d igestion, RNG scrubbing and sol ids processing facilities.

mar keting and delivery and energy sales. The District is responsible for the operatio n and maintenance of the waste receiving, anaerobic d igestion, RNG scrubbing and sol ids processing facilities.

The Wasatch Resource Recovery project is a joint venture. This enterprise is governed by a six-member management committee. This District i s represented on this committee by Leonard K. Ara ve, Ryan T. Westergard and John K. Davies.

ALPRO SD, LLC, our joint venture partner, is represented by Bru ce Alder, Eric Alder and L. Scott Rogers. Eric Alder serves as Chairman.

This is a large and complex project on a very small site. The h igh level of economic and construction activity in the U.S. and locally during 2018 and 2019 made labor scarce and expensive. Construction materials, particularly steel, increased significantly in cost. Despite these challenges, construction proc eeded smoothly and on budget. The project is, however, 18-months behind schedu le. This is due almost entirely to the gas scrubbing equipment. The supplier of the gas scrubbing equipment is a relatively new company located in the Netherland s. There were 22significant problems with engineering issues, shop drawing appr ovals, equipment delivery and electrical code compliance. Commissioning of the u nit has had numerous problems and is not yet complete.

The Project began sending gas to the grid in January 2021. Cur rently an average of 500 decatherms or 500,000 cubic feet of renewable natural gas ar e being sent to the grid.

WRR has been receiving food waste since March 2019. To date WRR has processed 35,000,000 gallons of organic wastes. The following shows major feedstock types and volume: Some of the major sources of feed stock are Dannon, Nestle', Swire s Coca Cola,

. To date WRR has processed 35,000,000 gallons of organic wastes. The following shows major feedstock types and volume: Some of the major sources of feed stock are Dannon, Nestle', Swire s Coca Cola, Schreiber Cheese, Costco, and Kroger/Smiths.

Current Major Activities - Treatment PlantsNorth Plant Aqua Engineering, the District E ngineer and staff completed an engineering assessment of all North Plant assets and processes. Based on t he condition of each asset, options were developed and evaluated for extending t he life of that asset into the next 20-year planning horizon or replacing it. An engineering design report for the rehabilitation of the North Plant with the additi on of an Advance Biological Nutrient Removal (ABNR) system for nutrient removal wa s submitted to DWQ for review and approval and was approved in May 2021. Plans a nd specifications for the project are being prepared The current co st estimate for the work is $47,276,500.

23On February 26, 2020, the Distric t went before the Water Quality Board requesting that the Board funding for the ABNR system be changed from the South Plant to the North Plant. This request was approved. Because of funding co nstraints, the amount was reduced to $14,176,000.

Due to the pending rehabilitation and nutrient removal project, no significant projects have been undertaken at the Nort h Plant. This plant is general ly in a clean, orderly, and workmanlike condition. There is no known deferred maintenanc e, that is not addressed in the plant rehabilitation project, which would adve rsely affect permit compliance or the life of significant, existing plant assets South Plant Aqua Engineering, the District E ngineer and staff completed an engineering

ation project, which would adve rsely affect permit compliance or the life of significant, existing plant assets South Plant Aqua Engineering, the District E ngineer and staff completed an engineering assessment of all South Plant assets and processes. Based on t he condition of each asset options were developed and evaluated for extending t he life of that asset into the next 20-year planning horizon or replacing it. Engine ering drawings and specifications have been developed to implement the chosen alternative for each asset.

Aqua Engineering has recommended and designed a Moving Bed Bior eactor (MBBR) ammonia removal system for the South Plant. This proces s is added at the end of the existing process. The plant rehabilitation and nutr ient removal process are currently under construction.

This plant is generally in a clean, orderly, and workmanlike cond ition other than disruptions caused by construction activity. There is no known d eferred maintenance, that is not addressed in the plant rehabilitation project, which would adversely affect permit compliance or the life of significant plant assets.

BiosolidsThe treatment and ultimate utilization of biosolids generated during the wastewater treatment process and WRR operations is a significant part of o perations.

Regulations pertaining to biosolid s are detailed and demanding. Compliance with regulations and maintaining viable biosolids handling options i s necessarily a high priority for the District.

The South Davis Sewer District i s committed to following the pr inciples of conduct set forth in the National Biosolids Code of Good Practice. It is the policy of the District to promote and practi ce the beneficial use of biosolid s and the

d to following the pr inciples of conduct set forth in the National Biosolids Code of Good Practice. It is the policy of the District to promote and practi ce the beneficial use of biosolid s and the reuse/recycling of resources. The District strives to maintain, improve, and protect the environment during the production and treatment of biosolid s. The District makes every effort to ensure that the public is not endangered o r inconvenienced by the production and treatment of biosolids. The District obeys al l applicable federal, state, county and local laws, rules, and regulations.

24Long-term biosolids options continue to be a concern for all PO TWs in the area.

Historically, the District has beneficially used its biosolids a s a soil amendment in local agricultural operations. The 2020spring and fall hauling and spreading campaigns went very smoothly. We have some wet weather issues tha t need to be addressed, such as soft spots in the access road. Larger flotation tires have been added to the spreader to improve wet weather operations.

The WRR project will ultimately generate more than 25,000 dry tons of biosolids per year. The Plants produce 1,000 dry tons per year. This increased v olume of biosolids to be utilized presents challenges, but also creates op portunities. The current land application site is in a conservation easement whic h means it is unlikely to develop and we can develop a long-range plan. This site is not adequate for all WRR biosolids, so additional sit es are being sought. Agreements with a very large parcel are being negotiated. The District is also working with a commercial land application site in Weber County for utilization of biosolids and ammonium sulfate produced by the WRR project. The long-range goal for these prod ucts is

trict is also working with a commercial land application site in Weber County for utilization of biosolids and ammonium sulfate produced by the WRR project. The long-range goal for these prod ucts is commercialization for the agricultural market.

Current Major Activities - Collection SystemThe collection system is in all r espects in clean, orderly, and workmanlike condition.

The Collection System Operations Facility and collection system mobile equipment is likewise in workmanlike condition. The District maintains a n on-going list of needed repairs and improvements. There is no deferred maintena nce, which would adversely affect the performance, permit compliance or the life of these assets.

Major Activities - FutureAccountingThe District has purchased a full accounting software package f rom Black Mountain Software to support WRR. We have completed configuring and popul ating this software to support the WRR project. This accounting system tr acks all WRR costs for labor, equipment, parts, materials, power, chemicals etc. The accounting workload for these operations and maintenance costs is signific ant. We have added one fulltime clerk for this workload. The bond documents require formal accounting and auditing manuals which we are continuing to develop.

Collection System Most of the District's trunklines (lines over 8-inches in diame ter) are constructed of reinforced concrete pipe (RCP). RCP is a robust and reliable product for sewers. It is, however, subject to corrosive attack from bacteria and chemi cals under certain conditions. Historically, if RCP needed to be replaced the onl y alternative was to excavate and install new pipe. A process called Cured-In- Place-P ipe (CIPP) has become a technically and ec onomically superior option.

lly, if RCP needed to be replaced the onl y alternative was to excavate and install new pipe. A process called Cured-In- Place-P ipe (CIPP) has become a technically and ec onomically superior option.

25In this process, a tube of polyester felt and/or fiberglass is s aturated with epoxy or vinyl ester resins and inserted into the existing pipe. It is inflated with air or water pressure and then cured using hot water or steam. The resultin g composite pipe is structurally independent of the original pipe and provides both a very smooth and corrosion resistant product. Th is process involves less interf erence with traffic and other activities, is accomplished in a fraction of the time, an d is far less expensive than traditional cut-and-cover m ethods. Over the last 15 years, Dis trict contractors have installed over 40,000 linear feet of CIPP from 8-inches dia meter through 27inches diameter.

The District has its own equipment for lining 4-inch diameter l aterals. We line approximately 50 laterals per year, saving the District and hom eowners many thousands of dollars. We have added the necessary equipment to line the joint between the main and the lateral . This is the last link in bei ng able to address all inflow, root and other problems encountered with laterals.Treatment PlantsWe continue to see significant increases in operating expenses particularly chemical costs, repair costs and replacemen t parts costs. We have redoubled our efforts to improve efficiency in these areas. For example, we just complete d a Rocky Mountain Power program to perform energy audits and complete ene rgy conservation projects. We have shortened replacement intervals for pump impellers to maintain higher pumping efficiency. We have increased our efforts to procure

energy audits and complete ene rgy conservation projects. We have shortened replacement intervals for pump impellers to maintain higher pumping efficiency. We have increased our efforts to procure these resources as economically as possible. We continue to ag gressively search for alternate suppliers for original equipment manufacturer par ts and to fabricate parts ourselves or have them fabricated locally.

SafetyDistrict facilities are periodically assessed to identify poten tial safety hazards. The purpose of these evaluations is to provide the information nece ssary to improve the working environment and reduce the potential for injuries. The following table and chart summarize recent District accidents: Collection TreatmentWater Quality Annual Year System Plants Group WRR Office Total 2011 hip & shoulder 1 2012 knee 2 2013 leg Foot 2 2014 eye 1 2015 0 2016 laceration/bruise 1 2017 finger & arm foot 3 2018 abrasions 1 2019 ear & hand foot & hand shoulder 5 2020 various 7 Total 6 8 2 1 1 23 26The significant increase in injuries is due to new employees an d the new WRR operation. The new employees are generally younger and less ex perienced in the workplace. We need to increase our daily emphasis on safety an d fundamental safety training issues.

The major safety and health related regulations have required w ritten program components, many of which are exte nsive. The District must develop, write, and implement programs specific to our facilities. The following t able lists the safety & health programs for which the District is responsible.

The implementation process involves working with all District p ersonnel to ensure that everyone understands their ro le within the program. Those personnel affected

hich the District is responsible.

The implementation process involves working with all District p ersonnel to ensure that everyone understands their ro le within the program. Those personnel affected by a given regulation or program must be trained on proper, saf e work practices through regularly scheduled train ing sessions. They also get h ands-on instruction and advice whenever necessary. A safety and industrial hygiene consulting firm is currently working on updating all the District's health and safe ty programs and documents.

The safety program creates a base from which a safety culture ca n thrive. As employees develop an attitude of working with safety in mind, a ccident risk goesItem Regulation(s)Written Program TrainingDocumentation Blood borne Pathogens Federal OSHA 1910.1030 X X X Personal Protective Equipment29 CFR Ch. XVII Subpart I Hearing Conservation Federal OSHA 1910.95 XX X X Hazardous Materials Communication Federal OSHA 1910.1200 XXX X X Laboratory Safety Federal OSHA 1910.1450 XX X X Respiratory Protection Federal OSHA 1910.134 XX X X Confined Space Entry Federal OSHA 1910.146 XXX X X CDL Policies & procedures Federal DOT (40 CFR 390 & 391) X X CDL Random Drug Testing Federal DOT (40 CFR 390 & 391) X X Electrical Safety Federal OSHA 1910.331-335 X X Emergency Response Planning Federal OSHA 1910.38 X X X Powered Industrial Truck Operation Federal OSHA 1910.78 X X Accident Reporting Federal OSHA 1904 X X Flammable Liquids Federal OSHA 1910.106 X X X Fire Extinguishers Federal OSHA 1910.157 X X Control of Hazardous Energy Federal OSHA 1910.147 XX X X Air Contaminant Exposure Federal OSHA 1910.1000 X On-site Contractor Briefing Various X Welding, Cutting, & Brazing Federal OSHA 1910.252 X X X Emergency Response

s Energy Federal OSHA 1910.147 XX X X Air Contaminant Exposure Federal OSHA 1910.1000 X On-site Contractor Briefing Various X Welding, Cutting, & Brazing Federal OSHA 1910.252 X X X Emergency Response HAZMAT Federal OSHA 1910.120 X X X Traffic ControlUtah DOT Manual on Uniform TC Devices X X Heavy Equipment Federal OSHA 1910.180(b)(3) X X 27down, and, as a result, there are fewer on the job incidents. Lower accident rates reduce insurance and workers compensation rates.

SecurityThe District has surveillance cameras at the South Plant, the No rth Plant, and Collection System Operations facili ties. Each installation includes three fixed and one pan and tilt camera. All cameras are backed up on a self-c ontained hard drive that maintains the most recent 3 0-days of activity. All camera s can be accessed from any workstation in the Distric t. The cameras can also be accessed from an iphone or ipad. The cameras can be programmed to monitor for m ovement and provide an alarm when movement is detected.

U.S. Environmental Protecti on Agency (EPA) Operating Grant EPA has a groundwater remediation project removing a plume of perc hlorethylene (PCE), a dry-cleaning solvent. This plume is located between 11 00 West and Redwood Road and between 500 South and 400 North in West Bounti ful. The District was awarded a grant to operate this facility for 10-years. The District’s proposal was approximately half the amount that EPA had budgeted. Our ten-years of operating OU2 have been successful and generally about one-half of the originallyproposed budget.

Risk Management F o r 2 0 2 1a n d 2 0 2 2t h e D istrict’s Property, Inland Marine, Crime, General Liability, Wrongful Acts/Professional Liability, Employment Practices Liab ility, Automobile

get.

Risk Management F o r 2 0 2 1a n d 2 0 2 2t h e D istrict’s Property, Inland Marine, Crime, General Liability, Wrongful Acts/Professional Liability, Employment Practices Liab ility, Automobile Liability, Excess Liability, Net work Security/Data Breach Liabi lity, (WRR), Wrongful Acts/Professional Liability (WRR), and Excess Liability (WRR) in surance is provided Liability (WRR) and Employment Pra ctices Liability (WRR) is provided by Travelers Environmental Liability is provided by Navigators (A+ XV). The l ocal agent, Olympus Insurance Agency, specializes in insuring local government agencies and provides extensive risk management support including audits, training, a nd consultation.

Worker’s Compensation insurance for 2021 and 2022 is being provided by Utah Worker ’s Compensation Fund. The District's experience modifier is 0.95. This is down from 0.68, a reflection of the higher number of claims for 2019. The number of claims in 2020 will likely next year’s modifier . The District is self-insured for unemployment. The District is also self-insured for vehicle casualty except for ourvery expensive collection system cleaning trucks and closed-circ uit television units, which are insured for casualty as well as liability.

The District believes in being proactive in providing a safe an d healthy workplace for its employees. We provide training in-house and using resources su ch as the Utah Workers Compensation Fund and the Utah Safety Council. In additi on to in-house 28safety inspections, we invite inspections by our liability insurance carrier and Utah OSHA consultation specialists.

h Workers Compensation Fund and the Utah Safety Council. In additi on to in-house 28safety inspections, we invite inspections by our liability insurance carrier and Utah OSHA consultation specialists.

Awards and Achievements The Government Finance Officers Association of the United State s and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the South Davis Sewer District for its Comprehensive Annual Financial Report (ANNUAL FINANCIAL REPORT) for th e fiscal year ended December 31, 2019. This was the 22nd consecutive year that the District has achieved thi s prestigious award.

To be awarded a Certificate of Achievement, a government must pu blish an easily readable and efficiently organized comprehensive Annual Financi al Report. This report must satisfy both generally accepted accounting principl es and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to m eet the Certificate of Achievement prog ram’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

John E. Petersen, the finance columnist for Governing magazine, stated in the April the realm of professional accomplishment.”

AnAnnual Financial Report is not required by the Governmental Accounting Standards Board (GASB), but according to the GASB Code Sec. 220 0.101, "every government entity should prepare and publish, as a matter of pu blic record, a ANNUAL FINANCIAL REPORT that encompasses all funds of the primar y government." The District Board of Trustees agrees that good g overnance requires

pare and publish, as a matter of pu blic record, a ANNUAL FINANCIAL REPORT that encompasses all funds of the primar y government." The District Board of Trustees agrees that good g overnance requires that the District produce an Annual Financial Report .

The following pages present the District’s organizational chart, a listing of the District’s Board of Trustees, the District’s 20 21 meeting schedule, a listing of the employees of the District, a copy of our 2019 Certificate of Achi evement, a list of professional awards, a location map, an area map, staff picture s, and project pictures.

Conclusion This report has been prepared to provide meaningful data and co mmentary to anyone interested in understanding the financial and other acti vities of the South Davis Sewer District. Further in formation is available in the Management's Discussion and Analysis and in the footnotes to the audit.

The Annual Financial Report is the product of the efforts of the entire office and accounting staff. We would like to express our appreciation for their talents and efforts. The District is especially appreciative of the tremendo us amount of time and 29effort put into the ANNUAL FINANCIAL REPORT and the Audit by our Accounting Manager, Mark R. Katter and the manager of our Audit, Stephen R. Capson.

We would also like to express our appreciation to the District’ s Board of Trustees for providing their continued support in maintaining the highest st andards of professionalism in the management of the District’s finances.

Respectfully submitted, Dal D. Wayment, P.E. Mark R. Katter, CPA General Manager/Treasurer Accounting Manager/Clerk 32SOUTH DAVIS SEWER DISTRICT AWARDS 1976 Outstanding Treatment Plant O perator/Wastewater Plant Under 5 MGD Design Capacity* Gary C. Hales

tter, CPA General Manager/Treasurer Accounting Manager/Clerk 32SOUTH DAVIS SEWER DISTRICT AWARDS 1976 Outstanding Treatment Plant O perator/Wastewater Plant Under 5 MGD Design Capacity* Gary C. Hales 1977 Outstanding Wastewater Plant Under 5 MGD Design Capacity* South Plant 1977 Outstanding Treatment Plant O perator/Wastewater Plant Under 5 MGD Design Capacity* Donald E. Stark 1979 Outstanding Collection System Under 5 MGD Design Capacity* 1978 Outstanding Wastewater Plant Over 5 MGD Design Capacity* North Plant 1981 Outstanding Wastewater Plant Under 5 MGD Design Capacity* South Plant 1983 Outstanding Wastewater Plant Under 5 MGD Design Capacity* South Plant 1985 Outstanding Wastewater Plant Under 5 MGD Design Capacity* South Plant 1988 Outstanding Plant Safety Award* North Plant 1994 Outstanding Plant Safety Award* North Plant 1999 Outstanding Wastewater Plant Under 5 MGD Design Capacity* South Plant 1999 Outstanding Wastewater Plant Operator Under 5 MGD Design Ca pacity* Eric S. Nemcek 1999 Outstanding Wastewater Plant Over 5 MGD Design Capacity* North Plant 2000 Grant K. Borg Extraordinary Service Award* Dal D. Wayment Dal D. Wayment Dal D. Wayment 2011 Outstanding Collection System Over 5 MGD Design Capacity* Collection Operators 2013 Outstanding Young Professional* Matt J. Myers 2017 Outstanding Water Reclamation Operator Under 5 MGD Design Capacity * Tim Munden Source: * Water Environment Association of Utah (WEAU/State) SOUTH DAVIS SEWER DISTRICT Organizational Chart For the Year Ending December 31, 2020 CITIZENS BOUNTIFUL CENTERVILLE NORTH SALT LAKE

f Utah (WEAU/State) SOUTH DAVIS SEWER DISTRICT Organizational Chart For the Year Ending December 31, 2020 CITIZENS BOUNTIFUL CENTERVILLE NORTH SALT LAKE Randy C. Lewis, Mayor Clark Wilkinson, Mayor Leonard K. Arav e, Mayor WEST BOUNTIFUL WOODS CROSS Ken Romney, Mayor Rick D. Earnshaw, Mayor UNINCORPORATED DAVIS COUNTY AREA Lorene Miner Kamalu, Commission Chair BOARD OF TRUSTEES Dee C. Hansen, Chairman Leonard K. Arave Howard G. Burningham,Vice-Chairman Mark W. Preece John K. Davies Ryan T. Westergard Randy Lewis AUDITOR Karen, Hendrix , Stagg, Allen & Co. CPA ’s ATTORNEY Mark H. Anderson GENERAL MANAGER Dal D. Wayment, PE TREATMENT PLANTS Eric S. Nemcek Superintendent ACCOUNTING Mark R. Katter Accounting Manager COLLECTION SYSTEM Marty M. Marsing Superintendent INDUSTRIAL PRETREATMENT Lyndon L. Tan Administrator 33 ENGINEERING Matthew J. Myers , PE District Engineer WATER QUALITY GROUP Theron G. Miller PhD Director SOUTH DAVIS SEWER DISTRICT Board of Trustees As of December 31, 2020 Name Title Representing Term Expires Dee C. Hansen (Appointed) Chairman Centerville City 12/31/2023 Howard G. Burningham (Elected) Vice-Chairman District At Large 12/31/2021 John K. Davies (Elected) Trustee District At Large 12/31/2021 Ryan T. Westergard (Appointed) Trustee Woods Cross City 12/31/2021 Leonard K. Arave ( Appointed) Trustee North Salt Lake City 12/31/2021 Mark W. Preece (Appointed) Trustee West Bountiful City 12/31/2021 Randy C. Lewis (Appointed) Trustee Bountiful 12/31/2021 Source: District human resource and election records 34 John K. Davis Ryan T. Westergard Leonard K. Arave Howard G. Burningham Dee C. Hansen

is (Appointed) Trustee Bountiful 12/31/2021 Source: District human resource and election records 34 John K. Davis Ryan T. Westergard Leonard K. Arave Howard G. Burningham Dee C. Hansen Mark W. Preece Randy C. Lewis 35SSOUTH DAVIS SEWER DISTRICT 2021 Meeting Schedule Board of Trustees PUBLIC NOTICE is hereby given that the 2021 Meeting Schedule of the Board of Trustees of the South Davis Sewer District, Davis County, Utah, is as follows: REGULAR MEETINGS DATES January 21st February 18th March 18th April 15th May 20th June 17th July 15th August 19th September 19th October 21st November 18th December 2nd The regular meeting of the Board of Trustees is held each month at 5:00 p.m. at the District Office, 1800 West 1200 North, West Bountiful, Utah.

Mark R. Katter District Clerk Dal D. Wayment General Manager/Treasurer Mark R. Katter Accounting Manager/Clerk Matt J. Myers District Engineer Susanne F. Monsen Administrative Assistant Valerie H. Davis Clerk Int/Accounting.

DeRae E. Paget Clerk/Accounts Payable Candice Venn Clerk/Accounts Receivable Eric S. Nemcek Operations Superintendent Corry J. King Lead North Treatment Plant Operator Timothy E. Munden Lead Sout h Treatment Plant Operator Brent M. Maxwell Treatment Plant Operator Jedd C. Powell Treatment Plant Operator Jeffery K. Perkins Treatment Plant Operator Joshua D Smedley Treatment Plant Operator Nathan L. Larsen Treatment Plant Operator Jacob U. Scott Engineer in Training WRR Norman S. Robinson Lead Plant Operator WRR Jayson D. Dlugas Operator WRR Braeden R. Adamson Operator WRR Anthony A. Conno r Operator WRR Dominic H. Padilla Operator WRR Douglas S. Reese Operator WRR Jonathan D. Weimer Operator WRR Lyndon L. Tan Industrial Pr etreatment Administrator Mike C. Bradshaw Maintenance

A. Conno r Operator WRR Dominic H. Padilla Operator WRR Douglas S. Reese Operator WRR Jonathan D. Weimer Operator WRR Lyndon L. Tan Industrial Pr etreatment Administrator Mike C. Bradshaw Maintenance Brandon M. Katter Maintenance Sterling D. Smedley Maintenance Kevin Page Maintenance Marty G. Marsing Collection System Superintendent Tyler Nemcek Collection System Lineman Curtis D. Bohman Collection System Lineman Shane E. Fleming Collection System Lineman Brandon S. Rice Collection System Lineman Carl E. Trimming Collection System Lineman Conrad Hash Collection System Lineman Theron G. Miller Research Scientist Source: District Personnel RecordsFor the Year Ending December 31, 2020SOUTH DAVIS SEWER DISTRICT Full-Time Employees 36 Cities Serviced by South Davis Sewer District Approximate Square Date City Population (2020) Miles Incorporated Centerville 16,870 5.99 May 5, 1915 West Bountiful 6,322 2.96 Dec. 31, 1948 Bountiful 48,340 13.22 Dec. 5, 1892 Woods Cross 12,532 3.76 Sep. 4, 1930 North Salt Lake 18,936 8.45 Sep. 3, 1946 Totals 103,000 Source: City Offices, Davis County, State of Utah, U.S Census, Wasatch Front Regional Council (WFRC) 37 SOUTH DAVIS SEWER DISTRICT Davis County and District Map For the Year Ending December 31, 2020 38 39 40 41 42 FINANCIAL SECTION 43 INDEPENDENT AUDITORS’ REPORT Board of Trustees South Davis Sewer District Report on the Financial Statements We have audited the accompanying financial statements of South Davis Sewer District as of and for the years ended December 31, 2020 and 2019, and the related notes to the financ ial statements, as listed in the table of contents.

Management’s Respon sibility for the Fi nancial Statements

f and for the years ended December 31, 2020 and 2019, and the related notes to the financ ial statements, as listed in the table of contents.

Management’s Respon sibility for the Fi nancial Statements Management is responsible for the preparation and fair presenta tion of these financial statements in accordance with accounting principles generally accepted in the United States o f 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 opinions on these financial st atements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the Un ited 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 jud gment, 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

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 reasonablen ess of significant accounting estimates made by management, as well as evaluating the overall presentation of t he financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above pres ent fairly, in all material respects, the financial position of South Davis Sewer District as of December 31, 2020 and 2019, and the changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles genera lly accepted in the United States of America.

  44 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States o f America require that the management’s discussion and analysis and Analysis on pages 45-55, Modified Approach for Eli gible Infrastructure Assets on pages 87–89 and Schedule of the Proportionate Share of the Net Pension Liability on pages 7 8-80 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

ot 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 historic al 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, t he 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 opinions on the financial statements that collectively comprise South Davis Sewer District’s basic financial statements. The introduc tory section, other supplementary information, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The other supplementary information is the responsibility of ma nagement and was derived from and relate directly to the underlying accounting and other records used to prepare the bas ic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including

pare the bas ic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the unde rlying accounting and other records used to prepare the basic financial statements or to the basic financial statements thems elves, and other additional procedures in accordance with auditing standards generally accepted in the United States of A merica. In our opinion, information is fairly stated in all mat erial respects in relation to the bas ic financial statements as a whole.

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

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated June 17, 2021 on our consideration of South Davis Sewer District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreement s and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial rep orting and compliance and the 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 South Davis Sewer District’s internal control over financial reporting and compliance.

Salt Lake City, Utah June 17, 2021 45 SOUTH DAVIS SEWER DISTRICT

th Government Auditing Standards in considering South Davis Sewer District’s internal control over financial reporting and compliance.

Salt Lake City, Utah June 17, 2021 45 SOUTH DAVIS SEWER DISTRICT Management’s Dis cussion and Analysis For the Fiscal Year Ended December 31, 2020, and 2019 (Unaudited) This section presents management’s discussion and analysis of the financial position and p erformance of the South Davis Sewer District (District) for the fiscal years ending December 31, 2020, and December 31, 2019, with comparative totals for December 31, 2018. It is presented as a narrative overview and analysis of the financial activities of the District.

Please read it in conjunction with the Letter of Transmittal. S ee pp.1-30, in the Introductory Section, the Basic Financial Statements (pp. 56-60) and Notes to the Financial Statements (p p. 61-70,) and the other information which is presented in the Financial Section and Statistical Section of this A nnual Financial Report .

Financial Highlights x The assets and deferred outflows of the District exceeded its liabilities and deferred inflows of resources at the close of the fiscal year 2020 therefore the 2020 net positi on is $89,270,023, a 2% increase from 2019. In 2019 and 2018 t he District’s net position was $8 7,880,791 and $85,291,384, respe ctively. Net investment in capital assets is 71% of the District’ s total assets (land, buildings, facilities, sewer lines, and e quipment).

giving rise to the change occurs regardless of the timin g of the related cash flows. Thus, revenues and expenses are reported in this statement for some items t hat will only result in cas h flows in future periods.

x The District’s 2020 total net position increased by $1,389,232 (2%) from 2019 and increased $2,589,407 from

n this statement for some items t hat will only result in cas h flows in future periods.

x The District’s 2020 total net position increased by $1,389,232 (2%) from 2019 and increased $2,589,407 from x At the end of fiscal year 2020, the District’s unrestricted cash, cash equivalents, and investments reported combined ending balances of $4,357,666. Fiscal years 2019 and 2 018 ending balances were $8,651,005 and $6,350,946, respectively.

x Series 2017A taxable revenue bond debt service payment was mad e in the amount of $1,638,763.

x Series 2019 20-year combined s ystem revenue bonds (private placement) payment was made in the amount of $257,079. The 2019 series bonds were issued to finance the S outh Treatment Plant rehabilitation and build an advanced biological nutrient removal (ABNR) facility. These two projects are to help the District meet the latest State of Utah Division of Water Quality and EPA standard s.

x 2020 impact fee revenue was $903,643 a 45% increase from 2019. Impact fee revenue in 2019 and 2018 was $624,221 and $604,760 respe ctfully. The 2020 impact fee rev enue was primarily the result of the following major construction developments: Amazon, Foxboro Mark et Place, The Ridge, The Winnie, and Atwood Ext. You can read more about the District’s impact fee revenue in the Supplemental Information Section pp. 92-95, and p.100 in the Statistical Section.

x Interest income in 2020 came from cash, cash equivalents, inve stments and bond proceeds totaling $186,855 a 1% increase from 2019. Interest income in 2019 and 2018 was $184,810 and $306,480, respectively (p.87 Statistical Section).

x Operating revenues for 2020 and 2019 were $6,197,271 and $6,04 3,598 respectively, a 3% increase, and

rest income in 2019 and 2018 was $184,810 and $306,480, respectively (p.87 Statistical Section).

x Operating revenues for 2020 and 2019 were $6,197,271 and $6,04 3,598 respectively, a 3% increase, and $4,700,558 in 2018 (29% increase from 2018 to 2019). 2020 opera ting expenses (less depreciation) decreased by 4%, or $263,034 from 2019. From 2018 to 2019, ope rati ng expenses decreased by 6% or $411,553. (See pp. 49-50 in the MD&A Section; pp.56-58 in the F inancial Statements; and pp.98-99 in the Statistical Section).

46 Overview of the Financial Statements This analytical review and communication are intended to serve as an introduction to the District’s financia l position. The District’s basic financial statements are comprised of the following: (1) the Statement of Net Positi on, (2) the Statement of Revenues, Expenses, and Changes in Net Position, (3) the Statem ent of Cash Flows, (4) Notes to Financial Statements, (5) Required Supplementary Information, and (6) Other Supplemental Information in addition to the basic financial statements themselves. The scope of the District’s financial statements is the entire entity (SDSD). The basis of accounting is accrual, and the measurement focus is all economic resources. All revenues and e xpenses are recorded, regardless of when the cash transactions occur. The District uses an enterprise fund to account for the fiscal activities relating to the collection and treatment of wastewater in South Davis County. An enterprise fund is a proprietary type of fund (busine ss type) used by governments to report an activity for which a fee is charged to users for g oods or services provided. The financial statements of the

prise fund is a proprietary type of fund (busine ss type) used by governments to report an activity for which a fee is charged to users for g oods or services provided. The financial statements of the District are designed to provide readers with a broad overview of the District’s finances in a man ner like a private sector business. The District’s accounting cycle is the calendar year.

The Statement of Net Position presents information on all the Di strict’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decr eases in net position may serv e as a useful indicator of whether the financial position of the District is improving or deteriorating.

The information in the Statement of Revenues, Expenses, and Changes in Net Position presents how the District’s net assets changed during the years presented. All changes in net position are reported as soo n as the underlying event The Statement of Cash Flows presents information ab out the District’s cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash pa yments, and net changes in cash resulting from operating, investing, and financing activities and provides answers to suc h questions as where cash cam e from, what was cash used for, and what was the change in cash balance during the reporti ng period.

The Notes to Financial Statements provide additional inf ormation that is necessary to understand the data provided in the financial statements.

Other supplementary Information is additional to the basic financ ial statements and accompanyin g notes. These reports present certain required and non-required supplementary informa tion of the District . The Required Supplementary

additional to the basic financ ial statements and accompanyin g notes. These reports present certain required and non-required supplementary informa tion of the District . The Required Supplementary Information (infrastructure assets and pensions) and the Other supplementary information can be found in the Financial Section of this report.

The Statistical Section provides statistical data on financial trends, revenue and debt capacity, demographic data, economic data, and ope rating information.

Financial Analysis of the District The District’s n et position may serve over time as a useful indicator of a government ’s financial position. In the case of the South Davis Sewer District, the net position at the end of fiscal year 2020 was $89,270,023 (2% increase from 2019) and $87,880,791 and $85,291,384 at the end of the fiscal year 2 019,and fiscal year 2018 respectfully (See pp. 48-50 Financial Statements and p.48 in the MD&A Section, and pp. 56-5 7 in the Statistical Section).

The largest portion of the District’s net position reflects its net invest ment in capital assets less any related debt (71% in 2020, 79% in 2019, and 88% in 2018, ) less debt used to acquire those assets. The District uses these capital assets to provide wastewater services to i ts customers (citizens). It sho uld be noted that resources n eeded to repay debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. The District had outstanding debt for fiscal year 2020 in the amount of $29, 795,616 in the form of two 20-year taxable revenue bonds to finance the Districts renewal energy project (WRR) and Treat ment Plant rehabilitation. The par value of these bonds is

the amount of $29, 795,616 in the form of two 20-year taxable revenue bonds to finance the Districts renewal energy project (WRR) and Treat ment Plant rehabilitation. The par value of these bonds is $21,195,000 and $12,179,000, series 2017A and series 2019 respe ctfully. These two revenue bonds were issued to finance the WRR project and tre atment plant rehabilitation.

47 In 2020 the District’s operating revenues of $6,197,271 increased from $6,043,598 (2019) by 3%. Operatin g revenue in 2018 was $4,700,558. The operating revenue increased because of a sewer rate increase in 2019. 2020 operating expenses were $7,571,711 (less depreciation) a 13% increase fro m 2019 ($6,709,393). 2018 operating expenses (Less depreciation) was $7,120,946. See pp. 50-51 in the MD&A Section , pp.56-57 in the Financial Statements, and in the Statistical Section pp. 98-102 and pp.127-128.

Key factors driving the preceding results include: Sewer service revenue for 2020 was $5,199,731 an increase of 2% compared to fiscal year 2019 ($5,082,655).

This came from continued growth in the new construction of home s and businesses within the District and a rate increase from $5 per month to $10 per EDU per month effective July 2018. The purpose of this rate increase was to cover inflationary costs and debt service. The District hasn’t increased rates since 1988. (See pp. 87, 91 and 109 in the Statistical Section and the Notes to the Financial Statements, note I, p. 54 of this report for more information).

2020 and 2019 property tax revenue was $2,304,411 and $2,272,06 2 respectfully, an increase of 1%. Davis County has a collection rate of 98.7% (see p 103 in the Statist ical Section for more information).

and 2019 property tax revenue was $2,304,411 and $2,272,06 2 respectfully, an increase of 1%. Davis County has a collection rate of 98.7% (see p 103 in the Statist ical Section for more information).

Contributions to capital revenue was $2,026,283 and $1,239,606 in 2020 and 2019 respectively, an increase of 63%. In 2018 contributions to capital revenue was $897,985. Con tributions to capital revenue primarily comes from deeded lines to the District from developers and contracto rs. 2020 contributions were a result of a strong economy and a boom in the constr uction industry, see p. 112 and p.119 in the Statistical Section for more information.

Impact fee revenue is a conseque nce of new building constructio n and development. These impact fees reflect economic recovery for the constr uction industry from when the g reat economic recession of 2008 was in full swing. Impact fee revenue was $903,642 and $624,221 in 2020 and 2019, respectively. 2018 impact fee revenue was $604,760 (see pp.81-86 in the Supplemental Informat ion Section and p.104 in the Statistical Section) With the implementation of the Modified Approach to Accounting for Infrastructure in 2004 per GASBS No.34 Depreciation expense for 2020 an d 2019 were $458,530 and $279,873, respectively. Depreciation expense for 2018 was $285,891. Depreciation increased in 2020 due to purcha sing & building capital assets for the resource recovery facility. The District’s assets are lasting longer becaus e of the execution of effective maintenance facilitating this longevity. The Modified Approach is discussed in greater detail in the Required Supplemental Information section of this report, pp.81-86. Also , see the Notes to the Financial Statements, section one paragraph note G on p. 62.

oach is discussed in greater detail in the Required Supplemental Information section of this report, pp.81-86. Also , see the Notes to the Financial Statements, section one paragraph note G on p. 62.

In 2020 personal services (salar ies and benefit expenses) incre ased 7% from 2019, due to a combination of health care increased costs and employee cost of living Increas es and the addition of thr ee full-time employees were hired in 2020 (see fina ncial statements pp.56-58) As of December 31, 2020, the District ’s non-current liabilities were employee compensated absences of $653,628, ($535,553 in 2019), an increase of 22%. This obligati on increased due to three employees hired to the District’s workforce and increases from emp loyee cost-of-living adjustment s On May 17, 2017, the District issued Series 2017A 20-year taxab le rev enue bonds in the amount of $21,195,000 (par). This bond liability is $19,226,615 (Net of u namortized discount) to finance the WRR renewable energy project. see the Notes to the Financial Statem ents, p.69, for more information. On December 3, 2019, the District issued Series 2019 20-year combined syste m revenue bonds (private placement), par value $12,179,000. This funding is for plant rehabilitation an d construction of the ABNR project which will begin in 2021. These projects will bri ng the District in compliance with the State of Utah and EPA new standards (see Statistical Section pp. 108-111) The District had a net pension liability totaling $868,394, $2, 071,914, and $928,173 in 2020, 2019 and 2018 respectively, the decrease from 2019 to 2020 was 58%. This was due to complying with GASB Statement No.

68 which was adopted in 2015. The Utah Retirement System’s actuaries lowered its assumed rate of return

ively, the decrease from 2019 to 2020 was 58%. This was due to complying with GASB Statement No.

68 which was adopted in 2015. The Utah Retirement System’s actuaries lowered its assumed rate of return from 7.2% to 6.95% consequently resulting in an adjustment to t he net pension liability. The fiduciary net position (funded) for URS was 96% in 2020. Many experts conside r 80% or greater to be a sound ratio for government retirement plans. Return on URS investments were 13% . See the Notes to Financial Statements, pp. 72-78 and the Required Supple mental Section, pp. 87-89 for more information.

48 South Davis Sewer District Condensed Statements of Net Position 2020-2019 Fiscal Year Fiscal Year Dollar Percent 2020 2019 Change Change Current and Other Assets 19,048,196 $ 21,387,842$ (2,339,646) $ -11% Capital Assets 103,786,688 101,676,993 2,109,695 2% Total Assets 122,834,884 $ 123,064,835 $ (229,951) $ 0% Deferred Outflows of Resources 707,206 1,208,371 (501,165) $ -41% Total Assets & Deferred Outf lows of Resources 123,542,090 $ 124,273,206 $ (731,116) $ -1% Current Liabilities 2,247,166 2,374,684 (127,518) $ -5% Non-Current Liabilities 31,317,638 33,979,354 (2,661,716) $ -8% Total Liabilities 33,564,804 $ 36,354,038 $ (2,789,234) $ -8% Deferred Inflows of Resources - 38,377 (38,377) $ -100% Total Liabilities & Deferred Inflows of Resources 33,564,804 $ 36,392,415$ (2,827,611) $ -8% Net Position: - $ Net Investment in Capital Assets 74,410,887 71,496,313 2,914,574 $ 4%

rred Inflows of Resources 33,564,804 $ 36,392,415$ (2,827,611) $ -8% Net Position: - $ Net Investment in Capital Assets 74,410,887 71,496,313 2,914,574 $ 4% Restricted - Capital Improvements 10,075,848 10,725,278 (649,430) $ -6% Restricted - Debt Service 2,029,815 2,016,206 Unrestricted 2,753,473 3,642,994 (889,521) $ -24% Total Net Position 89,270,023 $ 87,880,791 $ 1,389,232 $ 2% Total Liabilities and Net Position 122,834,827 $ 124,234,829 $ (1,400,002) $ -1% South Davis Sewer District Condensed Statements of Net Position 2019-2018 Fiscal Year Fiscal Year Dollar Percent 2019 2018 Change Change Current and Other Assets 21,387,842 $ 12,860,071 $ 8,527,771 $ 66% Capital Assets 101,676,993 95,253,455 6,423,538 7% Total Assets 123,064,835 $ 108,113,526$ 14,951,309$ 14% Deferred Outflows of Resources 1,208,371 737,874 64% Total Assets & Deferred Outf lows of Resources 124,273,206 $ 108,851,400 $ 14,951,309 14% Current Liabilities 2,374,684 1,520,046 854,638 56% Long-Term Liabilities 33,979,354 21,471,761 12,507,593 58% Total Liabilities 36,354,038 $ 22,991,807 $ 13,362,231 58% Deferred Inflows of Resources 38,377 568,209 -93% Total Liabilities and Deferred inflows of Resources 36,392,415 $ 23,560,016$ 13,362,231$ 54% Net Position: Net Investment in Capital Assets, 71,496,313 74,470,294 $ (2,973,981) -4% Restricted - Capital 10,725,278 2,942,223

23,560,016$ 13,362,231$ 54% Net Position: Net Investment in Capital Assets, 71,496,313 74,470,294 $ (2,973,981) -4% Restricted - Capital 10,725,278 2,942,223 Restricted - Debt Service 2,016,206 2,065,348 Unrestricted 3,642,994 5,813,519 (2,170,525) -37% Total Net Position 87,880,791 $ 85,291,384 $ 2,589,407 $ 3% Total Liabilities and Net Position 124,234,829 $ 108,283,191 $ 15,951,638 $ 15% 49 Collection System 30% Treatment Plant 42%IPT 4%Capital Expenses 9%WQG & OU2 15%Expenses by Department 2019 Collection System 7%Treatment Plant 13% IPT 1% Capital Expenses 76%WQG & OU2 3%Expenses by Department 2020 Taxes 23% Sewer Fees 52%Special Treatment 4%Impact Fees 6%Interest 2%Other 5% WQG & OU2 8%Revenue by Source 2019 50 SOUTH DAVIS SEWER DISTRICT Revenues, Expenses, and Changes in Net Position 2020-2019 Fiscal Year Fiscal Year Dollar Percent 2020 2019 Change Change Operating Revenues: Sewer Service Fees 5,199,732 $ 5 ,082,655 $ 117,077 $ 2% Special Treatment Fees 404,955 383,725 21,230 6% Inspection & Project Fees 68,800 113,135 (44,335) -39% Other 523,785 464,083 59,702 13% Total Operating Revenues 6,197,271 $ 6 ,043,598 $ 153,674 $ 3% Operating Expenses: Operating Expenses 3,560,469 2,931,114 $ 629,355 $ 21% Salaries & Benefits 4,011,242 3,778,279 232,963 6% Depreciation 458,530 279,873 178,657 64%

629,355 $ 21% Salaries & Benefits 4,011,242 3,778,279 232,963 6% Depreciation 458,530 279,873 178,657 64% Total Operating Expenses 8,030,241 $ 6 ,989,266 $ 1,040,975 $ 15% Non-Operating Revenue (Expense) General Property Tax 2,304,411 $ 2,272,062 $ 32,349 $ 1% Impact Fees 903,643 624,221 279,422 45% Interest In come 186,855 184,810 2,045 1% Bond Interest & Costs (1,101,213) (914,791) (186,422) 20% WQG Contribution s & EPA Grant 800,700 933,285 (132,585) -14% Gain (Loss) on Disposal of Property 24,552 98,114 (73,562) -75% Unrealized gain (loss) on investments 34,304 144,118 (109,814) -76% Equity in Earnings (Loss) (1,957,333) (1,046,350) (910,983) 87% Total Non-Operating Revenue (Expense) 1,195,919 $ 2,295,469 $ (1,099,550) $ -48% Increase in Net Position Before Capital Contributions (637,051) $ 1,349,801 $ (1,986,852) $ -147% Contributed Capital 2,026,283 1,239,606 786,677 63% Increase in Net Position 1,389,232 $ 2,589,407 (1,200,175) -46% Net Position at Beginning of Year 87,880,791 $ 85,291,384 $ 2,589,407 $ 3% Prior Period Adjustment - - -

,200,175) -46% Net Position at Beginning of Year 87,880,791 $ 85,291,384 $ 2,589,407 $ 3% Prior Period Adjustment - - Net Position at End of Year 89,270,023 $ 87,880,791 $ 1,389,232 $ 2% Taxes 27% Sewer Fees 42%Special Treatment 4%Impact Fees 7%Interest 3%Other 5% WQG & OU2 12%Revenues by Source 2020 51 SOUTH DAVIS SEWER DISTRICT Revenues, Expenses, and Changes in Net Position 2019-2018 Fiscal Year Fiscal Year Dollar Percent 2019 2018 Change Change Operating Revenues: Sewer Service Fees 5,082,655 $ 3,799,780 $ 1,282,875 $ 34% Special Treatment Fees 383,725 336,261 47,464 14% Inspection & Project Fees 113,135 93,980 19,155 20% Other 464,083 470,537 (6,454) -1% Total Operating Revenues 6,043,598 $ 4,700,558 $ 1,343,040 $ 29% Operating Expenses: Operating Expenses 2,931,114 $ 2,971,592 $ (40,478) $ -1% Salaries & Benefits 3,778,279 4,149,354 (371,075) -9% Depreciation 279,873 285,891 (6,018) -2% Total Operating Expenses 6,989,266 $ 7,406,837 $ (417,571) $ -6% Non-Operating Revenue (Expense) General Property Tax 2,272,062 $ 2,483,497 $ (211,435) $ -9% Impact Fees 624,221 604,760 19,461 3% Interest In come 184,810 306,480 (121,670) -40% Bond Interest & Costs (914,791)

Interest In come 184,810 306,480 (121,670) -40% Bond Interest & Costs (914,791) WQG Contribution s & EPA Grant 933,285 1,040,344 (107,059) 100% Gain (Loss) on Disposal of Property 98,114 256,975 (158,861) -62% Unrealized gain (loss) on investments 144,118 58,256 85,862 147% Equity in Earnings (Loss) (1,046,350) (124,039) (922,311) 744% Total Non-Operating Revenue (Expense) 2,295,469 $ 4,626,273 $ (2,330,804) $ -50% Increase in Net Position Before Capital Contributions 1,349,801 $ 1,919,994 $ (570,193) $ -30% Contributed Capital 1,239,606 897,985 341,621 38% I ncrease in Net Position 2,589,407 2,817,979 (228,572) -8% Net Position at Beginning of Year 85,291,384 $ 82,473,405 $ 2,817,979 $ 3% Prior Period Adjustment Net Position at End of Year 87,880,791 $ 85,291,384 $ 2,589,407 $ 3% Cash, Cash Equivalents, and Investments The District’s cash and cash equivalents that are t emporarily idle during the year are invested with the Utah Public Treasurer’s Investment Fund (PTIF). The District feels th at safety, liquidity, and yield provided by the PTIF make a prudent strategy for the investme nt and management of its cash assets in the short-term. The average interest rates paid

istrict feels th at safety, liquidity, and yield provided by the PTIF make a prudent strategy for the investme nt and management of its cash assets in the short-term. The average interest rates paid by the PTIF for 2020 and 2019 were 1.08% and 2.75% respectively (61% decrease). Interest rates have been at historic lows beginning in 2009. A ten-year history of the PTIF interest rates is found in the Statistical Section p.118.

$1,550,000 is invested with More ton Asset Management which has a net earnings rate is 1.22% as of December 31, 2020 . These funds are considered “sustainable funds.” The fair value as of December 31, 2020 is $1,837,255.

.

The District has four demand dep osit accounts all of which earn interest. The interest earned in these four accounts is immaterial because the account balances are small, and the interest rates are currently low. The Notes to the Financial Statements, note 2 on pp. 64-67 “D eposits and Investment s” section, will give you more information.

52 Interest income for 2020 and 2019 was $186,855 and $184,810 res pectfully a 1% increase. This increase was the result of low and stable interest rates in the Public Treasurers Inves tment Fund (PTIF) and lower fund balances in a PTIF accounts due to capital project funding. See pp. 64-67, note 2 in the Notes to the Financial Statements and p. 100 in the Statistical Section for more information.

The Utah State Money Management Act sets forth investment limit ations and standards for pr oper cash management for local government agencies. This a ct also defines the type of s ecurities the District can invest in and provides a list of state certified investment advisors and brokers. The District complies with the requirements of the Utah State Money

defines the type of s ecurities the District can invest in and provides a list of state certified investment advisors and brokers. The District complies with the requirements of the Utah State Money Management Act. Capital Assets The capital assets of the District are made up of land, buildin gs and treatment plant faciliti es, a collection system of lines and pipes, energy recovery facility and equipment.

The District had $121,814,856 an d 119,271,183 as of 2020 and 20 19 respectively (historical cost) in capital assets. This represents a net increase of 2% compared to 2019 and a 6% net i ncrease from 2018 to 2019 as shown in the tables below: Capital Assets 2020-2019 and 2019-2018 2020 2019 Change Change Land 3,070,568 $ 3,070,568 $ - $ 0% Buildings & Facilities 39, 464,109 39,464,109 - 0% Outfall/Sewer Lines 52,219,382 50,415,109 1,804,273 4% Equipment 13,420,028 12,956,365 463,663 4% Construction in Progress 13,640,770 13,365,032 275,738 2% Total 121,814,856$ 119,271,183$ 2,543,673 $ 2% Demand Deposits 12% PTIF 59%Investments 18%Cash & Cash Equivalents 2020 2019 2018 Change Change Land 3,070,568 $ 3, 070,568 $ - $ 0% Buildings & Facilitie s 39,464,109 24,336,186 15,127,923 62% Outfall/Se we r Line s 50,415,109 49,278,649 1,136,460 2% Equipment 12,956,365 5,977,419 6,978,946 117% Construction in Progress 13,365,032 29,951,777 (16, 586,745) -55% Total 119,271,183$ 112,616,617 $ 6,654,566 $ 6% 53

5,977,419 6,978,946 117% Construction in Progress 13,365,032 29,951,777 (16, 586,745) -55% Total 119,271,183$ 112,616,617 $ 6,654,566 $ 6% 53 The major capital asset events for fiscal year 2020 included th e following: x Construction costs for South Tr eatment Plant rehabilitation $2 75,737 x Contribution of sewer lines from developers valued at $2,006,618 x Purchased Brown Bear loader $25,200 x Purchased four 2021 Ford F350 and Ford F250 Trucks $186,728 x Purchased Hyster forklift $13,500 x Crane station $13,876 x Sold three Ford F350 and F150 Trucks $173,613 The District spent $696,157 on the maintenance and rehabilitati on of the collection system and treatment plant assets in 2020. Studies have shown that every dollar of preventative main tenance spent in the first 10 years of an asset will save $4-5 over the second 10 years (I owa Department of Transportatio n). The District has an aggressive asset management program to prolong the useful life of its assets.

2020 capital asset additions included: Sewer Lines $2,006,618 Construction-In-Progress (CIP) 275,737 Total $2,717,285 Additional information on the District’s capital assets can be found in the Required Supplemental Information section (pp.

81-86), the Statistical Section pp.122-126 and the Notes to the Financial Statements, Note 1, paragraph G, p. 62.

Debt Administration and Long-Term Liabilities The District issued 20-year taxab le revenue bonds (Series 2017A ) to finance the construction of the Wasatch Resource

ments, Note 1, paragraph G, p. 62.

Debt Administration and Long-Term Liabilities The District issued 20-year taxab le revenue bonds (Series 2017A ) to finance the construction of the Wasatch Resource Recovery (WRR) renewable energy project. The par amount of these bonds is $21,195,000. The outstanding bonds payable amount is $19,570,000 as of the end of FY2020. The clo sing date for the bonds was May 17, 2017 and the maturity date December 1, 2037. The average coupon rate is 4.1 7%. Bonds maturing on and after December 1, 2027 are callable at par on December 1, 2026. An interest payment was pa id June 1, 2020 for $406,881.25. The first principal and interest payment on these taxable revenue bonds was paid on Dec ember 1, 2020 in the amount of $1,231,881 ($825,000 principle and $418,881 interest). As of December 31, 2020, the net carrying value of these taxable revenue bonds are $19,226,616 (Restricted funds for WRR project). See pp.69-71 in the Notes to the Financial Statements and pp.107-111 in the Statistical Section for more information. The District received a bond rating from Standard and Poor’s (S&P ) credit agency of “A”. S& P felt that the project resembled a power utility project i.e. Dominion Energy or Rocky Mountain Power more than a normal sewer project. S&P indicated that the “A” rating is what Questar or Rocky Mountain Power would have received. The District’s credit rating has not changed.

On December 3, 2019, the District issued combined system revenu e bonds, series 2019 in the amount of $12,179,000.

These bonds will mature December 1, 2039 and have a net interes t cost of 2.16%. Two inte rest only payments were made in 2020: June 1, 2020 and December 1, 2020 for the amounts of $127,822 and $129,258 respectfully. The purpose

er 1, 2039 and have a net interes t cost of 2.16%. Two inte rest only payments were made in 2020: June 1, 2020 and December 1, 2020 for the amounts of $127,822 and $129,258 respectfully. The purpose of the series 2019 bonds is to fund plant rehabilitation and ABNR projects that are required by the State of Utah, Division of Water Quality (DWQ) and the E nvironmental Protection Agency (EPA) to meet new wastewater standards.

As of December 31, 2020, the District had current and non-curre nt liabilities related to compensated absences due to employees is $688,628. This incre ased 13% ($580,553) compared t o 2019. This was the result of a cost-of-living adjustment (COLA), merit increases, and the addition of three e mployees, and no retirements or terminations. For more information, see the “ Notes to the Financial S tatements” p.69.

54 The District had a net pension liability totaling $868,395, $2, 071,914, and $928,173, and for 2020 ,2019 and 2018 respectively, the decrease from 2019 to 2020 was 58%. This was due to complying with GASB Statement No. 68 which was adopted in 2015. The Utah Retirement System’s actuaries low ered its assum ed rate of return from 7.2% to 6.95%, the actual rate of return was 13 % consequently resulting in an decrease to the net pension l iability. The fiduciary net position (funded) for URS was 96.0% in 2020. Many experts consi der 80% or greater to be a sound funding ratio for government retirement plans. See the Notes to Financial Stateme nts, pp.72-76 and the Required Supplemental Section, pp. 87-89 for more information.

Outstanding Non-Current Debt and Non-Current Liabilities 2020-2019 and 2019-2018 2020 2019 Change Change Compensated Absences 653,628 $ 535,553 $ 118,075 $ 22%

Current Debt and Non-Current Liabilities 2020-2019 and 2019-2018 2020 2019 Change Change Compensated Absences 653,628 $ 535,553 $ 118,075 $ 22% Net Pension Liability 868,394 2,071,915 (1, 203,521) -58% Revenue Bonds Payable 29,795,616 31,371,886 (1, 576,270) -5% Total 31,317,638 $ 33,979,354 $ (2,661,716) $ -8% Fiscal Year Fiscal Year Percent 2019 2018 Change Change Compensated Absences 535,553 $ 560,427 $ (24,874) $ -4% Net Pension Liability 2,071,915 928,173 1,143,742 123% Revenue Bonds Payable 31,371,886 20,783,161 10,588,725 51% Total 33,979,354 $ 22,271,761 $ 11,707,593 $ 53% Modified Approach to Acco unting for Infrastructure Starting January 1, 2004, the D istrict elected to use the Modif ied Approach instead of the Depreciation Approach to correct any deficiencies of its qualifying networks or subsyste ms of infrastructure assets (Collection system, lift stations and treatment plant facil ities) as defined by GASB Statement No. 34 . The Modified Approach reflects a more accurate portrayal of infrastructure value. Using the Depreciation Appr oach does not consider the value added or maintained due to maintenance and rehabilitation efforts to extend the life of the asset. When possible, the Di strict utilizes the experience and knowledge of its employees to perform most of the preservat ion procedures to its infras tructure assets in order to

nd the life of the asset. When possible, the Di strict utilizes the experience and knowledge of its employees to perform most of the preservat ion procedures to its infras tructure assets in order to keep costs low.

The District’ s Asset Management Plan (AMP) def ines a condition rating scale between 1 and 5, with 1 being very good and 5 being very poor. The District’s target level of s ervice is a rating between 1 an d 3.

Funds totaling $650,370 were bud geted and funds expended were $ 489,365 in 2019 to rehabilitate and correct those identified deficiencies in the collection system, treatment pla nts and lift station systems. Funds totaling $981,000 have been budgeted for 2020. The Distr ict has always budgeted and ex pended significant funds for this purpose. The estimated budget required to mai ntain and preserve the current overall condition through th e fiscal year ending December 31, 2030 is $675,027 per year. There have been no significant changes in the condition level of the collection sy stem, treatment plants, lift stations and their related subsystems compared to the target levels , (See the table on page 82) Except for the cogeneration system. It has a conditional level of 5 and has been taken out of service due to problems with siloxane and digester gas. The ne xt conditional assessment samp le is scheduled for 2021 for all infrastructure assets.

Additional information about the Modified Approach can be found in the Required Supplemental Information Section of this report (pp. 81-86) and the Notes to the Financial Statemen ts, note 1, paragraph G, on p.62.

55 Economic Factors, Next Year’s (2021) Budgets, and Rates x The District continues to approac h budgeting for revenues cons ervatively with the focus on long-term

en ts, note 1, paragraph G, on p.62.

55 Economic Factors, Next Year’s (2021) Budgets, and Rates x The District continues to approac h budgeting for revenues cons ervatively with the focus on long-term sustainability. The economy in Utah is projected to be strong, especially in the construction and development of real estate ( www.gardner.utah.edu ). The civilian unemployment rate in Utah was 2.4% as of the en d of December 31, 2019. Low unemployment is a factor in a strong economy. Cur rently, Utah is one of the strongest in the United States and is expected be strong in 2021 x The 2021 debt service for both 20-year revenue bonds, (series 2017A and 2019), will be interest payments totaling $1,047,528 and principle payments totaling $1,380,000. Total debt service for 2021 will be $2,427,528.

x The Utah State Tax Commission proposed certified tax rate prop erty values for 2021 is $10,347,198,898.

According to the Davis County Assessor, property values are to increase 13% compared to 2020. The District has budgeted $3,066,176 for property tax revenue in 2021. The propo sed property tax rate for 2021 is.000296, an increase of 13% (.000226) from 2020.

x Short-term interest rates have been significantly trending dow nward since the 1st quarter of 2009 and have leveled off in 2015. Since 2015 interest rates are now trendin g upward but are still proj ected to remain low for 2021. It is projected the short-term interest rate will be slig htly above 2%.in 2021.

x $923,000 is budgeted for repairs and maintenance of the District’s infrastructure and is broken down as follows: $540,000 for the collection system and lift stations, $383,000 for treatment plants. It is projected that four to six

s and maintenance of the District’s infrastructure and is broken down as follows: $540,000 for the collection system and lift stations, $383,000 for treatment plants. It is projected that four to six new employees at a projected cos t of $800,000 will be needed in 2020 to operate the WRR facility. Revenue from the sale of this energy is projected to be $2,634,000 and tippi ng fees $579,000.

x To comply with the new nutrient restrictions issued by the Env ironmental Protection Agency (EPA) and the Utah State Division of Water Quality (DWQ), the District is explorin g the possibility of building an Advance Biological Nutrient Removal facility (ABNR) that will use algae to facilit ate this nutrient removal process. It is anticipated this algae project will cost approxima tely $30 million and would be funded by state revolving loans. As of December 31, 2020, this was still in the planning and feasibility stage. Construction could begin December 2021.

x A sewer service rate or property tax increase is possible for 2021. The monthly sewer service rates were increased in mid-2018 from $5.00 to $10.00. The purpose of this possible increase is to c over additional debt service of the ABNR and District treatment plant rehabilitation expenses. As of the date of this report, the District is still exploring if the additional funding will be needed.

Requests for Information This financial report is designed to provide a general overview of the South Davis Sewer District finances and to demonstrate accountability and t ransparency in its operations. If you have questions about this report or need additional information, please contact the District’s General Manager, Dal Wayment, or the Accounting Manager, Mark K atter, at

rency in its operations. If you have questions about this report or need additional information, please contact the District’s General Manager, Dal Wayment, or the Accounting Manager, Mark K atter, at 1800 W 1200 N, West Bountiful, mailing address P. O. Box 14011 1, Salt Lake City, Utah 84114-0111, by phone at (801) SOUTH DAVIS SEWER DISTRICT Basic Financial Statements For The Fiscal Year Ended December 31, 2020 and 2019 2020 2019 CURRENT ASSETS Cash and cash equivalents 2,527,102 $ 5,112,279 $ Investments 1,822,779 1,775,472 Receivables: Accounts receivable, sewer service charges 293,741 265,172 Accounts receivable, certified to county treasurer 78,060 84,011 Accounts receivable, special treatment charges 41,800 35,725 Accounts receivable, other 189,419 190,931 Accrued property taxes receivable 579,900 594,708 Accrued interest receivable 10,949 26,021 Inventory of supplies 14,164 13,742 Prepaid expenses 10,484 24,578 TOTAL CURRENT ASSETS 5,568,398 8,122,639 NONCURRENT ASSETS Restricted cash and cash equivalents 12,105,663 12,741,484 Investment in WRR, LLC 1,344,043 488,921 Reimbursable costs 30,092 34,798 Nondepreciable capital assets 94,721,237 92,641,227 Depreciable capital assets, net 9,065,451 9,035,766 TOTAL NONCURRENT ASSETS 117,266,486 114,942,196 TOTAL ASSETS 122,834,884$ 123,064,835$ DEFERRED OUTFLOWS OF RESOURCES Deferred outflow of resources related to pensions 707,206 $ 1,208,371 $ SOUTH DAVIS SEWER DISTRICT Statements of Net Position December 31, 2020 and 2019

DEFERRED OUTFLOWS OF RESOURCES Deferred outflow of resources related to pensions 707,206 $ 1,208,371 $ SOUTH DAVIS SEWER DISTRICT Statements of Net Position December 31, 2020 and 2019 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES The notes to the financial statements are an integral part of t his statement.

56 2020 2019SOUTH DAVIS SEWER DISTRICT Statements of Net Position December 31, 2020 and 2019 CURRENT LIABILITIES Accounts payable 310,908 $ 1,082,109 $ Accrued salaries & wages 51,220 139,634 Accrued payroll taxes 13,344 23,424 Accrued bond interest payable 87,294 89,117 Performance deposits and retainage 139,400 170,400 Current portion of accrued compensated absences 35,000 45,000 Current portion of revenue bonds payable 1,610,000 825,000 TOTAL CURRENT LIABILITIES 2,247,166 2,374,684 NONCURRENT LIABILITIES Noncurrent portion of revenue bonds payable, net of unamortized discount 29,795,616 31,371,886 Accrued compensated absences 653,628 535,553 Net pension liability 868,395 2,071,915 TOTAL NONCURRENT LIABILITIES 31,317,639 33,979,354 TOTAL LIABILITIES 33,564,805 $ 36,354,038 $ DEFERRED INFLOWS OF RESOURCES Deferred inflow of resources related to pensions 707,262 $ 38,377 $ NET POSITION Net Investment in capital assets 74,410,887 $ 71,496,313 $ Restricted for: Capital projects 10,075,848 10,725,278 Debt service 2,029,815 2,016,206 Unrestricted 2,753,473 3,642,994 TOTAL NET POSITION 89,270,023 $ 87,880,791 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION The notes to the financial statements are an integral part of t his statement.

57

94 TOTAL NET POSITION 89,270,023 $ 87,880,791 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION The notes to the financial statements are an integral part of t his statement.

57 2020 2019 OPERATING REVENUES Sewer service charges 5,199,731 $ 5,082,655 $ Sewer special treatment charges 404,955 383,725 Inspection, and project fees 68,800 113,135 Other operating revenues 523,785 464,083 TOTAL OPERATING REVENUES 6,197,271 6,043,598 OPERATING EXPENSES Personal services 4,011,242 3,778,279 Contractual services 795,035 507,855 Utilities 343,771 351,246 Repairs and maintenance 1,526,955 1,335,270 Other supplies and expenses 733,302 608,867 Insurance claims and expenses 161,406 127,876 Depreciation 458,530 279,873 TOTAL OPERATING EXPENSE S 8,030,241 6,989,266 OPERATING LOSS (1,832,970) (945,668) NONOPERATING REVENUES AND (EXPENSES ) General property tax 2,304,411 2,272,062 Intergovernmental contributions 800,700 933,285 Impact fees 903,643 624,221 Interest income 186,855 184,810 Miscellaneous revenue - Grant Revenue - Unrealized gain (loss) on investments 34,304 144,118 Bond interest expense (1,101,213) (891,791) Bond issuance costs - (23,000) Equity in earnings (losses) in subsidiary/JV activity (1,957,333 ) (1,046,350) Gain (loss) on sale of plant equipment 24,552 98,114 TOTAL NONOPERATING REVENUES AND (EXPENSES ) 1,195,919 2,295,469 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTION S (637,051) 1,349,801

le of plant equipment 24,552 98,114 TOTAL NONOPERATING REVENUES AND (EXPENSES ) 1,195,919 2,295,469 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTION S (637,051) 1,349,801 DEVELOPER CONTRIBUTED SEWER LINES 2,026,283 1,239,606 CHANGE IN NET POSITION 1,389,232 $ 2,589,407 $ NET POSITION - BEGINNING OF THE YEA R 87,880,791 85,291,384 NET POSITION - END OF THE YEA R 89,270,023$ 87,880,791 $ SOUTH DAVIS SEWER DISTRICT Statements of Revenues, Expenses and Changes in Net Position For the Years Ended December 31, 2020 and 2019 The notes to the financial statements are an integral part of this statement.

58 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 5,582,211 $ 5,413,165 $ Payments to suppliers of goods and services (4,317,998) (2,194,071) Payments to employees for services (4,035,131) (3,650,010) Other receipts 592,585 577,218 NET CASH FLOWS FROM OPERATING ACTIVITIES (2,178,333) 146,302 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property taxes collected 2,319,219 2,142,960 Intergovernmental contributions 800,700 933,285 Impact fees collected 903,643 624,221 NET CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES 4,023,562 3,700,466 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from sale of revenue bonds - 12,179,000 Bond issuance costs paid - (23,000) Bond principal paid (825,000) (800,000) Bond interest paid (1,069,306) (837,763) Proceeds from the sale of capital assets 24,552 98,114 Purchase of capital assets (541,942) (5,463,805)

(800,000) Bond interest paid (1,069,306) (837,763) Proceeds from the sale of capital assets 24,552 98,114 Purchase of capital assets (541,942) (5,463,805) Net receipt (refund) of performance deposits and retainages (31, 000) 59,500 NET CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES (2,442,696) 5,212,046 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of marketable securities (13,003) 2,477,478 Contributions made to equity method investment (2,812,455) (1,107,126) Interest income received 201,927 174,912 NET CASH FLOWS FROM INVESTING ACTIVITIES (2,623,531) 1,545,264 NET iNCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (3,220,998) 10,604,078 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 17,853,763 7,249,685 CASH AND CASH EQUIVALENTS - END OF PERIOD 14,632,765 $ 17,853,763 $ RECONCILIATION TO STATEMENT OF NET POSITIOIN : Unrestricted cash and cash equivalents 2,527,102 $ 5,112,279 $ Restricted cash and cash equivalents 12,105,663 12,741,484 TOTAL CASH AND CASH EQUIVALENTS 14,632,765$ 17,853,763$ SOUTH DAVIS SEWER DISTRICT Statements of Cash Flows For the Years Ended December 31, 2020 and 2019 The notes to the financial statements are an integral part of this statement.

59 2020 2019 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIE S Net loss from operations (1,864,022) $ (945,668) $ Adjustments to reconcile net loss from operations to net cash provided by operating activities: Depreciation 489,582 279,873 (Increase) decrease in: Accounts receivable: Sewer service charges (28,569) 47,298

from operations to net cash provided by operating activities: Depreciation 489,582 279,873 (Increase) decrease in: Accounts receivable: Sewer service charges (28,569) 47,298 Sewer service charges certified to county treasurer 5,951 (51,236) Special treatment charges (6,075) 4,886 Other 1,512 (62,124) Property taxes - Inventory of construction and maintenance materials (422) (1,284) Prepaid expenses 14,094 (2,778) Reimbursed costs 4,706 7,961 Net pension asset - Deferred outflows of resources 501,165 (470,497) Increase (decrease) in: Accounts payable (771,201) 741,105 Accrued payroll (88,414) 30,846 Accrued payroll taxes (10,080) (21,116) Accrued compensated absences 108,075 (24,874) Net pension liability (1,203,520) 1,143,742 Deferred inflows of resources 668,885 (529,832) NET CASH FROM OPERATING ACTIVITIE S (2,178,333) $ 146,302 $ NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: The District received additions to the collection system, which represent the fair value of sewer lines deeded to the District. These additions were accounted for as "developer contributed sewer lines" in the statement of revenues, expense, and changes in fund net position 2,026,283 $ 1,239,606 $ The District capitalized interest paid and accrue d on revenue bonds payable. - $ - $ Change in fair value of inves tments not repor ted as cas h and cash equivalents. 14,476 $ 181,213 $ SOUTH DAVIS SEWER DISTRICT Statements of Cash Flows, Continued

- $ Change in fair value of inves tments not repor ted as cas h and cash equivalents. 14,476 $ 181,213 $ SOUTH DAVIS SEWER DISTRICT Statements of Cash Flows, Continued For the Years Ended December 31, 2020 and 2019 The notes to the financial statements are an integral part of this statement.

60 SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 61 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES South Davis Sewer District (the “District”) serves the Cities o f North Salt Lake, Woods Cross, Bountiful, West Bountiful, and Centerville as well as the unincorporated areas South in Davis County. The District is a local district governed by a seven-member board. Each of the five in corporated cities included in the District’s service area, appoint one member to the Board of Trustees, and the residents of the District at large elect two members during a municipal election. Members of the Board of T rustees serve four-year terms and may be appointed or elected to an unlimited number of additional terms . Management has determined that the District is not a component unit of another government entity, nor shoul d the District include, in its basic statements, other government entities as component units.

The District’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncement (Standards and Interpretations). The more significant accounting policies established in GAAP and used by the District are discussed below.

A. Financial Reporting Entity

nts through its pronouncement (Standards and Interpretations). The more significant accounting policies established in GAAP and used by the District are discussed below.

A. Financial Reporting Entity The District is not a component unit of another government entity. There are no entities that are component units of the District.

B. Measurement Focus and B asis of Accounting The District is a government entity accounted for as an enterpr ise fund and categorized as a businesstype activity, which is reported using the economic resources measurement focus and the accrual basis of accounting . An enterprise fund is used to account for operations that ar e financed and operated in a manner similar to private business enterprises, where the inten t of the governing body is that the costs of providing services to the general public on a continuing basis are financed or recovered primarily through user charges. Revenues are recognized when earned and expenses are recognized with a liability is incurred, regardless of the timing of related cash flows.

C. Budgetary Data Items budgeted, but not expended, are not carried over to succe eding years. Budgeted items must be re-appropriated each year. The budgetary report is reconciled to the basic financial statements (GAAP basis) as noted in the other supplementary information found on pages 90-91. The District is required by state statute to adopt a budget prior to the beginning of each fiscal year. The District prepares and reports its budget on a basis consistent with GAAP with the following e xceptions: x Bond principal payments are budgeted as nonoperating expenditu res.

x Depreciation is not budgeted.

x Capital expenditures are budgeted as nonoperating expenditures .

D. Cash and Cash Equivalents

s: x Bond principal payments are budgeted as nonoperating expenditu res.

x Depreciation is not budgeted.

x Capital expenditures are budgeted as nonoperating expenditures .

D. Cash and Cash Equivalents For purposes of the statement of cash flows, the District considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash eq uivalents.

E. Investments Investments in debt securities are comprised of U.S. government securities, residential mortgage-backed securities, and corporate notes. These investments are carried at fair value determined on quote market prices. Changes in the fair value of investments are recognize d as a component of investment income in the Statement of Revenues, Expens es and Changes in Net Position .

The District complies with GASB Statement No. 31 Accounting and Financial Reporting for Certain Investments and for External Investment Pools . The statement requires certain investments to be reported at fair value and the ch ange in fair value to be inclu ded in revenues or expenses. The District’s policy is to report all investments at value and the change in fair value to be included in revenues or expenses. The District’s investment in the State Treasurer’s P ool has a fair value equivalent to the value of the pool shares. This pool is administered by the State of Utah and is regulated by the Money Management Council under provisi ons of the Utah State Money Man agement Act. In all statements, the District considers all highly liquid investments, (including re stricted assets) that mature within ninety days or less when purchased, to be cash equivalents.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 62 F. Inventories

that mature within ninety days or less when purchased, to be cash equivalents.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 62 F. Inventories Inventory is stated at cost on a first-in, first-out (“FIFO”) basis.

G. Capital Assets The District elects to use the Modified Approach for infrastructure reporting for its sewer treatment facility and collection system. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of t wo years. Costs include materials, transportation, and interest on funds borrowed to finance const ruction. Capital assets are categorized as either nondepreciable or depreciable capital assets.

x Nondepreciable capital assets - This category includes inexhaustible capital assets, such as land and land improvements, and eligible infrastructure assets repor ted using the Modified Approach .

Under the Modified Approach, the cost of additions and improvem ents to eligible infrastructure assets should be capitalized. Additions or improvements increase the capacity or efficiency of infrastructure assets rather than preserve the useful life of the assets. All other expenditures that preserve the useful life of the assets are expensed in the period incurred. Infrastructure assets are eligible under the Modified Approach as long as the District manages the eligible infrastructure assets using an asset management system, and the District documents that the el igible infrastructure assets are being preserved approximately at (or above) a condition level e stablished and disclosed by the District. [See additional information in the Required Suppleme ntary Information (RSI)]

ture assets are being preserved approximately at (or above) a condition level e stablished and disclosed by the District. [See additional information in the Required Suppleme ntary Information (RSI)] x Depreciable capital assets - Assets in this category includes all capital assets not eligible under the Modified Approach. These assets are recorded at cost. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. Additions and improvements that significantly extend the useful life of an asset are capitalized, whereas maintenance and repair costs are charg ed to current period operating expenses. These assets are depreciated over their remaining us eful lives.

Depreciation has been calculated over estimated useful lives of the assets using the straight-line method.

The estimated useful lives are as follows: x Machinery and equipmen t ...................................... .................................. 7—15 years x Mobile equipm ent ............................................. ........................................ 5—10 years x Office furniture and equipment ................................................................. 2—10 years The cost and accumulated depreciation of property sold or retir ed is deducted from capital assets, and any profit or loss resulting from the disposal is credited or charged in the nonoperating section of the statements of revenues, expenses, and changes in fund net posit ion. Construction in progress primarily relates to upgrades of existing facilities.

H. Operating and Non-Oper ating Revenue and Expenses Enterprise funds distinguish operating revenues and expense from nonoperating revenues and expenses.

ly relates to upgrades of existing facilities.

H. Operating and Non-Oper ating Revenue and Expenses Enterprise funds distinguish operating revenues and expense from nonoperating revenues and expenses.

x Operating revenues and expenses include activities that result from exchange transactions in providing services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the District are sewer service charges, sewer speci al treatment charges and inspection, and plan review fees. Operating expenses for District include labor, supplies, professional services, utilities, administrative expense s, and depreciation on capital assets x Non-operating revenues and expenses include activities that have the characteristics of nonexchange transactions. Examples of non-operating revenues and expenses would be property tax revenues, impact fees, penalties income, contributed capital, i nterest income, interest expense, unrealized gains or losses on investments, amortization, and ga in or loss on sale of assets.

I. Estimates The preparation of financial statements in conformity with gene rally accepted accounting principles requires management to make estimates and assumptions that affe ct certain reported amounts and disclosures. Accordingly, actual results could differ from tho se estimates.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 63 J. Pensions For purposes of measuring the net pension liability, deferred o utflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Utah Retirement Systems Pension Plan (URS) and additions to/ded uctions from the URS’s fiduciary net

urces related to pensions, and pension expense, information about the fiduciary net position of the Utah Retirement Systems Pension Plan (URS) and additions to/ded uctions from the URS’s fiduciary net position have been determined on the same basis as they are rep orted by URS. For this purpose, benefit payments (including refunds of employee contributions) are reco gnized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

K. Deferred Outflows/Inflows of Resources In addition to assets, financial statements will sometimes repo rt a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources , represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expenses/expenditures) until then. In addition to li abilities, financial statements will sometimes report a separate section for deferred inflows of resources. Th is separate financial statement element, deferred inflows of resources , represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

L. Net Position The District’s net position is classified as follows: x Investment in capital assets, net of related debt - This component of net position consists of the District’s total investment in capital assets, net of accumulat ed depreciation, reduced by the outstanding balance of bonds that are attributable to the acqui sition, constriction or improvement of those assets.

x Restricted -This component of net position consists of constraints impose d by creditors (such as debt covenants and/or sinking fund requirements).

tion, constriction or improvement of those assets.

x Restricted -This component of net position consists of constraints impose d by creditors (such as debt covenants and/or sinking fund requirements).

x Unrestricted -This component of net position consists of net position that d o not meet the definition of “invested in capital assets, net of related debt” or “restricted.

M. Restricted and Unrestricted resources When both restricted and unrestricted resources are available for use, it is the District’s policy to use the restricted resources first, then unrestricted resources as they are needed.

N. Allowance for Doubtful Accounts The District does not record bad debt expense or an allowance f or doubtful accounts on sewer fees.

Unpaid fees are certified to th e County and attached as liens o n the related real estate.

O. Contributed Capital Contributed capital consists of reimbursements by land develope rs for the costs of installing irrigation systems in subdivisions or other developments. Capital contributions are recorded separately after nonoperating revenues and expenses.

P. Risk Management The District has exposure to liabilities due to the nature of o perations. The District purchases insurance to insure against various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The District has obtaine d commercial insurance coverage to reduce the risk of loss to a level acceptable by the Board.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 64 2. DEPOSITS AND INVESTMENTS The District’s deposits and investments are governed by the Utah Money Management Act (Utah Code, Title

nancial Statements For the Years Ended December 31, 2020 and 2019 64 2. DEPOSITS AND INVESTMENTS The District’s deposits and investments are governed by the Utah Money Management Act (Utah Code, Title 51, Chapter 7) and rules of the State of Utah Money Management Council.

A. Deposits Custodial Credit Risk—Deposits: Custodial credit risk for deposits is the risk that in the eve nt of a bank failure, the District’s deposits may not be recovered. The Mone y Management Act requires deposits be in a “qualified depository.” The Act defines “qualified deposi tory” as any financial institution whose deposits are insured by an agency of the Federal Government and that has been certified by the State Commissioner of Financial Institutions as meeting the requireme nts of the Act and adhering to the rules of the Utah Money Management Cou ncil. The District’s insured an d uninsured and uncollateralized bank balances were as follows: 2020 2019 Carrying amount (book balance) 805,508 $ 460,393 $ Bank balance: Covered by FDIC insurance 250,000 $ 250,000 $ Uninsured and uncollateralized 578,393 329,494 TOTAL BANK BALANCE 828,393 $ 579,494 $ 2020 2019 Cash on deposit 804,783 $ 459,668 $ Cash on hand 725 725 TOTAL 805,508 $ 460,393 $ The District does not have a formal deposit policy for custodia l credit risk.

B. Investments The Money Management Act defines the types of securities authorized as appropriate investments for the District and the conditions for making investment transacti ons. Investment transactions may be conducted only through qualified depositories, certified dealer s, or directly with issuers of the investment securities.

onditions for making investment transacti ons. Investment transactions may be conducted only through qualified depositories, certified dealer s, or directly with issuers of the investment securities.

The Act authorizes the District to invest in negotiable or nonn egotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse r epurchase agreements; commercial paper classified as “first tier” by two nationally recognized s tatistical rating organizations; bankers’ acceptances, obligations of the U.S. Treasury including bills, notes, and bonds; obligations, other than mortgage derivative products, issued by U.S. government sponsored enterprises (U.S. Agencies) such as the Federal Loan Bank System, Federal Home Loan Mortgage Cor poration (Freddie Mac), Federal National Mortgage Association (Fannie Mae), and Student Loan Ma rketing Association (Sallie Mae); bonds, notes, and other evidence of indebtedness of political s ubdivisions of the State; fixed rate corporate obligations and variable rate securities rated “A” or higher, or the equivalent of “A” or higher, by two nationally recognized statistical rating organizations; and shares or certificates in a money market mutual fund as defined in the Ac t; and the Utah State Public Tr easurer’s Investment Fund (PTIF).

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 65 Fair Value of Investments: The District measures and records its investments using fair v alue measurement guidelines established by generally accepted accoun ting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: x Level 1 – Valuations based on quoted prices in active markets for iden tical assets or liabilities that

ting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows: x Level 1 – Valuations based on quoted prices in active markets for iden tical assets or liabilities that the District has the ability to access. Since valuations are b ased on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail any significant degree of judgment. Securities classified as Level 1 inputs include U.S. Government securities and certain other U.S. Agency and sovereign government obligations.

x Level 2 – Valuations based on quoted prices in markets that are not activ e or for which all significant inputs are observable, either directly or indirectly. Securitie s classified as Level 2 include: corporate and municipal bonds, and “brokered” or securitized certificates of deposit.

x Level 3 – Valuations based on inputs that are unobservable and significa nt to the overall fair value measurement.

As of December 31, 2020, and 201 9, the District had the following investments: Fair Investment Type Value Level 1 Level 2 Level 3 Utah Public Treasurer's Investment Fund (PTIF) 13,827,257 13,827,257 - Cash & cash equivallents 6,662 6,662 - Corporate bonds & notes 1,279,036 - 1,279,036 Other fixed income securities 537,081 537,081 - Fair Investment Type Value Level 1 Level 2 Level 3 Utah Public Treasurer's Investment Fund (PTIF) 17,392,645 17,392,645 - Cash & cash equivallents 3,095 3,095 - -

Level 1 Level 2 Level 3 Utah Public Treasurer's Investment Fund (PTIF) 17,392,645 17,392,645 - Cash & cash equivallents 3,095 3,095 - Federal agency bonds 250,000 250,000 - Corporate bonds 1,154,015 - 1,154,015 Other fixed income securities 368,362 368,362 - Fair Value Measurement Classification SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 66 Interest Rate Risk—Investments : Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District ’s policy for managing interest rate risk is to comply with the State’s Money Management Act. Section 51-7-11 of the Act requires that the remaining term to maturity of investments may not exceed the period of av ailability of the funds to be invested. The Act further limits the remaining term to maturity on all invest ments in commercial paper, bankers’ acceptances, fixed rate negotiable deposits, and fixed rate cor porate obligations to 270 days – 15 months or less. The Act further limits the remaining term to maturity on all investments in obligations of the United States Treasury; obligations issued by U.S. government sponsore d enterprises; and bonds, notes and other evidence of indebtedness of political subdivisions of the State to five years. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding three years.

political subdivisions of the State to five years. In addition, variable rate negotiable deposits and variable rate securities may not have a remaining term to final maturity exceeding three years.

As of December 31, 2020, and 201 9, the District had the followi ng investments and maturities: Fair Les s More Investment Type Value Than 1 1-5 6-10 Than 10 Utah Public Treasurer's Investment Fund (PTIF) 13,827,257 13,827,257 - - Cash & cash equivallents 6,662 6,662 - - Corporate bonds & notes 1,279,036 - 1,279,036 - Other fixed income securities 537,081 - 537,081 - Total investments 15,650,036$ 13,833,919$ 1,816,117$ - $ - $ Fair Les s More Investment Type Value Than 1 1-5 6-10 Than 10 Utah Public Treasurer's Investment Fund (PTIF) 17,392,645 17,392,645 - - Cash & cash equivallents 3,095 3,095 - - Federal agency bonds 250,000 250,000 - - Corporate bonds 1,154,015 1,154,015 - - Other fixed income securities 368,362 368,362 - - Total investments 19,168,117$ 19,168,117$ - $ - $ - $ December 31, 2020 December 31, 2019 SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 67 Credit Risk of Debt Securities : Credit risk is the risk that an issuer or other counterparty to a n

VIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 67 Credit Risk of Debt Securities : Credit risk is the risk that an issuer or other counterparty to a n investment will not fulfill its obligations. The District’s po licy for reducing its exposure to credit risk is to comply with the State’s Money Management Act as previously disc ussed.

The District had the following investments and quality ratings as of December 31, 2020 and 2019: Fair Investment Type Value AAA AA A Unrated Utah Public Treasurer's Investment Fund (PTIF) 13,827,257 13,827,257 Cash & cash equivallents 6,662 6,662 Corporate bonds 1,279,036 627,433 651,603 Other fixed income securities 537,081 537,081 Total investments 15,650,036 $ 6,662 $ 1,164,514 $ 651,603 $ 13,827,257 $ Fair Investment Type Value AAA AA A Unrated Utah Public Treasurer's Investment Fund (PTIF) 17,392,645 17,392,645 Cash & cash equivallents 3,095 3,095 Federal agency bonds 250,000 250,000 Corporate bonds 1,154,015 1,154,015 Other fixed incom e securities 368,362 368,362 Total investments 19,168,117 $ 253,095 $ 1,522,377 $ - $ 17,392,645 $ Quality RatingsQuality RatingsDe ce m be r 31, 2020 Custodial Credit Risk—Investments : Custodial credit risk for investments is the risk that, in th e event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The District does not have a formal deposit policy for custodial credit risk.

Concentration of Credit Risk—Investments: Concentration of credit risk is the risk of loss attributed

an outside party. The District does not have a formal deposit policy for custodial credit risk.

Concentration of Credit Risk—Investments: Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issue r. The District’s policy for reducing the risk of loss is to comply with the Rules of the Money Managemen t Council. Rule 17 of the Money Management Council limits investments in a single issuer of com mercial paper and corporate obligations to 5%-10% depending upon total dollar amount held in the portfo lio.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 68 3. EXTERNAL INVESTMENT POOL The Utah State Treasurer’s Office operates the Public Treasurer ’s Investment Fund (PTIF). The PTIF is available for investment of funds administered by any Utah publ ic treasurer. The PTIF is not registered with the SEC as an investment company. The PTIF is authorized and regulated by the Money Management Act, Section 51-7, Utah Code Annotated , 1953, as amended. The Act established the Money Management Council, which oversees the activities of the State Treasurer a nd the PTIF and details the types of authorized investments. Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah, and participants share proportionally in any realized gains or loss es on investments.

The PTIF allocates income and issues statements on a monthly ba sis. The PTIF operates and reports to participants on an amortized cost basis. The income, gains, an d losses – net of administration fees of the PTIF are allocated based upon the participant’s average daily balance. The fair value of the PTIF investment

amortized cost basis. The income, gains, an d losses – net of administration fees of the PTIF are allocated based upon the participant’s average daily balance. The fair value of the PTIF investment pool is approximately equal to the value of the pool shares. F unds held in the PTIF by the District are considered cash equivalents due to their liquidity and the aver age maturity of the pool’s investments.

4. REIMBURSABLE COSTS The District incurred costs associated with the installation of lateral lines for several property owners that had previously been using septic tanks. The District will bill the property owner for these costs by amortizing the total costs over a period of thirty years. However, if a prope rty owner sells or changes title to the property, the entire balance owed to the District at that time is due immedia tely. These costs were funded without any associated interest being charged to the property owners. The present value of the amount owed to the District would be less if the District were to impute an intere st rate and discount the balance due. However, the District believes that the difference from the present carr ying value and the estimated amount discounted for an imputed interest rate is immaterial.

5. JOINT VENTURE In 2017, the District entered into a joint venture with ALPRO S D, LLC (“ALPRO”), a Utah limited liability company to construct a project to jointly-owned by the District and ALPRO. The project consists of facilities for handling, treatment and processing through anaerobic digest ion, and resource recovery, of solid waste consisting primarily of organic matter. The District and ALPRO each own an undivided 50 percent interest in

treatment and processing through anaerobic digest ion, and resource recovery, of solid waste consisting primarily of organic matter. The District and ALPRO each own an undivided 50 percent interest in the Resource Recovery Project as tenants in common. Operations of the jointly owned project are managed by Wasatch Resource Recovery, LLC (“WRR”), a Utah limited liabi lity company. The District has a 50 percent member interest in WRR. At December 31, 2020, the Districts in vestment in WRR represents amounts contributed to WRR less the Distr ict’s equity in the accumulate d earnings (losses) as of December 31, 2020.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 69 6. CAPITAL ASSETS The changes in capital assets for the year ended December 31, 2 020, are as follows: 12/31/2019 Increase Decreases 12/31/2020 Nondepreciable capital assets: Land 3,070,568$ - $ - $ 3,070,568 $ Construction in progress 13,365,032 275,738 - 13,640,770 Infrastructure: Sew er treatment facility and collection system 89,879,218 1,804,272 - 91,683,490 Accumulated depreciation on in frastructure assets prior to January 1, 2005 (13,673,591) - - (13,673,591) Total nondepreciable capital assets 92,641,227 2,080,010 - 94,721,237 Depreciable capital assets: Machinery and equipment 8,996,923 397,972 - 9,394,895 Mobile equipment 3,448,805 (21,249) (173,613) 3,253,943 Office furniture and equipment 510,638 260,553 - 771,191 Total depreciable capital assets

quipment 3,448,805 (21,249) (173,613) 3,253,943 Office furniture and equipment 510,638 260,553 - 771,191 Total depreciable capital assets at historical cost 12,956,366 637,276 (173,613 ) 13,420,029 Less accumulated depreciation for: Machinery and equipment (1,526,529 ) (243,896 ) - (1,770,425 ) Mobile equipment (1,831,780 ) (181,116 ) 24,552 (1,988,344 ) Office furniture and equipment (562,291) (33,518) - (595,809) Total accumulated depreciation (3,920,600) (458,530) 24,552 (4,354,57 8) Depreciable capital assets, net 9,035,766 178,746 (149,061) 9,065,451 Total capital asse ts, ne t 101,676,993 $ 2,258,756 $ (149,061) $ 103,786,688 $ The changes in capital assets for the year ended December 31, 2 019, are as follows: 12/31/2018 Increase Decreases 12/31/2019 Nondeprec iable cap ital assets: Land 3,070,568 $ - $ - $ 3,070,568 $ Construct ion in progress 29,951,777 4,662,003 (21,248,748) 13,365,032 Infrastructure: Sew er treatment facility an d collection system 7 3,614,836 16,264,382 - 89,879,218 Accum u lated deprec iation on infrastructure assets pr ior to January 1, 2005 (13,673,591) - - (13,673,591) Total nondeprec iable cap ital assets 92,963,590 20,926,385 (21,248,748) 92,641,227 Deprec iable cap ital assets: Machinery an d equipment 1,598,265 7, 398,658 - 8,996,923 Mobile equ ipment 3,894,063 287,657 (732,915) 3,448,805

Deprec iable cap ital assets: Machinery an d equipment 1,598,265 7, 398,658 - 8,996,923 Mobile equ ipment 3,894,063 287,657 (732,915) 3,448,805 Office furniture an d equipment 485,091 25,547 - 5 10,638 Total deprec iable cap ital assets at historical cost 5,977,419 7,711,862 (732,915) 12,956,366 Less accum u lated deprec iation for: Machinery an d equipment (1,464,004) (62,525) - (1,526,529) Mobile equ ipment (1,693,395) (185,214) 46,829 (1,831,780) Office furniture an d equipment (530,157) (32,134) - (562,291) Total accum u lated deprec iation (3,687,556) (279,873) 46,829 (3,920,600) Deprec iable cap ital assets, net 2,289,863 7,431,989 (686,086) 9,035,766 Total capital asse ts, ne t 95,253,453 $ 28,358,374 $ (21,934,834) $ 101,676,993 $ SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 70 7. NONCURRENT LIABILITIES Noncurrent liabilities activity for the year ended December 31, 2020 and 2019 is as follows: Beginning E nding Due Within Balance Additions Reductions Balance One Year Revenue Bonds Payable 32,196,886 - (791,270) 31,405,616 1,610,000 Compensated absenses 580,553 272,000 (163,925) 688,628 35,000 Net pension liability 2,071,915 - (1,203,520) 868,395 Total investments 34,849,354$ 272,000 $ (2,158,715)$ 32,962,639$ 1,645,000$ Beginning E nding Due Within Balance Additions Reductions Balance One Year

(1,203,520) 868,395 Total investments 34,849,354$ 272,000 $ (2,158,715)$ 32,962,639$ 1,645,000$ Beginning E nding Due Within Balance Additions Reductions Balance One Year Revenue Bonds Payable 20,783,161 12,179,000 (765,275) 32,196,886 825,000 Compensated absenses 560,427 269,492 (249,366) 580,553 45,000 Net pension liability 928,173 1,143,742 - 2,071,915 Total investments 22,271,761$ 13,592,234$ (1,014,641)$ 34,849,354$ 870,000$ December 31, 2019December 31, 2020 Compensated absences The District’s employee benefits policy allows employees to acc umulate benefits for unused compensated, vacation, and sick leave time to be paid upon termination or re tirement.

Series 2017A Revenue Bonds The Series 2017 Bonds were issued for the purpose of (a) financ ing a portion of the cost of acquisition and construction of a project to jointly-owned by the District and ALPRO SD, LLC, a Utah limited liability company (“ALPRO”), consisting of facilities for handling, treatment and processing through anaerobic digestion, and resource recovery, of solid waste consisting primarily of organ ic matter, and (b) paying costs of issuance of the Series 2017 Bonds. The District and ALPRO each own an undiv ided 50 percent interest in the Resource Recovery Project as tenants in common.

The Series 2017 Bonds will be payable and secured solely by a p ledge and assignment of the Revenues from the Combined Utility System and monies on deposit in the funds and accounts held by the Trustee.

The District covenants and agrees to establish, fix, prescribe and collect rates, charges and fees for the sale

ined Utility System and monies on deposit in the funds and accounts held by the Trustee.

The District covenants and agrees to establish, fix, prescribe and collect rates, charges and fees for the sale or use of the service or capacity that are reasonably expected to yield Net Revenues which are at least equal to the Rate Covenant Requirement of 125% of Annual Aggregate Debt Service for the forthcoming fiscal year.

Series 2019 Revenue Bonds The Series 2019 Bonds were issued for the purpose of (a) equipm ent and expenses of the nutrient removal facility, (b) improvements to the District’s south and north pl ant, and (c) pay costs associated with the issuance of Series 2019 Bonds.

The Series 2017 Bonds were issued under the Master Resolution o n parity with the 2017A bonds and have a parity of revenue on the District’s system and projects.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 71 The Series 2017A and Series 2019 Bonds bear interest from their dated date at the rates set forth as follows: Maturity Interest On Principal Maturity Interest On Principal (December 1) Rate Amount of (December 1) Rate Amount of 2021 3.000% 850,000 $ 2021 2.050% 508,000 $ 2022 3.000% 875,000 2022 2.050% 519,000 2023 3.250% 900,000 2023 2.050% 529,000 2024 3.375% 930,000 2024 2.050% 540,000 2025 3.500% 960,000 2025 2.050% 551,000 2026 3.625% 995,000 2026 2.050% 562,000 2027 4.125% 1,030,000 2027 2.050% 574,000 2028 4.125% 1,075,000 2028 2.050% 586,000 2029 4.125% 1,120,000 2029 2.050% 598,000 2030 4.125% 1,165,000 2030 2.050% 610,000 2031 4.125% 1,215,000 2031 2.050% 622,000 2032 4.125% 1,260,000 2032 2.050% 635,000

050% 586,000 2029 4.125% 1,120,000 2029 2.050% 598,000 2030 4.125% 1,165,000 2030 2.050% 610,000 2031 4.125% 1,215,000 2031 2.050% 622,000 2032 4.125% 1,260,000 2032 2.050% 635,000 2033 4.500% 1,315,000 2033 2.050% 648,000 2034 4.500% 1,375,000 2034 2.050% 661,000 2035 4.500% 1,435,000 2035 2.290% 675,000 2036 4.500% 1,500,000 2036 2.290% 690,000 2037 4.500% 1,570,000 2037 2.290% 706,000 19,570,000$ 2038 2.290% 722,000 2039 2.290% 739,000 11,675,000$ Series 2017A Bonds Series 2019 Bonds SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 72 The following table shows the remaining aggregate debt service schedule: Fis cal Ye ar E nded Series Series December 31 2017A Bonds 2019 Bonds Total 2021 1,639,013 $ 788,516 $ 2,427,529 $ 2022 1,638,513 788,651 2,427,164 2023 1,637,263 788,560 2,425,823 2024 1,638,013 788,244 2,426,257 2025 1,636,625 788,703 2,425,328 2026 1,638,025 787,915 2,425,940 2027 1,636,956 788,902 2,425,858 2028 1,639,469 788,623 2,428,092 2029 1,640,125 788,097 2,428,222 2030 1,638,925 788,326 2,427,251 2031 1,640,869 788,288 2,429,157 2032 1,635,750 787,983 2,423,733 2033 1,638,775 788,412 2,427,187 2034 1,639,600 788,554 2,428,154 2035 1,637,725 788,409 2,426,134 2036 1,638,150 788,288 2,426,438 2037 1,640,650 788,800 2,429,450 2038 - 788,923 788,923 2039 - 788,656 788,656

638,150 788,288 2,426,438 2037 1,640,650 788,800 2,429,450 2038 - 788,923 788,923 2039 - 788,656 788,656 27,854,446$ 14,980,850 $ 42,835,296 $ SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 73 8. PENSION PLANS General Information a bout the Pension Plan Plan Description: Eligible Plan participants are provided with pensions through the Utah Retirement Systems.

Utah Retirement Systems are comp rised of the following Pension Trust Funds: Defined Benefit Plans xPublic Employees Noncontributory Retirement System (Noncontribu tory System); xPublic Employees Contributory Retirement System (Contributory S ystem); are multiple employer, cost sharing, retirement systems.

xTier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System); is a multiple employer, cost sharing, public employee, retirement system.

The Tier 2 Public Employees System became effective July 1, 201 1. All eligible employees beginning on or after July 1, 2011, who have no previous service credit with any of the Utah Retirement Systems, are members of the Tier 2 Retirement System.

The Utah Retirement Systems (Systems) are established and gover ned by the respective sections of Title 49 of the Utah Code Annotated 1953, as amended. The Systems’ defi ned benefit plans are amended statutorily by the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of the Systems under the direction of the Utah State Retirement Bo ard, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension ( and other employee benefit) trust funds. URS

nder the direction of the Utah State Retirement Bo ard, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension ( and other employee benefit) trust funds. URS is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and amend the benefits terms. URS issues a publicly available financial report that can be ob tained by writing Utah Retirement Systems, 560 E. 200 S., Salt Lake City, Utah 84102, or visiting the website: www.urs.org.

Benefits provided: URS provides retirement, disability, and death benefits. Retirement benefits are as follows: Summary of Benefits by System SystemFinal Average SalaryYears of Service Required and/or Age Eligible for BenefitYears of Service Required and/or Age Eligible for 30 years, any age Noncontributory Highest 3 25 years, any age* System Years 20 years, age 60* 2.0% per year all years Up to 4% 10 years, age 62* 4 years, age 65 30 years, any age 4 years, age 65 present 35 years, any age Tier 2 Public Highest 5 20 years, age 60* Employees Years 10 years, age 62* 1.5% per year all years Up to 2.5 % System 4 years, age 65 * Actuarial reductions are applied Judges, which is compounding benefit. The cost-of-living adjustments are also limited to the actual Consumer Price Index (CPI) increase for the year, although unused CPI increases not met may be carried forward to subsequent years.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019

for the year, although unused CPI increases not met may be carried forward to subsequent years.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 74 Contribution Rate Summary As a condition of participation in the Systems, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and sp ecified by the Utah State Retirement Board.

Contributions are actuarially determined as an amount that, whe n combined with employee contributions (where applicable) is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued lia bility. Contribution rates as of December 31, 2020 are as follows: Employee Employer 401(k) Contributory System 11 Local Government Div - Tier 1 6.00 14.46 N/A 111 Local Government Div - Tier 2 N/A 15.80 0.89 Noncontributory System 15 Local Government Div - Tier 1 N/A 18.47 N/A Tier 2 DC Only211 Local Government N/A 6.69 10.00 For fiscal year ended December 31, 2020, the employer and emplo yee contributions to the Systems were as follows: SystemEmployer ContributionsEmployee Contributions Noncontributory System 296,972 $ N/A Contributory System 51,376 21,318 Tier 2 DC Public Employee System 150,446 Tier 2 DC Only System 5,796 N/A Total Contributions 504,590 $ 21,318 $ Contributions reported are the URS Board approved required cont ributions by System. Contributions in the Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems.

21,318 $ Contributions reported are the URS Board approved required cont ributions by System. Contributions in the Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems.

Combined Pension Assets, Liab ilities, Expense, and Deferred Out flows and Inflows of Resources Related to Pensions At December 31, 2020, we reported a new pension asset of $-0- a nd a net pension liability of $868,395.

SystemNet Pension AssetNet Pension LiabilityProportionate ShareProportionate Share December 31, 2018Change (Decrease) Contributory - $ 733,734 $ 0.1946828% 0.1854115% 0.0092713% Noncontributory - 123,353 1.8822009% 1.7087889% 0.1734120% Tier 2 Public Employee - 11,308 0.0502777% 0.0307391% 0.0195386% - $ 868,395 $ The net pension asset and liability was measured as of December 31, 2019, and the total pension liability used to calculate the net pension asset and liability was deter mined by an actuarial valuation as of January 1, 2019, and rolled-forward using generally accepted actuarial pro cedures. The proportion of the net pension asset and liability is equal to the ratio of the employer’s act ual contributions to the Systems during the plan year over the total of all employer contributions to the System during the plan year.

For the year ended December 31, 2020, we recognized pension exp ense of $471,072.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 75 At December 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow of ResourcesDererred Inflow of Resources

cember 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow of ResourcesDererred Inflow of Resources Difference between expected and actual experience 69,905 $ 14,421 $ Changes in assumptions 82,539 325 Net difference between projected and actual earnings on pension plan investments - 687,672 Changes in proportion and difference between contributions and proportionate share of 50,172 4,844 Contributions subsequent to the measurment date 504,591 Total Contributions 707,207 $ 707,262 $ $504,591 reported as deferred outflows of resources related to pensions results from contributions made by us prior to our fiscal year end, but subsequent to the measurem ent date of December 31, 2019.

These contributions will be recognized as a reduction of the ne t pension liability in the upcoming fiscal year.

Other amounts reported as deferred outflows of resources and de ferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31, 2020 (125,203) $ 2021 (154,311) $ 2022 23,040 $ 2023 (258,079) $ 2024 1,347 $ Thereafter 8,861 $ Net Deferred Outflows (Inflows) of Resources Noncontributory System Pension Expe nse, and Deferred Outflows a nd Inflows of Resources For the year ended December 31, 2020, we recognized pension exp ense of $392,783.

At December 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow of ResourcesDererred Inflow of Resources

cember 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow of ResourcesDererred Inflow of Resources Difference between expected and actual experience 66,742 $ 10,540 $ Changes in assumptions 77,711 Net difference between projected and actual earnings on pension plan investments - 371,056 Changes in proportion and difference between contributions and proportionate share of 38,364 4,844 Contributions subsequent to the measurment date 296,972 Total Contributions 479,789 $ 386,440 $ $296,972 reported as deferred outflows of resources related to pensions results from contributions made by us prior to our fiscal year end, but subsequent to the measurem ent date of December 31, 2019.

These contributions will be recognized as a reduction of the ne t pension liability in the upcoming fiscal year.

Other amounts reported as deferred outflows of resources and de ferred inflows of resources related to pensions will be recognized in pension expense as follows: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 76 Year ended December 31, 2020 (15,219) $ 2021 (64,080) $ 2022 16,745 $ 2023 (141,069) $ 2024 - $ Thereafter - $ Net Deferred Outflows (Inflows) of Resources Contributory System Pension Expe nse, and Deferred Outflows and Inflows of Resources For the year ended December 31, 2020, we recognized pension exp ense of $14,509.

At December 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow

gnized pension exp ense of $14,509.

At December 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Dererred Outflow of ResourcesDererred Inflow of Resources Difference between expected and actual experience - $ - $ Changes in assumptions - Net difference between projected and actual earnings on pension plan investments - 307,924 Changes in proportion and difference between contributions and proportionate share of - Contributions subsequent to the measurment date 51,376 Total Contributions 51,376 $ 307,924 $ $51,376 reported as deferred outflows of resources related to p ensions results from contributions made by us prior to our fiscal year end, but subsequent to the measurement date of December 31, 2019.

These contributions will be recognized as a reduction of the ne t pension liability in the upcoming fiscal year.

Other amounts reported as deferred outflows of resources and de ferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31, 2020 (108,985) $ 2021 (89,701) $ 2022 5,641 $ 2023 (114,879) $ 2024 - $ Thereafter - $ Net Deferred Outflows (Inflows) of Resources Tier 2 Public Employee ystem Pension Expense, and Deferred Outf lows and Inflows of Resources For the year ended December 31, 2020, we recognized pension exp ense of $63,780.

At December 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements

ecember 31, 2020, we report ed deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 77 Dererred Outflow of ResourcesDererred Inflow of Resources Difference between expected and actual experience 3,163 $ 3,881 $ Changes in assumptions 4,828 325 Net difference between projected and actual earnings on pension plan investments - 8,692 Changes in proportion and difference between contributions and proportionate share of 11,808 Contributions subsequent to the measurment date 156,242 Total Contributions 176,041 $ 12,898 $ $156,242 reported as deferred outflows of resources related to pensions results from contributions made by us prior to our fiscal year end, but subsequent to the measurem ent date of December 31, 2019.

These contributions will be recognized as a reduction of the ne t pension liability in the upcoming fiscal year.

Other amounts reported as deferred outflows of resources and de ferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31, 2020 (999) $ 2021 (830) $ 2022 655 $ 2023 (2,131) $ 2024 1,347 $ Thereafter 8,861 $ Net Deferred Outflows (Inflows) of Resources Actuarial assumptions The total pension liability in the December 31, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods inc luded in the m easurement: Inflation 2.50 percent Salary increases 3.25 - 9.75 percent, average, including inflati on

s determined using the following actuarial assumptions, applied to all periods inc luded in the m easurement: Inflation 2.50 percent Salary increases 3.25 - 9.75 percent, average, including inflati on Investment rate of return 6.95 percent, net of pension plan investment expense, including inflation Mortality rates were developed from actual experience and morta lity tables, based on gender, occupation and age, as appropriate, with adjustments for future improvements i n mortality based on Scale AA, a model developed by the Society of Actuaries.

The actuarial assumptions used in the January 1, 2019, valuatio n were based on the results of an actuarial experience study for the five-year period ending December 31, 2 016.

The long-term expected rate of return on pension plan investmen ts was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each m ajor asset class and is applied consistently to each defined benefit pension plan. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best esti mates of arithmetic real rates of return for each major asset class are summariz ed in the following table: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 78 Real Return Long-Term Expected Target Asset Arithmetic Portfolio Real Asset Class Allocation Basis Rate of Return Equity securities 40.00% 6.15% 2.46% Debt securities 20.00% 0.40% 0.08% Real assets 15.00% 5.75% 0.86% Private equity 9.00% 9.95% 0.89%

metic Portfolio Real Asset Class Allocation Basis Rate of Return Equity securities 40.00% 6.15% 2.46% Debt securities 20.00% 0.40% 0.08% Real assets 15.00% 5.75% 0.86% Private equity 9.00% 9.95% 0.89% Absolute return 16.00% 2.85% 0.46% Cash and cash equivalents 0.00% 0.00% 0.00% Totals 100.00% 4.75% Inflation 2.50% Expected arithmetic nominal return 7.25%Expected Return Arithmetic Basis The 6.95% assumed investment rate of return is comprised of an inflation rate of 2.50%, a real return of 4.45% that is net of investment expense.

Discount rate : The discount rate used to measure the total pension liabilit y was 6.95%. The projection of cash flows used to determine the discount rate assumed that emp loyee contributions will be made at the current contribution rate and that contributions from all parti cipating employers will be made at contractually required rates that are actuarially determined and certified by the URS Board. Based on those assumptions, the pension plan’s fiduciary net position was projected to be a vailable to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projecte d benefit payments to determine the total pension liability. The discount rate does not use the Municipa l Bond Index Rate. The discount rate remained unchanged at 6.95%.

Sensitivity of the proportionate share of the net pension asset and liability to changes in the discount rate : The following presents the proportionate share of the net pension l iability calculated using the discount rate of 6.95%, as well as what the proportionate share of the net pensi on liability would be if it were calculated using

roportionate share of the net pension l iability calculated using the discount rate of 6.95%, as well as what the proportionate share of the net pensi on liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.95%) or 1 p ercentage-point higher (7.95%) than the current rate: System1% Decrease or 5.95%Discount Rate of 6.95%1% Decrease or 5.95% Contributory 2,291,707$ 733,734 $ (565,599) $ Noncontributory 962,986 123,353 (584, 671) Tier 2 Public Employee 97,512 11,308 (55,312) 3,352,205$ 868,395 $ (1,205,582) $ the separately issued URS financial report.

Defined Contribution Savings Plans The Defined Contribution Savings Plans are administered by the Utah Retirement Systems Board and are generally supplemental plans to the basic retirement benefits o f the Retirement Systems, but may also be used as a primary retirement plan. These plans are voluntary t ax-advantaged retirement savings programs authorized under sections 401(k), 457(b) and 408 of the Internal Revenue code. Detailed information regarding plan provisions is available in the separately issued URS financial report.

The District participates in the following Defined Contribution Savings Plans with Utah Retirement Systems: x 401(k) x 457(b) x Roth IRA Plan Employee and employer contributions to the Utah Retirement Defi ned Contribution Savings Plans for fiscal year ended December 31, were as follows: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 79 2020 2019 2018 401(k) Plan Employer Contributions 56,828 $ 50,808 $ 43,195 $

follows: SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 79 2020 2019 2018 401(k) Plan Employer Contributions 56,828 $ 50,808 $ 43,195 $ Employee Contributions 113,163 $ 119,194 $ 107,853 $ 457 Plan Employer Contributions - $ - $ - $ Employee Contributions 58,970 $ 52,020 $ 36,700 $ roth IRA Plan Employer Contributions N/A N/A N/A Employee Contributions - $ 19,403 $ 17,646 $ 9. PROPERTY TAX CALENDAR The District’s property tax calendar is as follows: Lien date .............................................................................................................................. ............. Jan. 1 District notifies the County of date, time, and place of publi c hearings. ............................................ Mar. 1 County Auditor sends valuation, certified tax rate and levy wo rksheets to District. .......................... Jun. 8 District must adopt a proposed tax rate, certify the rate and levy, and submit to th e County Auditor. ...................... ........................................................... Bef ore Jun. 22 District adopts a final tax rate. ............................ ............................................................... ............. Jun. 22 District adopts final budget. ................................ ............................................................... ............... Dec. 4 Copy of the budget is submi tted to State Auditor ............. .............................. Within 30 da ys of adoption.

10. IMPACT FEES The District collects connection fees that are defined as impact fees. The District must expend these impact

............. .............................. Within 30 da ys of adoption.

10. IMPACT FEES The District collects connection fees that are defined as impact fees. The District must expend these impact fees on capital expenditures relating to the infrastructure of the District. Impact fees collected in respect of the District’s existing wastewater treatment facilities are not restricted to future capital expenditures, but may be used for any purpose of the District. The District had impa ct fee reserves of $-0- at December 31, 2020 and 2019, respectively. Revenues from impact fees were $903,64 3 and $624,221 for the year ended December 31, 2020 and 2019, respectively.

11. CONTINGENCY On December 18, 2019, the Utah Division of Water Quality (“DWQ” ) issued a Notice of Violation and Compliance Order (Docket No. UTM-19-06) to the South Davis Sewer District (the “District”), alleging violations of Utah Water Quality Regulations (Utah Administrative Code R305-7 et seq.(“R egulations”)) and the Utah Water Quality Act (Title 19, Chapter 5 of the Utah Code (the “Act”) for exceedan ces of certain nitrogen and ammonia (“Nitrogen”) effluent limitations under the UPDES Discharge Permit (“UPDES P ermit”) for the District’s South Sewage Treatment Plant (the “South Plant”) over the period July 2019 t hrough October 2019. On March 17, 2020, the DWQ issued a Notice of Violation and Compliance Order (Docket No. U TM-20-01) to the District, alleging violations of Utah Water Quality Regulations and the Act for exceedances of c ertain Nitrogen effluent limitations under the UPDES Permit for the South Plant over the period of December 20 19 and January 2020, and for failure to implement an industrial pretreatment program for the Wasatch Re source Recovery (“WRR”) facility located

rmit for the South Plant over the period of December 20 19 and January 2020, and for failure to implement an industrial pretreatment program for the Wasatch Re source Recovery (“WRR”) facility located adjacent to the South Plant.

References in this footnote to the “NOV” refer to both Notices of Violation and Compliance Orders. On March 5, 2021, the District and DWQ entered into an Administrative Settlement Agreement. The agreement specifies steps and deadlines for bringing the South Plant into full compliance . The agreement reads in part: 1. The Division calculated a total penalty of $232,831. The So uth Davis Sewer District shall pay a penalty in the amount of $38,805 and associated investigative costs in the amount of $15,345 for a total of $54,150, which was calculated and adjusted for circumstances in conformance with the penalty policy outlined in Utah Administ rative Code R317-1-8.

SOUTH DAVIS SEWER DISTRICT Notes to Financial Statements For the Years Ended December 31, 2020 and 2019 80 2. SDSD shall apply an additional $38,805 to fund a mitigation project(s)…… 3. The Director agrees to hold in abeyance $155,221, so long as SDSD completes the following terms within the time frames listed below…… The penalty and costs have been paid. The terms in item 3 are all in compliance and on schedule. The South Plant continued in noncompliance for ammonia during January thr ough March. These violations will trigger an automatic reduction in the amount held in abeyance by $10,000 per month. DWQ will likely issue an additional NOV for these violations At this time, it is not possible to accurately estimate the amo unt of the costs that may be incurred or fines and

e by $10,000 per month. DWQ will likely issue an additional NOV for these violations At this time, it is not possible to accurately estimate the amo unt of the costs that may be incurred or fines and penalties that may be assessed to fully resolve any additional NOV. However, the District is confident that it has the financial and other resources necessary to satisfy DWQ’s re quirements. The South Plant is currently in compliance with its UPDES permit and is expected to remain in c ompliance.

On August 28, 2020, the Utah Division of Water Quality (“DWQ”) issued a Notice of Violation and Compliance Order (Docket No. UTM-20-02) to the South Davis Sewer District, alleging violations of Utah Water Quality Regulations (Utah Administrative Code R305-7 et seq.(“Regulations”)) and the Utah Water Quality Act (Title 19, Chapter 5 of the Utah Code (the “Act”) for exceedances of cert ain nitrogen and ammonia (“Nitrogen”) effluent limitations under the UPDES Discharge Permit for the District’s North Sewage Treatment Plant (the “North Plant”) over the period November 2019 through March, 2020.

On February 4, 2021, the District and DWQ entered into an Admin istrative Settlement Agreement. The agreement specifies steps and deadlines for bringing the South Plant into full compliance. The agreement reads in part: A. The Division calculated a total penalty of $18,921. SDSD sha ll pay a penalty in the amount of $9,584 and associated investigative costs in the amount of $1,980 for a to tal of $11,564, which was calculated and adjusted for circumstances in conformance with the penalty poli cy outlined in Utah Administrative Code R317-1-8.

B. The Director agrees to hold in abeyance $9,337 in civil penalties, so long as SDSD completes the follow terms within the time frames outlined:

poli cy outlined in Utah Administrative Code R317-1-8.

B. The Director agrees to hold in abeyance $9,337 in civil penalties, so long as SDSD completes the follow terms within the time frames outlined: i. Meets all the payment terms outlines above in item A of the Order.

ii. The SDSD N. Plant does not violate the Act, rules or UPDES Permit No. UT0021636 for a period of 12 months from the effective date of this agreement. If new violations occur within this time frame, the penalty amounts listed below will no longer be held in abeyance and following amounts will become due and payable to the State of Utah, in ad dition to any penalties imposed for the new violations. In no event will the total amount due under this section exceed the penalties held in abeyance.

(a) $9337 per violation per day for discharge violations, including but not limited to UPDES Permit limit exceedances, spills, or overflows. For the purposes of this agreement, an exceedance of a monthly average effluent limit will be considered one (1) day.

(b) $500 per occurrence for recordkeeping violations or other v iolations determined by the Director to be minor.

The North Plant is currently in compliance with its UPDES permi t and is expected to r emain in compliance.

In addition, the City of North Salt Lake (“City”) issued a Noti ce of Code Violation, Case No. CDV2020-001, dated May 5, 2020 (“Notice”) to the District, alleging a violation of the City’s Code for emitting offensive odors from the South Plant. Civil penalties of up to $100 per day could be as sessed for each day of violation. Further action by

ict, alleging a violation of the City’s Code for emitting offensive odors from the South Plant. Civil penalties of up to $100 per day could be as sessed for each day of violation. Further action by the City were possible. The District responded promptly to the Notice and, in communication with the City, has taken and is taking steps to resolve the Notice and mitigate an y offending odors from the South Plant. These efforts appear to have been successful, the District having had no complaints since February 6, 2021. No further action has been taken by the City.

REQUIRED SUPPLEMENTAL INFORMATION 81 SOUTH DAVIS SEWER DISTRICT Modified Approach for Eligible Infrastructure Assets For the Year Ended December 31, 2020 In accordance with GASB Statement No. 34, the District is required to account for and report infrastruct ure capital assets.

The District defines infrastructure as the basic physical asset s of the wastewater collection system and treatment plant facilities. Infrastructure asset s are capital assets which norm ally are stationary in nature and can be preserved for significantly more years than other capital assets. The District’s major infrastruct ure system consists of the coll ection system, treatment plant facilities and the resource recovery fa cility and it can be divided into sub systems such as trunk lines, collection lines, manhole s, lift stations, plant facilit ies, and other appurtenances . Subsystem details are not presented in the basic financial statements. However, the Distr ict maintains detailed information on these subsystems.

The District has elected to use the Modified Approach as define d by GASB Statement No.34 for infrastructure reporting

ents. However, the Distr ict maintains detailed information on these subsystems.

The District has elected to use the Modified Approach as define d by GASB Statement No.34 for infrastructure reporting for its capital assets. Under GASB Statement No. 34 , eligible infrastructure capital assets are not required to be depreciated if the following requirements are met: 1. The District manages the eligible infrastructure capital ass ets using an asset management (AMP) system meeting the following minimum requirement: (A) have up-to-date inventor y records, (B) perform condition assessments at least once every three years and summarize the results using a measurement scale, and (C) estimate annual amount to maintain and preserve at the established condition as sessment level.

2. The District documents that the eligible infrastructure capi tal assets are being preserved approximately at or above the established and disclos ed condition assessment level.

Using the Modified Approach, both preservation and maintenance costs are expensed and only those costs for additions and improvements must be capitalized.

The District makes use of a physical condition assessment of it s collection system, treatment plant facilities and the resource recovery facility that began January 1, 2004. The District’s objective is to complete an assessment annually (or at least once every three years) of all infrastructure assets c overed by its asset management system in accordance with GASB Statement No. 34 . The District’s conditio n assessments will be performed using statistical samples that are representative of infrastructure assets. The latest condition assessment was performed in 2019 according to GASB

istrict’s conditio n assessments will be performed using statistical samples that are representative of infrastructure assets. The latest condition assessment was performed in 2019 according to GASB Statement No. 34 . This allows the District to ensure that assets are maintained at a prescribed condition and analyze future funding needs. The District’s collection system and treatment plant facilities are composed of approximately 380 miles (2,008,331 feet) of sewer lines, 9,050 sections of line, 8,825 manholes, 11 lift stations, and 2 treatment plant facilities which collect and treat up to 16 million gallons per day (MGD) of wastewater.

Approximately 18 % of the District’s collection system was cleaned and 9% was inspected by closed circuit television (CCTV) in 2020 (see Collection S ystem GIS TV and Cleaning Maps in this section).

The District expended $696,157 on maintenance and/or preservati on of its infrastructure assets for the year ended December 31, 2020. These expenses add service life to capital a ssets. A study by the Iowa Department of Transportation reported that for every dollar of preventative maintenance spen t in the first 10 years of an asset, $4-5 will be saved over the next 10 years. The District has an aggressive asset managem ent program to prolong the useful life of its capital assets. Th e District is using trenchless technology or cured in place p ipe (CIPP) as a means of being more efficient in repairing and maintaining the sewer collection system. CIPP equipment, re sin, and liners are used to complete rehabilitation projects of the collection system. The collection system operat ors performed 68, 98 and 95 rehabilitation projects for CIPP

tem. CIPP equipment, re sin, and liners are used to complete rehabilitation projects of the collection system. The collection system operat ors performed 68, 98 and 95 rehabilitation projects for CIPP on sewer lateral lines in 2020, 2019 and 2018 for a total cost of $34,770, $47,145, and $47,880 respectfully.

The District developed condition grade scales to provide a means of rating the assets during each condition assessment.

The assets are assessed for several possible defects which are assigned a relative weight. Those weights are then normalized to sum to one (100%) . The assigned condition grade score for each possible defect is multiplied by the normalized relative weight to yield a weighted defect score. Th e weighted defect scores are totaled for each asset yielding a total asset rating that will ra nge from 1 to 5. The District has set a minimum service level of 3 (moderate/fair) for all infrastructure assets. .

82 The following table makes known th e most recent conditional assessments (GASB Statement No. 34, paragraph 132).

Condition 2019 2017 2015 2019 2017 2015 2019 2017 2015 2019 2017 2015 Very Good 783 675 623 653 548 890 1540 1212 1440 11 11 11 Good 72 3 2 17 15 24 32 25 18 Fair 12 18 4 85 56 0 12 18 17 Poor 22 4 2 82 7 1 5 8 3 1 2 Very Poor 11 3 1Treatment Facilities Collection Line Segments Manholes Lift Stations I In 2019, the District performed 786 condition assessments of li ne segments for the collection system, calculated in accordance with GASB Statement No. 34 guideline. The District also pe rformed an assessment of both t reatment plant facilities,1,592 manholes, and 11 lift stations. The condition assessment of the line segments identified 32 deficiencies in

eline. The District also pe rformed an assessment of both t reatment plant facilities,1,592 manholes, and 11 lift stations. The condition assessment of the line segments identified 32 deficiencies in line segments and 31 deficiencies in manholes resulting in a co ndition level lower than established by the District. 100% of the deficiencies identified in the line segments and manhole s were corrected in the year 2019. Each treatment plant had a deficiency identified in its respective cogeneration (co- gen) system. The co-gen systems are still being evaluated for a cost-effective solution. All 11 lift stations and the remaind er of the infrastructure assets were at or above the minimum service level. These results were within the estimated expectat ions of the District.

The following condition assessments were noted: x The co-gen systems have been taken out of service due to probl ems with siloxane and digester gas and will remain out of service until a cost-effective solution is found.

x The condition of the co-gen faci lity itself is excellent (1).

The next condition assessment sample is scheduled for 2021. The actual amounts the District expended on rehabilitation, rep air and replacement of the collection system and treatment plant facilities over the curren t and past five reporting perio ds are as follows: Estimated 2015 $714,977 2016 $668,287 2017 $691,323 2018 $672,067 2019 $650,370 2020 $676,500 Actual 2015 $515,366 2016 $782,817 2017 $557,777 2018 $517,768 2019 $489,365 2020 $696,157 The budget required to maintain and preserve the current overal l condition through the year ended December 31, 2030 is estimated to be $651,482 per year. This figure was arrived at b y taking the average expenditures from 2011 to 2020 and

serve the current overal l condition through the year ended December 31, 2030 is estimated to be $651,482 per year. This figure was arrived at b y taking the average expenditures from 2011 to 2020 and infrastructure assets and are allocated as follows: $540,000 Collection System $383,000 Plant & Equipment Facilities The amount estimated to achieve the 2020 minimal target conditional assessment is $650,370 and the actual cost was $489,365. The District employees performed most of the repairs, maintenance, rehabilitation, and other preservation work therefore lowering the cost.

The Environmental Protection Agency (EPA) reports that much of the nation’s infrastructure is deteriorating due to o ld age and lack of maintenance. Neglecting or deferring maintenance of an asset to the point of failure will cost more in the long run than carrying out routine maintenance.

Source: District Asset Management Records.

83 North South Collection Asset Plant Plant System Barscreen 1 1 Pump Station #1 1 1 Grit Removal 1 1 Primary Clarifiers 1 1 Trickling Filters 1 1 Pump Station #2 1 1 Secondary Clarifiers 1 1 Raw Sludge Pump Station 1 1 Chlorination System 1 1 Gravity Thickener 1 1 Digester 2 2 Sludge Drying Beds 1 1 Operations Building 1 1 CS Garages 1 1 Maintenance Shop 1 1 Office Building 2 2 Yard Piping 1 1 Electrical 1 1 Cogeneration 5 5 Utility Water System 1 1 Chemical Feed Ferric & Polymer 1 1 Site Work (Paving, etc) 2 2 Foxboro Lift Station 1 Mountain View Lift Station 1 Sheep Road Lift Station 3 Outdoor Rec Lift Station 1 1100 North Lift Station 1

em 1 1 Chemical Feed Ferric & Polymer 1 1 Site Work (Paving, etc) 2 2 Foxboro Lift Station 1 Mountain View Lift Station 1 Sheep Road Lift Station 3 Outdoor Rec Lift Station 1 1100 North Lift Station 1 Legacy Trials Lift Station 1 Birnam Woods Lift Station 1 North Pointe Lift Station 1 Eaglewood Village Lift Station 1 Porter Lane Lift Station 1 Pages Lane Lift Station 1 6" Sewer Pipe 2 8" Sewer Pipe 2-3 10" Sewer Pipe 2-3 12" Sewer Pipe 2-3 15" Sewer Pipe 2-3 18" Sewer Pipe 2-3 21" Sewer Pipe 2-3 24" Sewer Pipe 2-3 27" Sewer Pipe 2-3 30" Sewer Pipe 2-3 33" Sewer Pipe 2-3 36" Sewer Pipe 2-3 42" Sewer Pipe 2-3 48" Sewer Pipe 2-3 84 85 SOUTH DAVIS SEWER DISTRICT Wastewater Network For The Year Ending December 31, 2020 Statistics 34.38 Square Miles 8,825 Manholes 9,050 Sections of Line 2,008,331 Feet of Line (380 Miles) 16,000,000 Max. gallons per day (MGD) 2 Treatment Plants 1 Energy Recovery Facility WRR) 11 Lift Stations (LS) Source: District GIS Database and Flow Records North Treatment Plant South Treatment Plant 86 Outdoor Rec LS Legacy Trails LS Birnam Woods LS Mountain View LS Foxboro LS 1100 North LS Sheep Road LS North Pointe LS Eaglewood Village LS Pages Meadow LS Porter Lane LS Wasatch Resource Recovery Schedule of Required Supplementary Information Last 10 Fiscal Years* Noncontributory System for the Fiscal Years Ended December 31, 2020 2019 2018 2017 2016 2015 Proportion of net pension liability (asset) 0.1946828% 0.1854115% 0.1827746% 0.1859885% 0.1773809% 0.1714837% Proportionate share of the net pension liability (asset) 733,734$ 1,365,319$ 800,790$ 1,194,274$ 1,003,707$ 744,623$ Covered payroll 1,637,481$ 1,627,788$ 1,659,575$ 1,703,079$ 1,579,894$ 1,504,734$

he net pension liability (asset) 733,734$ 1,365,319$ 800,790$ 1,194,274$ 1,003,707$ 744,623$ Covered payroll 1,637,481$ 1,627,788$ 1,659,575$ 1,703,079$ 1,579,894$ 1,504,734$ Proportionate share of the net pension liability (asset) as a p ercentage of its covered payroll 44.81% 83.88% 48.25% 70.12% 63.53% 49.5% Plan fiduciary net position as a percentage of the total pensio n liability 93.7% 87.0% 91.9% 87.3% 87.8% 90.2% Contributory System for the Fiscal Years Ended December 31, 2020 2019 2018 2017 2016 2015 Proportion of net pension liability (asset) 1.8822009% 1.7087889% 1.5504906% 1.2969910% 0.6854172% 0.5162013% Proportionate share of the net pension liability (asset) 123,353$ 693,431$ 126,170$ 425,557$ 481,749$ 148,895$ Covered payroll 337,278$ 319,834$ 314,619$ 311,199$ 292,048$ 275,901$ Proportionate sh are of the net p ension liability (asset) as a p ercentage of its covered payroll 36.57% 216.81% 40.10% 136.75% 164.96% 54.0% Plan fiduciary net position as a percentage of the total pensio n liability 98.6% 91.2% 98.2% 92.9% 85.7% 94.0% Tier 2 Public Employee System for the Fiscal Years Ended December 31, 2020 2019 2018 2017 2016 2015 Proportion of net pension liability (asset) 0.0502777% 0.0739100% 0.0137612% 0.0105558% 0.0067634% 0.0079996% Proportionate share o f the net pensio n liability (asset) 11,308 $ 13,165 $ 1,213 $ 1,177 $ (15) $ (242) $ Covered payroll 697,698$ 359,127$ 134,222$ 86,566 $ 43,693 $ 39,225 $ Proportionate share of the net pension liability (asset) as a p ercentage of its covered payroll 1.62% 3.67% 0.90% 1.36% -0.03% -0.6%

359,127$ 134,222$ 86,566 $ 43,693 $ 39,225 $ Proportionate share of the net pension liability (asset) as a p ercentage of its covered payroll 1.62% 3.67% 0.90% 1.36% -0.03% -0.6% Plan fiduciary net position as a percentage of the total pensio n liability 96.5% 90.8% 97.4% 95.1% 100.2% 103.5% * In accor dance with paragraph 81.a of GASB 68 , the District will need to disclose a 10 year history of its proportionate share of th e net pension liability (asset) in its RS I. The District will c ontinue to present i nformation for available years until a full 10 year trend is co m plied.SOUTH DAVIS SEWER DISTRICT Schedule of the Proportionate Sha re of the Net Pension Liabilit y-Utah Retirement Systems For the Year Ended December 31, 2020; With a Measurement Date of December 31, 2019 87 SOUTH DAVIS SEWER DISTRIC T Schedule of Required Supplementary Information Schedule of Contributions - Utah Retirement SystemsDecember 31, 2020 Contributions in relation to the As of fiscal Actuarial contractually Contribution Contributions as year ended Determined required deficiency Covered a percentage o f December 31,* Contributions contributions (excess) payroll covered p ayroll Noncontributory System 2014 267,149 $ 267,149 $ - $ 1,504,734 $ 17.75% 2015 288,938 288,938 - 1,579,894 18.29% 2016 311,783 311,783 - 1,702,246 18.32% 2017 304,458 304,458 - 1,659,575 18.35% 2018 298,868 298,868 - 1,627,788 18.36%

017 304,458 304,458 - 1,659,575 18.35% 2018 298,868 298,868 - 1,627,788 18.36% 2019 300,655 300,655 - 1,637,481 18.36% 2020 296,972 296,972 - 1,612,366 18.42% Contributory System 2014 38,303 $ 38,303 $ - $ 275,901 $ 13.88% 2015 42,230 42,230 - 292,048 14.46% 2016 44,999 44,999 - 311,199 14.46% 2017 45,494 45,494 - 314,619 14.46% 2018 46,248 46,248 - 319,834 14.46% 2019 48,770 48,770 - 337,278 14.46% 2020 51,376 51,376 - 355,299 14.46% 2015 6,521 6,521 - 43,693 14.92% 2016 12,907 12,907 - 86,566 14.91% 2017 20,194 20,194 - 134,222 15.05% 2018 55,056 55,056 - 359,127 15.33%

,194 20,194 - 134,222 15.05% 2018 55,056 55,056 - 359,127 15.33% 2019 108,954 108,954 - 697,698 15.62% 2020 150,446 150,446 - 956,444 15.73% Tier 2 Public Employee DC Olnly 2014 - $ - $ - $ - $ 0.00% 2016 - - - - 0.00% 2017 - - - - 0.00% 2018 1,948 1,948 - 29,123 6.69% 2019 4,035 4,035 - 60,308 6.69% 2020 5,796 5,796 - 86,639 6.69% * Only fiscal years 2014-2020 were available. The District will continue to present information for available years until a 10-year trend is compiled.

88 SOUTH DAVIS SEWER DISTRICT Notes to Required Supplementary Information For the Fiscal Year Ended December 31, 2020 Changes in Assumptions: The assumptions and methods used to calculate the total pension liability remain unchanged from the prior year.

89 SUPPLEMENTAL INFORMATION Final Variance

ed December 31, 2020 Changes in Assumptions: The assumptions and methods used to calculate the total pension liability remain unchanged from the prior year.

89 SUPPLEMENTAL INFORMATION Final Variance Original Amended Favorable Budget Budget Actual (Unfavorable) REVENUES Operating RevenuesSewer Service Fees 2,500,000 $ 5,200,000 $ 5,066,747 $ (133,253) $ Sewer Special Treatment 100,000 200,000 383,725 183,725 Inspection Fees 9,000 25,000 22,535 (2,465) Project Fees 30,000 50,000 90,600 40,600 Permit Fees 7,000 6,000 5,500 (500) Sampling Fees 6,000 12,000 18,349 6,349 Lab Testing Fees 50,000 32,000 31,186 (814) Taxable Sales 5,000 3,000 1,184 (1,816) Misc Income 81,000 210,000 277,764 67,764 Total 2,788,000 5,738,000 5,897,589 159,589 Non-operating Revenues Property Taxes 2,369,000 2,477,000 2,272,062 (204,938) Impact Fees 550,000 500,000 624,221 124,221 Delinquent Account Administration Fees 135,000 135,000 130,100 (4,900) Interest 105,000 100,000 184,810 84,810 Surplus Property Sales 572,000 310,000 399,015 89,015 WFWQC Contributions 780,000 840,000 815,700 (24,300) Total 4,511,000 4,362,000 4,425,909 63,909 Total Revenue 7,299,000 $ 10,100,000$ 10,323,498 $ 223,498 $ EXPENSES Operating Expenses Operating Expenses 471,000 $ 471,000 $ 81,629 $ 389,371 $ Repairs & Maintenance 399,000 190,000 180,002 9,998 Utilities 388,500 385,500 389,119 (3,619) Payroll and Benefits 3,773,200 3,981,200 4,044,715 (63,515) Biosolid Disposal 50,000 40,000 58,893 (18,893) No-Fault Sewer Back-up 12,000 12,000 9,707 2,293 Outside Services 134,000 413,008 3,100,000 (2,686,992) Chemicals 530,000 640,000 673,328 (33,328) Lab Testing 134,000 310,000 413,008 (103,008) Transportation 44,000 59,000 51,466 7,535 Buildings & Grounds 32,000 46,000 31,974 14,026

3,100,000 (2,686,992) Chemicals 530,000 640,000 673,328 (33,328) Lab Testing 134,000 310,000 413,008 (103,008) Transportation 44,000 59,000 51,466 7,535 Buildings & Grounds 32,000 46,000 31,974 14,026 Office & Computer 176,000 143,000 166,122 (23,122) Insurance 123,000 123,000 174,188 (51,188) Audit & Accounting 22,000 22,000 17,195 4,805 Education & Training 72,000 20,000 20,534 (534) Total 6,360,700 $ 6,855,708 $ 9,411,878 $ (2,556,170)$SOUTH DAVIS SEWER DISTRICT Schedule of Revenues and Expenses Budget to Actual (Unaudited) (Non-GAAP Budgetary Basis) For the Year Ended, December 31, 2020 Continued next page 90 Final Variance Original Amended Favorable Budget Budget Actual (Unfavorable) Non Operating Expenses Capital Expenses Outfall/Sewer Lines - 100,000 - 100,000 Operating Equipment 217,000 215,000 - 215,000 Building and Facilities 8,900,000 2,200,000 275,737 1,924,263 Mobile Equipment 311,000 190,000 265,144 (75,144) Major Equipment & Engineering 100,000 100,000 - 100,000 Office Equipment 35,000 17,000 27,441 (10,441) OtherDebt Service 1,895,842 1,895,842 1,895,842 Total 11,458,842 4,717,842 2,464,164 2,253,678 Total Expenses 17,819,542 11,573,550 11,876,042 (302,492) Excess of Revenue over Expenses (10,520,542) $ (1,473,550)$ (1,552,544) $ (78,995) $ - Schedule of Revenues and Expenses, Budget to Actual (Non-GAAP Budgetary Basis) For the Year Ended, December 31, 2020SOUTH DAVIS SEWER DISTRICT 91 Date Monthly Project/Development Lot/Building Received Amount Subtotal Renassance Towne Ct Lot 6 1/2/2020 4,958.00 $ The Ridge Sub PUD Lot 101 & 102 1/3/2020 3,192.00 Views at Eaglewood Village Lot 331 1/3/2020 1,596.00 Mt. View Est. Lot 101 1/8/2020 1,596.00 Parish Creek Sub Lot 1 1/13/2020 1,596.00 Hidden Hollow @H Lakes Lot 701 1/13/2020 1,596.00

3/2020 3,192.00 Views at Eaglewood Village Lot 331 1/3/2020 1,596.00 Mt. View Est. Lot 101 1/8/2020 1,596.00 Parish Creek Sub Lot 1 1/13/2020 1,596.00 Hidden Hollow @H Lakes Lot 701 1/13/2020 1,596.00 Sheffield Downs Lot 16 1/14/2020 1,596.00 Mt. View Est. Lot 129 1/16/2020 1,596.00 The Manors @McKeen Meadows Lot 7 1/17/2020 1,596.00 The Ridge Sub PUD Lots 342 - 350 (9) 1/16/2020 14,364.00 Shamrock Village Lot 105 1/21/2020 1,596.00 Mt. View Est. Lot 113 1/20/2020 1,596.00 M & B 1475 W Center St, NSL 1/22/2020 3,830.40 40,708.40 $ Atwater Ext. Lots 1,2,4-12 (11) 1/23/2020 17,556.00 Shamrock Village Lot 416. 421 2/12/2020 3,192.00 The Commons at WB Lot 3 2/14/2020 558.60 George & Ruthann Fisher Sub Lot 2 2/18/2020 1,596.00 Sports Sales Plaza 2 Lot 203 2/19/2020 2,793.00 City's Edge LLC HOA 7 Units 2/20/2020 11,172.00 Sheffield Downs Lot 4-5 2/20/2022 3,192.00 Old Towne Center Building 6 2/20/2020 7,980.00 48,039.60 $ Shamrock Village Ph 4 Lot 417- 420(4) 3/2/2020 6,384.00 $ The Ridge Sub Lot 103 3/3/2020 1,596.00 Cannonwood Ind Park D Lot 1 3/3/2020 3,112.20 Shane Sub Lot 2 3/6/2020 1,596.00 Rigby Court Sub Lot 3 3/9/2020 1,596.00 NSL IND Park A Lot 9 PT 3/10/2020 2,234.40 Views at Eaglewood Village Lot 221 3/11/2020 1,596.00 Highgate Est. Lot 13 3/11/2020 1,596.00 NSL City Park Building 9 Units, 48-56 3/17/2020 14,364.00 Old Towne Center Building 7 Units 1-5 3/16/2020 7,980.00 Parrish Creek Sub Lot 2 3/23/2020 1,755.60 Chapel Ridge Cove PUD Lot 10 3/20/2020 1,596.00 Sheffield Downs Lot 6,9,14,17,18, 20 3/23/2020 9,576.00 G&G SUB Commercial Lot 4 3/25/2020 5,346.60 Shamrock Village Ph 5 Lots 501, 532 3/27/2020 3,192.00 63,520.80 $ Mtn. View Est. Lot 111 4/1/2020 1,596.00 $ Foxboro Market Place SUB Lot 7C - Clubhouse 4/15/2020 3,032.40

l Lot 4 3/25/2020 5,346.60 Shamrock Village Ph 5 Lots 501, 532 3/27/2020 3,192.00 63,520.80 $ Mtn. View Est. Lot 111 4/1/2020 1,596.00 $ Foxboro Market Place SUB Lot 7C - Clubhouse 4/15/2020 3,032.40 Foxboro Market Place SUB HOA Lot 7 60 units 4/15/2020 95,760.00 The Towns on 2nd 8 Units 4/20/2020 12,768.00 Shamrock Village Ph 5 Lots 502, 503, 530 , 531 4/22/2020 6,384.00 The Ridge Sub Lots 335- 334 (8) 4/22/2020 12,768.00 Sheffield Downs Lots 8, 21 4/23/2020 3,192.00 Parish Park Lot 4 4/27/2020 399.00 Pheasant Ridge Farm Lot 12 4/28/2020 1,596.00 137,495.40 $ Eagle Ridge A Lot 12 5/5/2020 1,596.00 $ Mtn. View Est. Lot 125 5/11/2020 1,596.00 Van Orden Heights Lot 4 5/13/2020 1,596.00 Grady Brimley SUB Lot 2 5/13/2020 1,596.00 Parish Creek SUB Lot 1 5/14/2020 319.20 Shamrock Village Ph 5 Lots 504, 505 528, 529 5/15/2020 6,384.00 The Winnie PUD Building A, E, B, C, D (48 units-5 cr 5/18/2020 54,264.00 Mtn. View Est. Lot 103 5/21/2020 1,596.00 Sheffield Downs Lot 12 5/22/2020 1,596.00 Highgate Est. Lot 11 5/27/2020 1,596.00 72,139.20 $ SOUTH DAVIS SEWER DISTRCT Schedule of Impact Fees (Unaudited) For the Year Ending December 31, 2020 92 Shamrock Village Ph 5 Lots 513 - 518 (6) 6/5/2020 9,576.00 $ Legacy SUB Lot 12 6/4/2020 1,596.00 Sheffield Downs Lot 103 6/5/2020 1,596.00 Olde Towne Centre Sub Building 8 5 units 6/5/2020 7,980.00 Ballard Acres Lot 1 6/8/2020 1,596.00 Woods Cross Ind Park - addition Lot 11 6/17/2020 718.20 Sheffield Downs Lot 13 6/25/2020 1,596.00 LD Properties LLC - Remodel 125 S Main, Cent 6/17/2020 319.20 Twin Hollow Sub Ph 2 Lot 202 6/25/2020 1,596.00 Park Lofts at City Center PUD Lots 42-47 (6) 6/26/2020 9,576.00 Sheffield Downs Lot 11 6/26/2020 1,596.00 Eaglewood Cove 12 Lot 1206 6/30/2020 1,596.00

Twin Hollow Sub Ph 2 Lot 202 6/25/2020 1,596.00 Park Lofts at City Center PUD Lots 42-47 (6) 6/26/2020 9,576.00 Sheffield Downs Lot 11 6/26/2020 1,596.00 Eaglewood Cove 12 Lot 1206 6/30/2020 1,596.00 Olde Towne Centre Sub Lots 41-45 (6) 6/29/2020 7,980.00 47,321.40 $ NSL Industrial Par k Pl A - addition Lot 6 7/1/2020 3,032.40 $ Mtn. View Est. Lot 107 7/7/2020 1,596.00 M & B - demo/rebuild 158 N 100 W, BNTFL- Triplex 7/7/2020 3,192.0 0 The Winnie PUD Lot 54-71 (18) 7/9/2020 28,728.00 Viola Sub Lot 7 Amnd 7/9/2020 1,596.00 Sheffield Downs Lot 19 7/9/2020 1,596.00 Crosby Sub No. 3 Lot 1 7/14/2020 1,596.00 Eagle Pointe Ext Lot 1809 7/16/2020 1,596.00 Sheffield Downs Lot 27 7/17/2020 1,596.00 Barrus Cove Lot 2, 3, 8 7/21/2020 4,788.00 H&H Commercial Park Lot 8 (now lot 14) 7/22/2020 2,154.60 NorthWood Bus Center Amnd Lot 19 7/21/2020 1,596.00 Shamrock Village Ph 5 Lot 509, 510, 511, 512, 519, 520 7/27/2020 9 ,576.00 64,239.00 $ M & B - carwash 136 N 500 W, BNTFL 8/10/2020 12,049.80 $ The Ridge Sub PUD Lot 301-305, 328 -333 (11) 8/12/2020 17,556.00 Foxboro Market Place SUB HOA Lot 7 60 units 8/12/2020 95,760.0 0 Shamrock Village Ph 5 Lots 506 , 507, 521, 525. 527 8/14/2021 7,980 .00 The Manors @ McKean Meadow Sub Lot 6 8/15/2020 1,596.00 M & B - Amazon 1005 Center St, NSL 8/18/2020 23,062.20 M & B - remodel 74 W 500 S STE 2, BNTFL 8/18/2020 718.20 Sheffield Downs SUB Lot 30 8/18/2020 1,596.00 Shamrock Village Ph 5 Lots 5 08, 522, 523, 524 8/24/2020 6,384.00 Deer Run @ Maple Hills B Lot 3 8/24/2020 1,596.00 Shamrock Village Ph 5 Lot 526 8/25/2020 1,596.00 Towne Plaza Townhomes Ph 2 Lots 129 - 136 (8) 8/26/2020 12,768.00 The Ridge SUB PUD Lots 306, 3 07. 308, 309, 310 8/26/2020 7,980.00

8/24/2020 1,596.00 Shamrock Village Ph 5 Lot 526 8/25/2020 1,596.00 Towne Plaza Townhomes Ph 2 Lots 129 - 136 (8) 8/26/2020 12,768.00 The Ridge SUB PUD Lots 306, 3 07. 308, 309, 310 8/26/2020 7,980.00 Fairway Oaks Lot 47 8/26/2020 1,596.00 Williamsburg Place Lot 8 8/28/2020 1,596.00 193,834.20 $ NSL Orchard Grove PLD HOA Lots 109 - 114 (6 Units) 9/3/2020 9,57 6.00 $ Sheffi eld Down Sub Lot 31 9/3/2020 1,596.00 Highgate Est. Lot 5 9/3/2020 1,596.00 NSL City Center PUD Buildi ng 6 (8 Units) 9/9/2020 12,768.00 JP Estates Lot 2 9/10/2020 1,596.00 Sheffield Down Sub Lot 122 9/15/2020 1,596.00 Mtn. View Est. Lot 110 9/18/2020 1,596.00 Shamrock Village Ph 6 Lot 601. 636 9/21/2020 3,192.00 Mtn. View Est. Lot 136 9/21/2020 1,596.00 Sheffield Down Sub Lot 23 9/29/2020 1,596.00 36,708.00 93 The Ridge Sub PUD Lots 311- 327 (17) 10/2/2020 27,132.00 M & B 147 E Union Ave, NSL 10/5/2020 2,713.20 Sheffield Down Sub Lot 26 10/14/2020 1,596.00 Parrish Creek Sub - additon Lot 2 10/15/2020 2,314.20 Valley Meadows Lots 1, 6, 10 10/15/2020 4,788.00 Barrus Cove Lot 7 10/20/2020 1,596.00 Shamrock Village Ph 6 Lots 602, 631, 10/21/2020 3,192.00 Valley Meadows Lot 12 10/21/2020 1,596.00 Knighton Ct Lot 8 10/23/2020 1,596.00 Sycamore Sub Lot 15 10/26/2020 1,596.00 Cannonwood Ind Park H Lot 1 10/27/2020 2,473.80 Cannonwood Ind Park G Lot 1 10/27/2020 3,112.20 Valley Meadows Lots 7, 9, 11 10/28/2020 4,788.00 The Ridge Sub Lots 115, 128, 1 37, 139, 141, 142, 10/28/2020 9,576.00 Shamrock Village Ph 6 Lot 603. 630 11/1/2020 3,192.00 $ 71,261.40 $ Sheffield Down Sub Lot 32 11/3/2020 1,596.00 Barrus Cove Lot 9 11/4/2020 1,596.00 Valley Meadows Lot 4 11/5/2020 1,596.00 M & B North Building 2440 S Hwy 89, BNTFL 11/9/2020 2,314.20 M & B South Building 2468 S Hwy 89, BNTFL 11/9/2020 3,271.80

Barrus Cove Lot 9 11/4/2020 1,596.00 Valley Meadows Lot 4 11/5/2020 1,596.00 M & B North Building 2440 S Hwy 89, BNTFL 11/9/2020 2,314.20 M & B South Building 2468 S Hwy 89, BNTFL 11/9/2020 3,271.80 Sheffield Down Sub Lots 25, 28, 29 11/10/2020 4,788.00 Wellington Place PUD Lots 9, 13, 14, 15 11/12/2020 6,384.00 Brown's Park 2 Lot 81 11/12/2020 1,596.00 City Walk Duplex 14 Units (13 impact fees) 11/12/2020 20,748.00 Centerville Marketplace Lot 3 11/12/2020 558.60 Valley Meadows Lots 2, 5, 8, 11/13/2020 4,788.00 Shamrock Village Ph 6 Lots 627, 629, 11/16/2020 3,192.00 NSL IND Park A Bldg 1100 11/18/2020 3,351.60 Chelsea Cove 10B Lot 1051 11/19/2020 1,596.00 Deuel Springs Amd Sub - addition Lot 101 11/19/2020 3,648.00 M & B - adding 4 units 3511 S Orchard Dr, BNTFL 11/20/2020 6,384.00 Cottages on Main Lots 101 - 116 (16) 11/24/2020 25,536.00 The Views @ Eaglewood Village PUD Lot 326 12/1/2020 1,596.00 $ 94,540.20 $ Daniel Woods Square 410 S 500 W, BNTFL 12/1/2020 3,192.00 Barrus Cove Sub Lot 6 12/2/2020 1,596.00 Legacy Lands Commercial SUB Lot 1 12/3/2020 5,665.80 The Ridge Sub Lots 111, 118, 138, 1 40, 144 12/3/2020 7,980.00 Shamrock Village Ph 6 Lots 604, 628 12/9/2020 3,192.00 Wellington Place PUD Lot 12 12/9/2020 1,596.00 WX IND. Park Lot 12 12/16/2020 2,154.60 Highgate Est. SUB Lot 18 12/17/2020 1,596.00 Shamrock Village Ph 6 Lots 605, 626 12/29/2020 3,192.00 West Bountiful Commons - remodel Lot 10 12/28/2020 478.80 Shamrock Village Ph 6 Lots 606, 625 12/30/2020 3,192.00 33,835.20 $ 903,642.80 $ 903,642.80 $ Source : District accounting records, Zion s Public Finance impact fee study and Resolution136.

Note : Because of the nature of providing wastewater collection and treatment, facilities are always built in anticipation of growt h.

ecords, Zion s Public Finance impact fee study and Resolution136.

Note : Because of the nature of providing wastewater collection and treatment, facilities are always built in anticipation of growt h.

Impact fees are therefore collec ted in arrears a nd are used to reimburse the District's capital account. Therefore, no schedu le for impact fees for expenditures is available since they are consid ered expended as soon as they are collected. See the statistic al to submitt to the State Audito r a report that identifies: 1) Impact fee funds by the year in wh ich they are received, 2) The project from which the funds are collected, 3) The capital project for which the funds were bu dgeted, 4) The projec t schedule for expen diture.

The District's impact fee was $1,456 per residence or residenti al equilvalent (EDU) fr om January 1, 2012 to September 20, 2012.

This impact fee was increased to $ 1,596 per EDU beginning Septe mber 20, 2012.

This increase was the result of a impact fee analysis performed by Zions Public Finance.

The capital facility plan was performed based upon Utah State C ode; 11-36a-102 The Board of Trustees passed and adopted Resolution 136-2012 in conjunction with a public hearing that was hel d on June 21, 2 012 The effective date for Resolution 136-2012 was September 21, 20 12.section for capital expenditures . Utah Code 11-3 6-301, states that a local political subdivisi on collecting impact fees are r equiredGrand Total GL Adjustment GL Adjusted Total 94 STATISTICAL SECTION 96 STATISTICAL SECTION (UNAUDITED) This part of the South Davis Sewer District’s Annual Financial Report presents information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary inform ation says

District’s Annual Financial Report presents information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary inform ation says about the District’s overall financial condition.

Effective January 1, 2006, the District adopted the Governmental Accounting Standards Board Statement No. 44, Economic Condition Reporting: The Statistical Section, An Amendment of NCGA Statement1, GASB 44 provides the requirements for the schedules contained in this section of the District’s Comprehensive Annual Financial Report.

Financial Trends 97 These schedules contain trend information to help the reader understand how the District ’s financial performance and well -being have changed over time.

Revenue Capacity 99 These schedules contain information to help the reader assess the District ’s most significant local revenue sources .

Debt Capacity 107 These schedules present information to help the reader assess the affordability of the District’ s current levels of outstanding debt and the ability to issue additional debt in the future. Demographic and Economic Information 112 These schedules offer demographic and economic indicators to help the reader understand th e environment within which the District ’s financial activities take place.

Operating Information 120 These schedules contain service and infrastructure data to assist the reader understands how the information in the District ’s financial report relates to the servi ce the District provides and the activities it performs.

Sources: Unless otherwise noted, the information in these sche dules is derived from the Comprehensive Annual Financial Reports for the relevant year.

strict provides and the activities it performs.

Sources: Unless otherwise noted, the information in these sche dules is derived from the Comprehensive Annual Financial Reports for the relevant year.

Assets Current & Other Assets 6,942,533 $ 8,597,216 $ 7,852,500 $ 13,759,859 $ 19,629,290 $ 19,562,221 $ 15,739,177 $ 15,524,487 $ 15,281,822 $ 15,482,994 $ Restricted Assets 12,105,663 12,790,626 5,007,571 16,200,816 - - - Capital 103,786,688 101,676,993 95,253,455 75,335,401 62,622,006 61,735,456 60,919,692 59,235,406 55,347,168 53,226,384 Total Assets 122,834,884$ 123,064,835$ 108,113,526$ 105,296,076$ 82,251,296$ 81,297,677$ 76,658,869$ 74,759,893$ 70,628,990$ 68,709,378$ Deferred Outflows of Resources 707,206 1,208,371 737,874 1,070,080 900,460 361,388 - - - Total Assets & Deferred Outflows of Resources 123,542,090 $ 124,273,206$ 108,851,400 $ 106,366,156 $ 83,151,756 $ 81,659,065 $ Liabilities Current Liabilities 2,247,166 $ 2,374,684 $ 720,046 $ 816,681 $ 522,624 $ 403,320 $ 330,507 $ 486,103 $ 434,771 $ 453,497 $ Non-Current Liabilities 31,317,639 33,979,354 22,271,761 22,868,453 1,948,777 1,343,615 403,555 381,180 373,624 370,027

$ Non-Current Liabilities 31,317,639 33,979,354 22,271,761 22,868,453 1,948,777 1,343,615 403,555 381,180 373,624 370,027 Total Liabilities 33,564,805 $ 36,354,038$ 22,991,807$ 23,685,134$ 2,471,401 $ 1,746,935$ 734,062 $ 867,283 $ 808,395 $ 823,524 $ Deferred Inflows of Resources 707,262 38,377 568,209 207,617 128,199 127,979 Total Liabilities & Deferred Inflows of Resources 34,272,067 $ 36,392,415$ 23,560,016 $ 23,892,751 $ 2,599,600 $ 1,874,914 $ Net Position: Net Investment in Capital Assets 74,410,887 $ 69,480,107$ 74,470,294 $ 56,736,773 $ 62,253,415 $ 61,660,782 $ 60,838,477 $ 59,235,406 $ 55,347,168 $ 53,226,384 $ Restricted - Capital 10,075,848 10,725,278 2,942,223 14,184,170 Restricted - Debt Service 2,029,815 2,016,206 2,065,348 2,016,645 18,298,741 18,123,369 15,086,330 14,657,204 14,473,427 14,659,470 Unrestricted 2,753,473 5,659,200 5,813,519 9,535,817 Total Net Position 89,270,023 $ 87,880,791$ 85,291,384$ 82,473,405$ 80,552,156$ 79,784,151$ 75,924,807$ 73,892,610$ 69,820,595$ 67,885,854$ Source: District accounting and financial records, Zions Tru st.

Notes: ¹SDSD became the agent entity for a interlocal agreement for th e Wasatch Front Water Quality Council (WFWQC) ²Contracted with the EPA to operated a superfund site (OU2) in West Bountiful.

³GASB Statement No 68 (Pension Plans) implemented in 2015

agreement for th e Wasatch Front Water Quality Council (WFWQC) ²Contracted with the EPA to operated a superfund site (OU2) in West Bountiful.

³GASB Statement No 68 (Pension Plans) implemented in 2015 ⁴The District Issued 20-year taxable revenue bonds to finance c onstruction of the WRR project ($21,195,000) ⁵ The District Issued 20-year revenue bonds to finance treatment plant rehabilitation ($12,179,000).SOUTH DAVIS SEWER DISTRICT Statement of Net Position Last Ten Fiscal Years (Unaudited)Schedule 1 97 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Operating Revenues Sewer Service Fees 5,199,733 $ 5,082,655 $ 3,799,780 $ 2,503,469 $ 2,471,683 $ 2,266,210 $ 2,235,118 $ 2,188,651 $ 2,145,429 $ 2,127,602 $ Sewer Special Treatment Fees 404,955 383,725 336,261 205,292 197,526 180,779 213,554 255,804 180,475 168,374 Inspection & Project Fees 68,800 113,135 93,980 34,276 33,730 20,470 40,200 52,460 77,980 27,210 Other 523,784 464,083 470,537 454,201 278,265 295,526 253,912 334,343 247,124 178,195 Total Operating Revenue 6,197,271 $ 6,043,598 $ 4,700,558 $ 3,197,238$ 2,981,204 $ 2,762,985$ 2,742,784$ 2,831,258 $ 2,651,008 $ 2,501,381$ Operating Expenses

ating Revenue 6,197,271 $ 6,043,598 $ 4,700,558 $ 3,197,238$ 2,981,204 $ 2,762,985$ 2,742,784$ 2,831,258 $ 2,651,008 $ 2,501,381$ Operating Expenses Operating & Maintenance 7,571,711 $ 6,709,393 $ 7,120,946 $ 6,691,513 $ 6,666,828 $ 5,935,569 $ 5,532,400 $ 5,407,450 $ 5,241,791 $ 5,704,107 $ Depreciation 458,530 279,873 285,891 323,330 326,654 278,380 342,111 360,330 327,082 295,415 Total Operating Expenses 8,030,241 $ 6,989,266 $ 7,406,837 $ 7,014,843$ 6,993,482 $ 6,213,949$ 5,874,511$ 5,767,780 $ 5,568,873 $ 5,999,522$ Operating Income (Loss) (1,832,970)$ (945,668) $ (2,706,279) $ (3,817,605)$ (4,012,278) $ (3,450,964)$ (3,131,727)$ (2,936,522)$ (2,917,865) $ (3,498,141)$ Nonoperating Revenue (Expenses) General Property Tax 2,304,411 $ 2,272,062 $ 2,483,497 $ 2,102,078 $ 2,282,560 $ 2,208,762 $ 2,078,046 $ 2,119,222 $ 1,989,427 $ 2,024,811 $ Impact Fees 903,643 624,221 604,760 589,843 592,322 4,572,029 868,201 1,029,824 957,351 712,027 Miscellaneous Revenue - - - - 119,065 140,865 113,190 175,989 109,002 98,692

Revenue - - - - 119,065 140,865 113,190 175,989 109,002 98,692 Intergovernmental Contributions 800,700 933,285 1,040,344 924,746 900,827 785,000 600,000 550,000 350,000 355,400 Project Grant - - - - - - 69,418 178,113 Interest Income 186,855 184,810 306,480 302,862 178,050 94,186 75,657 81,659 213,508 158,551 Gain (Loss) on Disposal of Property 24,552 98,114 256,975 87,959 36,394 33,603 104,325 43,625 29,866 198,630 Interest & Bond Costs (1,101,213) (914,791) - (483,601) - - - - - Net Change in Fair Value of Investments 34,304 144,118 58,256 13,482 20,829 (14,326) (2,552) (6,336) 507,089 (437,754) Equity in Earnings (Loss) WRR (1,957,333) (1,046,350) (124,039) (123,714) Total Non-Operating Revenue (Expense) 1,195,919 $ 2,295,469 $ 4,626,273 $ 3,413,655$ 4,130,047 $ 7,820,119$ 3,836,867$ 4,063,401 $ 4,334,356 $ 3,110,357$

Non-Operating Revenue (Expense) 1,195,919 $ 2,295,469 $ 4,626,273 $ 3,413,655$ 4,130,047 $ 7,820,119$ 3,836,867$ 4,063,401 $ 4,334,356 $ 3,110,357$ Income (Loss) Before Contributions (637,051) $ 1,349,801 $ 1,919,994 $ (403,950) $ 117,769 $ 4,369,155 $ 705,140 $ 1,126,879 $ 1,416,491 $ (387,784) $ Capital Contributions - Assets 2,026,283 1,239,606 897,985 2,325,199 650,236 266,362 1,327,057 2,871,442 518,250 134,412 Increase in Net Assets 1,389,232 $ 2,589,407 $ 2,817,979 $ 1,921,249 $ 768,005 $ 4,635,517 $ 2,032,197 $ 3,998,321 $ 1,934,741 $ (253,372) $ Total Net Position at Beginning of Year 87,880,791 85,291,384 82,473,405 80,552,156 79,784,151 75,924,807 73,892,610 69,820,595 67,885,854 68,139,226 Prior Period Adjustment - - - - - (776,173) - 73,694 Total Net Positon at End of Year 89,270,023$ 87,880,791 $ 85,291,384$ 82,473,405 $ 80,552,156 $ 79,784,151 $ 75,924,807 $ 73,892,610 $ 69,820,595 $ 67,885,854 $ Source: District accounting and fi nancial records, Davis County Notes: 2012 Contracted with the EPA to operate a superfund site (OU2) in We st Bountiful 2013 & 2015 Prior period adjustment resulted from a journal ent ry error.

2015 GASB Statement No.68 (Pension Plan) Implemented, Received Holly Re finery Impact Fee $3,702,000

OU2) in We st Bountiful 2013 & 2015 Prior period adjustment resulted from a journal ent ry error.

2015 GASB Statement No.68 (Pension Plan) Implemented, Received Holly Re finery Impact Fee $3,702,000 Iss ued 20-year taxable revenue bonds Series 2017 to finance constr uction of the WRR Project (21, 195,000).SOUTH DAVIS SEWER DISTRICT Statement of Revenues, Expenses and Changes in Net Position Last Ten Fiscal Years (Unaudited) Iss ued 20-year taxable revenue bonds Series 2019 to finance constr uction of the ABNR Project & plant re habilitation (12, 179,000).Schedule 2 98 Special Treatment Project & Year Sewer Fees Inspection Fees Other Total 2011 2,127,602 $ 195,584 $ 178,195 $ 2,501,381 $ 2012 2,145,429 $ 258,455 $ 247,124 $ 2,651,008 $ 2013 2,188,651 $ 308,264 $ 334,343 $ 2,831,258 $ 2014 2,235,118 $ 253,754 $ 253,912 $ 2,742,784 $ 2015 2,266,210 $ 201,249 $ 295,526 $ 2,762,985 $ 2016 2,471,683 $ 231,256 $ 278,265 $ 2,981,204 $ 2017 2,503,468 $ 239,568 $ 330,488 $ 3,073,524 $ 2018 3,799,780 $ 430,241 $ 470,537 $ 4,700,558 $ 2019 5,082,655 $ 496,860 $ 464,083 $ 6,043,598 $ 2020 5,199,731 $ 473,755 $ 523,785 $ 6,197,271 $ Source: District accounting records Notes: Sewer Service rate increase $5.00 per month to $10.00 per month FY 2018SOUTH DAVIS SEWER DISTRICT Operating Revenues (Unaudited) Last Ten Fiscal Years $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 2011 2012 2013 20142015 2016 2017 2018 2019 2020 YearOperating RevenueSchedule3 99 Grant & Capital Impact Misc Inter Govt Year Taxes Contributions Fees Interest Revenue Contributions Total

$7,000,000 2011 2012 2013 20142015 2016 2017 2018 2019 2020 YearOperating RevenueSchedule3 99 Grant & Capital Impact Misc Inter Govt Year Taxes Contributions Fees Interest Revenue Contributions Total 2011 2,024,811 $ 134,412 $ 712,027 $ 158,551 $ 98,692 $ 355,400 $ 3,483,893 $ 2012 1,989,427 $ 518,250 $ 957,351 $ 213,508 $ 109,002 $ 528,113 $ 4,315,651 $ 2013 2,119,222 $ 2,871,442 $ 1,029,824 $ 81,659 $ 175,989 $ 619,418 $ 6,897,554 $ 2014 2,078,046 $ 1,327,057 $ 868,201 $ 75,657 $ 113,190 $ 600,000 $ 5,062,151 $ 2015 2,208,762 $ 266,362 $ 4,572,029 $ 94,186 $ 140,865 $ 785,000 $ 8,067,204 $ 2016 2,282,560 $ 650,236 $ 592,322 $ 178,050 $ 119,065 $ 900,827 $ 4,723,061 $ 2017 2,102,078 $ 2,325,199 $ 589,843 $ 302,862 $ 99,746 $ 924,746 $ 6,344,474 $ 2018 2,483,497 $ 897,985 $ 604,760 $ 306,480 $ 100,344 $ 1,040,344 $ 5,433,410 $ 2019 2,272,062 $ 1,239,606 $ 624,221 $ 184,810 $ 117,585 $ 933,285 $ 5,371,569 $ 2020 2,304,411 $ 2,026,283 $ 903,643 $ 186,855 $ 58,856 $ 800,700 $ 6,280,748 $ Source: District financial and accounting records Notes: Beginning in 2009, Intergovernmental contribution revenue from 7 POTW's was received for the support Tax Increment from CDA is classified as Miscellaneous Income Received in 2015 impact fee from Holly Refinery expansion in th e amount of $3,702,000The District contracted with the EPA beginning in 2010 to opera te and maintain a superfund fa cility in West Bountiful CitySOUTH DAVIS SEWER DISTRICT Non Operating Re venue (Unaudited) Last Ten Fiscal Years

trict contracted with the EPA beginning in 2010 to opera te and maintain a superfund fa cility in West Bountiful CitySOUTH DAVIS SEWER DISTRICT Non Operating Re venue (Unaudited) Last Ten Fiscal Years of the Water Quality Group research, headquarted at the South D avis Sewer District.

Table & Chart does not include realized, unrealized, gain or lo ss from investments and/or sale of equipment. $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 2011 20122013 2014 2015 2016 2017 2018 2019 2020 YearNon Operating RevenueSchedule 4 100 Source: District financial and accounting records, Davis County Auditor/Clerks officeSOUTH DAVIS SEWER DISTRICT Revenues by Source (Unaudited) Last Ten Fiscal Years $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Taxes $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2011 2012 2013 20142015 2016 201720182019 2020Sewer User Fees $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Impact Fees $- $100,000 $200,000 $300,000 $400,000 $500,000 2011 2012 2013 201420152016 2017 2018 20192020Special Treatment FeesSchedule 5 101 Source: District financial and accounting records.

Note: 2017 and 2018 Miscellaneous non-operating revenue wa s reclassified to Other operating revenueSOUTH DAVIS SEWER DISTRICT Revenues by Source (Unaudited) Last Ten Fiscal Years $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2011 2012 2013 2014 20152016 2017 2018 2019 2020Capital Contributions $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2011 2012 2013 2014 20152016 2017 20182019 2020Interest Revenue

0 2011 2012 2013 2014 20152016 2017 2018 2019 2020Capital Contributions $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2011 2012 2013 2014 20152016 2017 20182019 2020Interest Revenue $- $100,000 $200,000 $300,000 $400,000 $500,000 2011 2012 2013 2014 2015 20162017 2018 2019 2020Other Revenue $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Miscellaneous RevenueSchedule 6 102 Total Tax Collection in Levy for Percentage Subsequent Percentage Year Fiscal Year Amount of Levy Periods Amount of Levy 2011 1,841,535 1,705,846 92.6% 157,462 1,863,308 101.2% 2012 1,877,465 1,762,712 93.9% 72,263 1,834,975 97.7% 2013 1,942,033 1,826,818 94.1% 142,612 1,969,430 101.4% 2014 2,059,448 1,959,317 95.1% 64,576 2,023,893 98.3% 2015 2,168,606 2,072,537 95.6% 77,968 2,150,505 99.2% 2016 2,265,124 2,192,274 96.8% 52,939 2,245,213 99.1% 2017 2,335,669 2,254,880 96.5% 46,644 2,301,523 98.5% 2018 2,231,675 2,155,680 96.6% 46,080 2,201,760 98.7% 2019 2,313,762 2,218,428 95.9% 60,748 2,279,176 98.5% 2020 2,343,647 2,245,767 95.8% 44,211 2,312,548 98.7%

019 2,313,762 2,218,428 95.9% 60,748 2,279,176 98.5% 2020 2,343,647 2,245,767 95.8% 44,211 2,312,548 98.7% Source: Utah State Tax Commission, Davis County Assessor's Office and Davis County Treasurer's Office. SOUTH DAVIS SE WER DISTRICT Schedule 7 Property Tax Levies and Collections (Unaudited) Last Ten Fiscal Years Collected in First Period Total Collections 103 Year Annual Annual Sewer Service Fee Sewer Service Fee Impact (Single Residential Home) (Single Mobile Home) Fee 2011 $60.00 $48.00 $1,456.00 2012 $60.00 $48.00 $1,596.00 2013 $60.00 $48.00 $1,596.00 2014 $60.00 $48.00 $1,596.00 2015 $60.00 $48.00 $1,596.00 2016 $60.00 $48.00 $1,596.00 2017 $60.00 $48.00 $1,596.00 2018 $120.00 $96.00 $1,596.00 2019 $120.00 $96.00 $1,596.00 2020 $120.00 $96.00 $1,596.00 In 2011 Zions Public Finance was engaged to cond uct a impact fee rate study.

The results of the 2011 impac t fee study was a change in the im pact fee to $1,596 in Sept 2012 Begi nning July 1, 2018 a sewer service rate incr ease took effect.Source: D istrict financial and acc ounting records, Zions P ublic Finance, and Resolution 110-5.

Notes: ¹In 1997 the District did an analytical review on impact fee costs based upon changes in t he State Code, Section s 11-36-100 to 11-36-3 00. The impact fee changed from $600 to $1,456.SOUTH DAVIS SEWER DISTRICT Sewer Service and Impact Fee Rates (Unaudited) Last Ten Fiscal YearsSchedule 8 104 Annual Discharge Business Location (Gallons) 1 Holly Refinery* West Bountiful 442,935,460 2 Big West Oil LLC* North Salt Lake 240,352,260

Last Ten Fiscal YearsSchedule 8 104 Annual Discharge Business Location (Gallons) 1 Holly Refinery* West Bountiful 442,935,460 2 Big West Oil LLC* North Salt Lake 240,352,260 3 Car Wash/Service Stations/Dealers District 75,669,000 4 Restaurants District 51,503,000 5 Medical Centers/Retirement Homes District 42,471,000 6 Large Retail Stores District 35,690,000 7 IHC Laundry Woods Cross 25,564,188 8 Health Clubs/ Bountiful Rec. Center District 21,574,000 9 Hotels District 20,112,000 10 Schools District 14,674,000 11 Air Products Manufacturing Corp Bountiful 13,610,402 12 Churches District 11,066,000 13 Stericycle Inc. North Salt Lake 9,638,262 14 Lakeview Hospital Bountiful 9,580,000 15 Dry Cleaners/Laundry District 8,113,000 16 Silver Eagle Refinery* Woods Cross 5,932,901 17 Zero Manufacturing Inc.* North Salt Lake 5,695,093 18 South Davis Hospital Bountiful 5,290,000 19 Chevron Products North Salt Lake 5,183,471 20 Cowboy Oil Woods Cross 3,835,753 21 Albertson’s Distribution Center North Salt Lake 3,487,000 22 Benchmark Hospital Woods Cross 2,462,000 23 Aero Tech* North Salt Lake 2,119,000 24 Biotron Laboratories Centerville 2,106,000 25 Windriver Petroleum Centerville 1,457,000 26 Legacy Megaplex Theater Centerville 1,098,000 27 THB Inc North Salt Lake 1,079,000 28 Dura-Line North Salt Lake 953,000 29 Pioneer Pipe Line North Salt Lake 888,000 30 Quality Plating* Woods Cross 651,460 31 Innophos LLC North Salt Lake 11,815 32 Pilot Travel North Salt Lake 9,376 33 Advanced Drainage Systems North Salt Lake 5,002 34 General Electric North Salt Lake 4,695 35 Manuel's Fine Foods Woods Cross 4,069 36 Orbit Sprinklers North Salt Lake 3,638 37 Candera LLC North Salt Lake 3,416 38 Herm Hughes North Salt Lake 3,222 39 Pipe Fab Woods Cross 1,416

lt Lake 4,695 35 Manuel's Fine Foods Woods Cross 4,069 36 Orbit Sprinklers North Salt Lake 3,638 37 Candera LLC North Salt Lake 3,416 38 Herm Hughes North Salt Lake 3,222 39 Pipe Fab Woods Cross 1,416 40 WX Center Westerra Corp Woods Cross 1,402 Source: District accounting re cords and city water records f rom Bountiful, Centerville, North Salt Lake, West Bountiful, and Woods C ross.

Note: *EPA categorical industry Principle Wastewater Contributors (Unaudited ) For the Year Ending December 31, 2020 SOUTH DAVIS SEW ER DISTRICT Schedule 9 105 Rate Payer Type of Service 2020 2011 Holly Refinery Refinery 499,953$ 295,902$ Big West Oil Refinery 144,622$ 98,425$ Silver Eagle Oil Refinery 35,944 $ 28,780$ Intermountain Health Care Health Care 15,925 $ 9,700 $ South Davis Recreation Center Recreation 13,408 $ 8,825 $ Lakeview Hospital Health Care 10,440 $ 7,241 $ Zero Mfg Manufacturing 9,405 $ 7,789 $ Chevron Products Refinery 8,760 $ 6,962 $ Air Products Manufacturing 8,225 $ 5,881 $ Cowboy Asphalt Terminal Industry 6,963 $ 7,205 $ Albertson Distribution Warehouse 5,816 $ 6,680 $ Source: District accounting records Notes: *EPA Categorical IndustriesSOUTH DAVIS SEWER DISTRICT Top Non-Residential Customers (Unaudited) For the Current Year (2020) and Nine Years Prior Annual User Fee AmountSchedule 10 106 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Net Revenues Operating Revenues 6,197,271 $ 6,043,598 $ 4,576,519 $ 3,073,524 $ 2,981,204 $ 2,762,985 $ 2,742,784 $ 2,831,258 $ 2,651,008 $ 2,501,381 $

011 Net Revenues Operating Revenues 6,197,271 $ 6,043,598 $ 4,576,519 $ 3,073,524 $ 2,981,204 $ 2,762,985 $ 2,742,784 $ 2,831,258 $ 2,651,008 $ 2,501,381 $ Operating Expenses (excluding depreciation) (7,571,711) (6,863,930) (7,120,946) (6,691,513) (6,840,618) (5,935,569) (5,532,400) (5,407,450) (5,241,791) (5,840,971) General Property Tax 2,304,411 2,272,062 2,483,497 2,102,078 2,282,560 2,208,762 2,082,256 2,119,222 1,989,427 2,024,811 Impact Fees 903,643 624,221 604,760 589,843 592,322 4,572,029 868,201 1,029,824 957,351 712,027 Intergovernmental Contributions 800,700 933,285 1,040,344 924,746 900,827 785,000 600,000 550,000 350,000 355,400 Project Grant Revenue - - - - - - - 69,418 178,113 Misc. Revenue - - - - 119,065 140,865 113,190 175,989 109,002 98,692 Interest Income 186,855 184,810 306,480 342,773 178,050 94,186 75,657 81,659 213,508 158,551 Total Net Revenues 2,821,169 $ 3,194,046 $ 1,890,654 $ 341,451 $ 213,410 $ 4,628,258 $ 949,688 $ 1,449,920 $ 1,206,618 $ 9,891 $

158,551 Total Net Revenues 2,821,169 $ 3,194,046 $ 1,890,654 $ 341,451 $ 213,410 $ 4,628,258 $ 949,688 $ 1,449,920 $ 1,206,618 $ 9,891 $ Net Revenues Excluding Impact Fees Net Revenues 2,821,169 3,194,046 1,890,654 341,451 213,410 4,628,258 949,688 1,449,920 1,206,618 9,891 Impact Fees (903,643) (624,221) (604,760) (589,843) (592,322) (4,572,029) (868,201) (1,029,824) (957,351) (712,027) Net Revenues Excluding Impact Fees 1,917,526 $ 2,569,825 $ 1,285,894 $ (248,392) $ (378,912) $ 56,229 $ 81,487 $ 420,096 $ 249,267 $ (702,136) $ Aggregate Debt Service* 1,895,842 $ 1,637,763 $ 837,244 $ 451,461 $ - $ - $ - $ - $ - $ - $ Ratio of Net Revenues to Aggregate Debt Service 1.49 1.95 2.26 0.76 0 0 0 0 0 0 Ratio of Net Revenues to Aggregate Debt Service 1.01 1.57 1.54 (0.55) 0 0 0 0 0 0 (Excluding Impact Fees) Minimum Ratio 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Source: District acc ounting and financial records.

2019 issued 20-year revenue bonds to finance ABNR and Treatment Plant rehabilitation

1.00 1.00 1.00 Source: District acc ounting and financial records.

2019 issued 20-year revenue bonds to finance ABNR and Treatment Plant rehabilitation July 2018 sewer service rate increase from $5.00 per month to $10.00 per monthNotes: 2012 Contracted wi th the EPA to operate a s uperfund site (OU2) in West Bountiful 2015 GASB Statement No.68 (Pension Plan) Implemented & Received Holly Refinery Impact Fee $3,702,000 2017 Issued 20-year series 2017 taxable revenue bonds to finan ce the construction of the WRR project $21,195,000SOUTH DAVIS SEWER DISTRICT Schedule of Revenue Bond Coverage Last Ten Fiscal Years (Unaudited) B ond payments are semi annual and due June 1st and December 1st. Average coupon rate is 4.179%Schedule 11 107 Debt as a Debt as a Estimated Percentage of Percentage Value Est. Actual Revenue Debt Personal of Personal of Taxable Value of Year Bonds Population Per Capita Income Income Property Taxable Prop.

Notes: Iss ued Series 2017A taxable revenue bonds, par value $21,195,000 Iss ued Series 2019 revenue bonds, par value $12,179,000

Notes: Iss ued Series 2017A taxable revenue bonds, par value $21,195,000 Iss ued Series 2019 revenue bonds, par value $12,179,000 Rev enue bonds are net of unamortiized discountSOUTH DAVIS SEWER DISTRICT Outstanding Debt Ratios (unaudited) Last Ten Fiscal Years Source: Davis County Assessor/Auditors office, Distric t financial and accounting records, Zions Trust Pers onal income informatiion for the District is not available, only for Davis County. U.S Census and Utah Workforce Services.Schedule 12 108 Total Cash & % of ²Total % of Total Cash & % of Debt to Year Debt Investments Debt : Cash Capital Assets Debt : Asset Capital Assets Cash & Assets 2011 14,462,364$ 0.00% 69,268,268 $ 0.00% 83,730,632 $ 0.00% 2012 14,511,792$ 0.00% 71,177,332 $ 0.00% 85,689,124 $ 0.00% 2013 14,601,123$ 0.00% 75,884,155 $ 0.00% 90,485,278 $ 0.00% 2014 14,950,344$ 0.00% 77,565,784 $ 0.00% 92,516,128 $ 0.00% 2015 18,796,338$ 0.00% 78,589,869 $ 0.00% 97,386,207 $ 0.00% 2016 18,628,790$ 0.00% 79,659,822 $ 0.00% 98,288,612 $ 0.00% 2017 20,748,437 $ 26,397,185$ 78.60% 94,494,332 $ 21.96% 120,891,517 $ 17.16% 2018 20,783,161 $ 11,358,517$ 182.97% 111,194,639 $ 18.69% 122,553,156 $ 16.96% 2019 32,286,003 $ 19,629,236$ 164.48% 119,271,184 $ 27.07% 138,900,420 $ 23.24% 2020 31,492,910 $ 16,483,288$ 191.06% 121,814,856 $ 25.85% 138,298,144 $ 22.77% 4 $ SOUTH DAVIS SEWER DISTRICT Debt to Asset Ratios (Unaudited) Last Ten Fiscal Years Source: District a ccounting records.

8$ 191.06% 121,814,856 $ 25.85% 138,298,144 $ 22.77% 4 $ SOUTH DAVIS SEWER DISTRICT Debt to Asset Ratios (Unaudited) Last Ten Fiscal Years Source: District a ccounting records.

Captal assets are at historical cost (excluding depreciation).Note: Issued 20-year Series 2017 taxable revenue bonds ($21,195,000) for construction of the WRR project..

Rev enue bonds are net of unamortized discount Iss ued 20-year Series 2 019 revenue bonds ($12,1 79,000) for ABNR project and plant rehabilitation $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Total Debt to Total Cash & InvestmentsDebt Cash & Investments $- $50,000,000 $100,000,000 $150,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Total Debt to Capital Assets Debt Capital Assets $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Total Debt to Total Cash & Capital Assets Debt Total Cash & Capital AssetsSchedule 13 109 Debt Total % of Debt Service Year Service Expenses to Expenses 2011 - $ 7,443,546 $ 0.00% 2012 - $ 7,512,322 $ 0.00% 2013 - $ 7,027,863 $ 0.00% 2014 - $ 6,667,837 $ 0.00% 2015 - $ 5,935,569 $ 0.00% 2016 - $ 6,840,618 $ 0.00% 2017 451,461 $ 6,691,513$ 6.75% 2018 837,173 $ 7,120,946$ 11.76% 2019 1,637,763$ 6,863,930$ 23.86% 2020 1,895,842$ 7,571,711$ 25.04% Source: District financial a nd accounting records, Zions Ba nk Trust Department.

7,120,946$ 11.76% 2019 1,637,763$ 6,863,930$ 23.86% 2020 1,895,842$ 7,571,711$ 25.04% Source: District financial a nd accounting records, Zions Ba nk Trust Department.

Notes: Issued 20-year series 2017 taxable revenue bonds ($ 21,195,000) for construc tion of the WRR project.SOUTH DAVIS SEWER DISTRICT Debt Service to Total Expenses (Unaudited) Last Ten Fiscal Years Total expenses excludes depreciation Issued 20-year series 2019 revenue bonds ($12,179,000) for ABNR project and plant rehabitation $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000US DollarsDebt Service to Total Expenses Debt Service Total ExpensesSchedule 14 110 Year Principle Interest Total Population Per Capita 2011 - $ - $ 92,390 - $ 2012 - $ - $ 93,900 - $ 2013 - $ - $ 94,257 - $ 2014 - $ - $ 95,200 - $ 2015 - $ - $ 96,250 - $ 2016 - $ - $ 97,252 - $ 2017 - $ 451,461$ 451,461 $ 98,737 4.57 $ 2018 - $ 837,763$ 837,763 $ 99,283 8.44 $ 2019 800,000 $ 837,763$ 1,637,763$ 101,858 16.08$ 2020 825,000 $ 1,070,843$ 1,895,843$ 103,000 18.41$ Source: District financial and accounting records, Zions Ban k Trust Department, and Stifel Financial Notes: Issued Taxable Revenue Bonds May 17, 2017 for $21,1 95,000 to finance renewable energy project Issued Revenue Bonds December 3,2019 for $12, 179,000 to finance plant rehablitation

inancial Notes: Issued Taxable Revenue Bonds May 17, 2017 for $21,1 95,000 to finance renewable energy project Issued Revenue Bonds December 3,2019 for $12, 179,000 to finance plant rehablitation Bond payments are semi-annual and due every Decem ber 1st and June 1stSOUTH DAVIS SEWER DISTRICT Schedule of Total Bond Debt Service (Unaudited) Last Ten Fiscal YearsSchedule 15 111 Total Fiscal Per Capita Personal Unemployment Public School Year Population Births Deaths Income Income Rate Enrollment 2011 312,603 5,704 1,410 34,755.00$ 10,864,517,265$ 6.20% 71,232 2012 315,809 5,844 1,472 37,124.00$ 11,724,093,316$ 5.30% 68,342 2013 322,094 5,720 1,612 38,372.00$ 12,359,390,968$ 4.20% 68,571 2014 329,692 5,772 1,684 38,770.00$ 12,782,158,840$ 3.60% 69,139 2015 336,043 5,870 1,710 40,000.00$ 13,441,720,000$ 3.30% 69,879 2016 342,281 5,687 1,762 41,339.00$ 14,149,554,259$ 3.30% 71,021 2017 347,637 5,473 1,826 44,106.00$ 15,332,877,522$ 3.10% 71,908 2018 351,713 5,282 1,892 46,286.00$ 16,279,387,915$ 2.90% 72,264 2019 355,481 5,075 1,840 48,423.00$ 17,213,456,463$ 2.40% 72,897 Sources: Davis County Department of Community & Economic Develop ment Davis County Health Department - Vital Statistics U.S Bureau of Economic Analysis Utah Department of Workforce Services - Labor Information Divis ion Davis County School District Notes: 2020 per capita personal income and personal income information was not available at the time this was releasedThis information represents all of Davis C ounty. The District takes in part of Davis County (Five Cities)SOUTH DAVIS SEWER DISTRICT

income information was not available at the time this was releasedThis information represents all of Davis C ounty. The District takes in part of Davis County (Five Cities)SOUTH DAVIS SEWER DISTRICT Davis County Demographic and E conomic Statistics (Unaudited) Last Ten Fiscal YearsSchedule 16 112 Percentage of Percentage of Total County Total County Employer Employees Rank Employment Employees Rank Employment 168,737 134,583 Hill Air Force Base 10000-14999 1 9.23% 10000-14999 1 11.0% Davis County School District 7000-9999 2 6.15% 7000-9999 2 5.1% Kroger Group Cooperative 2000-2999 3 1.23% 500-999 6 1.5% Lifetime Products 1000-1999 4 1.23% 1000-1999 4 0.7% Walmart 1000-1999 5 1.23% 1000-1999 3 1.5% ATK Space Systems 1000-1999 6 1.23% 1000-1999 4 1.5% Lagoon Inc. 1000-1999 7 1.23% 1000-1999 5 0.0% Utility Trailer Manufacturing 1000-1999 8 1.23% 500-999 9 1.5% Intermountain Health Care 1000-1999 9 1.23% n/a n/a 0.0% ATK Launch Systems 500-999 10 0.61% 500-699 9 0.5% Davis County 500-999 n/a 0.00% 500-999 8 0.5% Davis Hospital & Medical 500-999 n/a 0.00% 500-999 10 0.5% Totals 26,500-42,988 24.61% 17,200-34,784 24.3% Source: Uta h Department of Workforce Services. Davis County Notes: This schedule ref lects data for all of Davis County, the District serves only a portion of Davis County.2020 2011SOUTH DAVIS SEWER DISTRICT Davis County Principle Employers Current Year (2020) and Nine Years AgoSchedule 17 113 South South Total Davis West Woods North Davis Weber S outh Bountiful Davis Direct & Fiscal Sewer Bountiful Centerville Bountiful Cross Salt Lake Davis Co unty Basin Davis Irrigation Mosquito Recreation Overlapping Year District City City City City City County Library Water Water Distric tAbatement District Rates

ille Bountiful Cross Salt Lake Davis Co unty Basin Davis Irrigation Mosquito Recreation Overlapping Year District City City City City City County Library Water Water Distric tAbatement District Rates 2011 0.000315 0.001037 0.001102 0.001366 0.000840 0.00152 0.008416 0.000363 0.000207 0.000240 0.000122 0.000097 0.000379 0.016004 2012 0.000329 0.001093 0.001173 0.001997 0.001049 0.001637 0.011244 0.000392 0.000217 0.000248 0.000130 0.000104 0.000407 0.020020 2013 0.000330 0.001094 0.001165 0.001951 0.001058 0.001637 0.013931 0.000396 0.000215 0.000253 0.000131 0.000105 0.000399 0.022665 2014 0.000301 0.000946 0.001072 0.001788 0.000913 0.001541 0.008637 0.000361 0.000199 0.000246 0.000120 0.000124 0.000338 0.016586 2015 0.000303 0.000957 0.001088 0.001806 0.000927 0.001517 0.012221 0.000361 0.000196 0.000250 0.000120 0.000122 0.000334 0.020202 2016 0.000287 0.000890 0.000983 0.001684 0.001057 0.001622 0.010139 0.000342 0.000187 0.000234 0.000110 0.000116 0.000306 0.017957 2017 0.000264 0.000832 0.001354 0.001566 0.001003 0.001450 0.012161 0.000376 0.000174 0.000214 0.000103 0.000107 0.000279 0.019883 2018 0.000245 0.000880 0.001275 0.001449 0.000935 0.001355 0.012090 0.000349 0.000164 0.000202 0.000096 0.000119 0.000257 0.019416 2019 0.000234 0.000814 0.001192 0.001315 0.000891 0.001264 0.012084 0.000329 0.000153 0.000189 0.000089 0.000112 0.000242 0.018908 2020 0.000226 0.000789 0.001158 0.001363 0.000867 0.001233 0.011268 0.000319 0.000146 0.000183 0.000086 0.000110 0.000218 0.017966 Notes: Overlapping rates are those of local and county governments that apply to property owners within the South Davis Sewer District.

Davis County includes Davis County School District.SOUTH DAVIS SEWER DISTRICT Property Tax Rates - Direct and Overlapping Governments (Unaudited)

roperty owners within the South Davis Sewer District.

Davis County includes Davis County School District.SOUTH DAVIS SEWER DISTRICT Property Tax Rates - Direct and Overlapping Governments (Unaudited) Last Ten Fiscal Years Overlapping Rates Source: District financial and accounting records, Davis C ounty Treasurer's Office and Auditor/Clerk's OfficeSchedule 18 114 1 Davis County Jail Bond 0.000071 2 Davis County Mosquito Abatement 0.000110 3 Weber Basin Water 0.000146 4 Central Davis Sewer District 0.000161 5 Davis County Assess & Collect 0.000177 6 South Davis Water District 0.000183 7 South Davis Recreation Center 0.000218 8 South Davis Sewer District 0.000226 9 Hooper Water Improvement 0.000277 10 Benchland Water District 0.000315 11 Central Weber Sewer District 0.000564 12 North Davis Sewer District 0.000769 13 North Davis Fire District 0.000769 14 Bountiful City 0.000789 15 Bountiful Irrigation District 0.000860 16 Woods Cross City 0.000867 17 West Point City 0.000910 18 Sunset City 0.000981 19 Davis County 0.001110 20 Davis County Library 0.001111 21 Centerville City 0.001158 22 North Salt Lake City 0.001233 23 West Bountiful City 0.001363 24 Clearfield City 0.001437 25 Farmington City 0.001491 26 Kaysville City 0.001589 27 Syracuse City 0.001593 28 Clinton City 0.001608 29 Utah Statewide School Rate 0.001628 30 Layton City 0.001645 31 Fruit Heights City 0.001950 Source: Davis County Treasurer's and Auditor's Office, Utah Sta te Tax CommissionSOUTH DAVIS SEWER DISTRICT Davis County Tax Factors (Unaudited) For the Year Ending December 31, 2020Schedule 19 115 2020 2020 Personal Real 2020 2011 Tax Payer City Property Property Total Total 1 Chevron USA Inc. County/NSL 55,481,599 $ 542,514,305 $ 597,995,904$ 366,190,066$

2020Schedule 19 115 2020 2020 Personal Real 2020 2011 Tax Payer City Property Property Total Total 1 Chevron USA Inc. County/NSL 55,481,599 $ 542,514,305 $ 597,995,904$ 366,190,066$ 2 Holly Refinery Woods Cross 23,987,801 301,474,339 325,462,140 298,653,604 3 Big West Oil North Salt Lake 14,732,043 133,087,285 147,819,328 160,251,188 4 Pacificorp Centerville 69,531,379 - 69,531,379 53,787,450 5 Questar Gas Bountiful 64,393,895 - 64,393,895 43,759,823 6 WBC Partners & Commons Woods Cross 52,338,596 - 52,338,596 48,576,258 7 IGI RE Holdings WX LLC West Bountiful 6,518,180 35,653,604 42,171,784 40,185,825 8 Eaglewood Loft LLC North Salt Lake 36,580,200 - 36,580,200 49,981,249 9 FedEx Ground Package Sys North Salt Lake 10,057,944 26,573,227 36,631,171 37,437,568 10 Legacy Crossing LLC Centerville 31,725,631 86,722 31,812,353 29,978,148 11 ABS UT- (Albertsons) North Salt Lake 28,029,000 - 28,029,000 33,319,952 12 Hospital Corporation of Utah Woods Cross 21,507,231 4,029,294 25,536,525 26,458,700 13 J & S Purpura Ventures Centerville 25,118,936 - 25,118,936 24,058,660 14 Services Development Corp Woods Cross 19,133,025 - 19,133,025 18,969,365 15 IHC Health Services Woods Cross 25,300,001 14,781 25,314,782 19,000,360

ds Cross 19,133,025 - 19,133,025 18,969,365 15 IHC Health Services Woods Cross 25,300,001 14,781 25,314,782 19,000,360 484,435,461$ 1,043,433,557 $ 1,527,869,018 $ 1,250,608,216 $ Notes: 2020 Certified Tax Rate = 0.000226. Year end property values for the District were:Assessed Taxable ValueSOUTH DAVIS SEWER DISTRICT Principle Tax Payers (Unaudited) For the Current Year 2020 and Nine Years Prior Source: Davis County Clerk/Auditor's Office, Utah State Tax Commnission Real Property $8,437,984,663 Person al Property, $1,615,045,886 & Centrally Assessed $259,918,893 Total adjusted 2020 property values were $10,312,949,442.Schedule 20 116 Collection Treatment Maintenance Biosolids Employee Level Level Level Level 1 Bohman, Curtis D. Grade IV 2 Bradshaw, Mike C. Grade IV Grade I3 Dlugas, Jason D. Grade IV Grade l4 Fleming, Shane E. Grade IV5 Galli, Skyjay T. Grade I 6 Katter, Brandon M. Grade l Grade lll 7 King, Corry J. Grade IV8 Larsen, Nathan L Grade l9 Marsing, Marty G. Grade IV 10 Marsing, Mason D. Grade I11 Maxwell, Brent M. Grade I Grade IV12 Munden, Timothy E. Grade IV13 Myers, Matthew J. Grade IV Grade IV Grade lll14 Nemcek, Eric S. Grade IV15 Nemcek, Tyler P. Grade I 16 Perkins, Jeffrey K Grade IV 17 Powell, Jedd C. Grade IV Grade l 18 Rice, Brandon S. Grade IV19 Robinson, Norman S. Grade lll20 Scott, Jacob U. Grade IV Grade lV21 Trimming, Carl E. Grade IV22 Wayment, Dal D. Grade IV Grade IV23 Weimer, Jonathan D. Grade l Source : District employm ent records and St ate of Utah, D ivision of Water Quality records.

Notes: In a ccordance with Section 19-5-104 o f the Utah Code, wastewater operators, both in

rce : District employm ent records and St ate of Utah, D ivision of Water Quality records.

Notes: In a ccordance with Section 19-5-104 o f the Utah Code, wastewater operators, both in collectio n and treatment systems are to be certified. This certifcation is regulated by the Divison of Water Quality, State of Utah .SOUTH DAVIS SEWER DISTRICT Operator Certification Program (Unaudited) For the Year Ending December 31, 2020Schedule 21 117 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Jan 0.4812 0.7496 0.6499 0.5074 0.5073 0.7460 1.1806 1.7291 2.9109 2.2007 Feb 0.4900 0.7949 0.6120 0.5070 0.5184 0.7796 1.2007 1.8649 2.9778 2.1034 Mar 0.5102 0.7937 0.5739 0.5023 0.5294 0.8224 1.2217 2.0302 2.9971 1.6624 Apr 0.5362 0.7941 0.5295 0.4992 0.5475 0.8517 1.2651 2.2008 2.9759 1.4406 May 0.5374 0.7917 0.4902 0.4879 0.5559 0.8997 1.2858 2.3517 2.8984 1.1939 Jun 0.5463 0.7894 0.5046 0.4799 0.5610 0.9093 1.3431 2.5007 2.8983 0.9480 Jul 0.5455 0.7877 0.5115 0.4693 0.5791 0.9429 1.4084 2.5801 2.8663 0.7425 Aug 0.5577 0.7791 0.4962 0.4699 0.6098 0.9968 1.4782 2.5836 2.7262 0.5534 Sep 0.5961 0.7784 0.5126 0.4767 0.6368 1.0597 1.5280 2.5979 2.6014 0.5300 Oct 0.6336 0.7484 0.5143 0.4850 0.6593 1.0982 1.5621 2.6486 2.5360 0.5190 Nov 0.6790 0.7235 0.5150 0.5071 0.6824 1.1231 1.6053 2.7387 2.3976 0.5186 Dec 0.7190 0.6908 0.5103 0.5077 0.7244 1.1457 1.6340 2.8036 2.2849 0.4895 Avg 0.5694 0.7684 0.5350 0.4916 0.5926 0.9479 1.3928 2.3858 2.7559 1.0752 Source: Utah State Treasurer's Office Notes: Interest calculated based on the 365 day rate Last Ten Fiscal Years Public Treasurer In vestment Fund (PTIF) Interest Rates (U naudited) SOUTH DAVIS SEWER DISTRICT 0.00000.50001.00001.50002.00002.50003.0000Rate YearPTIF AVG. INTEREST RATESSchedule 22 118

s Public Treasurer In vestment Fund (PTIF) Interest Rates (U naudited) SOUTH DAVIS SEWER DISTRICT 0.00000.50001.00001.50002.00002.50003.0000Rate YearPTIF AVG. INTEREST RATESSchedule 22 118 Number of Residential Nonresidential Total New Dwelling Construction Construction Construction Year Units Value ($000) Value ($000 ) Residential ($000) Nonresidential ($000) Value 2011 1,334 239,784 56,404 17,981 44,765 358,934 2012 2,033 332,625 48,848 20,712 24,552 426,743 2013 632 122,334 27,274 4,498 15,155 169,263 2014 1,643 316,597 139,616 25,621 40,291 522,126 2015 1,693 366,998 370,979 28,640 52,720 522,126 2016 1,721 377,935 172,821 29,958 73,250 653,965 2017 1,870 382,116 157,539 23,864 44,383 607,902 2018 2,230 474,931 145,931 41,588 47,312 694,833 2019 1,689 412,402 111,759 33,180 64,186 635,920 2020 2,620 596,030 195,330 39,823 55,342 635,920 10-year Avg. 1,747 $ 362,175 $ 142,650 $ 26,586 $ 46,196 $ 522,773 $

195,330 39,823 55,342 635,920 10-year Avg. 1,747 $ 362,175 $ 142,650 $ 26,586 $ 46,196 $ 522,773 $ Source: Ivory-Boyer data base, Utah Construction R eport, University of Utah.

Notes: This sc hedule represents Davis County as a whole , the District covers a portion of Davis CountyValue of Additions, Alterations and RepairsPermit-Authorized Constr uction in Davis County Last Ten Fiscal Years (Unaudited) (values in thousands)SOUTH DAVIS SEWER DISTRICT Schedule 23 119 Fiscal Treatment Collection Engineering/ Industrial Water Resource Year Plants System Maintenance Administration Pretreatment Research Recovery Total 2011 7 7 2 7 1 1 25 2012 7 8 2 6 1 1 25 2013 7 8 2 6 1 1 25 2014 7 8 2 6 1 1 25 2015 7 8 2 6 1 1 25 2016 7 8 2 6 1 1 25 2017 9 8 2 6 1 1 27 2018 7 7 2 7 1 1 25 2019 8 7 4 6 1 1 8 35 2020 8 8 4 7 1 1 83 7 Average 7.4 7.7 2.4 6.3 1 1 8 27.4 Notes: Full ti me employees are sch eduled to work 2,080 hours per year (Including vacation, and sick leave).

2017, two treatment plan t operators were hi red for the ABNR project 2020 added one employee to accounting department2019 Wasatch Resource Recovery be came operational2018 one employee was transferred from Collection System to Engineering (EIT) SOUTH DAVIS SEWER DISTRICT Full-Time Equivalent Employees by Function/Department (Unaudite d) Last Ten Fiscal Years Source: District e mployment recordsFunction/DepartmentSchedule 24 ³³ 120 YEAR EDU'S 2011 35,591 2012 36,309 2013 37,005 2014 37,587 2015 37,762 2016 41,589 2017 42,136 2018 42,410 2019 42,588 2020 42,878 The District has approximately 27,700 custome r accounts as of 12/31/20 SOUTH DAVIS SEWER DISTRICT

2013 37,005 2014 37,587 2015 37,762 2016 41,589 2017 42,136 2018 42,410 2019 42,588 2020 42,878 The District has approximately 27,700 custome r accounts as of 12/31/20 SOUTH DAVIS SEWER DISTRICT Equivalent Dwelling Units (EDU'S ) - (Unaudited) Notes: 1 EDU (equivalent dwelling unit) = 102,200 gallons of water allowed annually. Last Ten Fiscal Years Source: District accounting and engineering records.

010,00020,00030,00040,00050,000Equivalent Dwelling Units EDU'SSchedule 25 121 SOUTH DAVIS SEWER DISTRICT HISTORICAL COST ACCUMULATED DEPRECIATION Balances Balances Balances Depreciation Asset Balances Acct # Description 12/31/19 Additions Disposals Transfers Adjust 12/31/20 Acct # 12/31/19 Expense Deposal Transfers 12/31/20 182000 0.01 Building & Facilities 2,710, 249.55 $ 2,710,249.55 $ 182100 0.01 (104,813.66) $ (104,813.66) $ 182000 0.02 Building & Facilities 21,597,043.90 21,597,043.90 182100 0.02 (8,611,802.97) (8,611,802.97) 182000 0.11 Building & Facilities 8,590, 405.30 8,590,405.30 182100 0.11 -0184000 0.02 Improvements Other Than Bldgs 28,892.78 28,892.78 184000 0.02 -0184000 0.11 Improvements Other Than Bldgs 6,537,517.00 6,537,517.00 184000 0.11 188000 0.04 Construction in Progress 13,365,032.29 275,737.35 13,640 ,769.64 188000 0.04 -0189000 0.01 Outfall/Sewer Lines 44,666,988.36 2,006,618.00 (202,345. 82) 46,471,260.54 189110 0.01 (3,666,414.62) (3,666,414.62) 189000 0.02 Outfall/Sewer Lines 5,748,121.05 5,748,121.05 189110 0.02 (1,290,559.59) (1,290,559.59) 189000 0.04 Outfall/Sewer Lines - -0- 189110 0.04 189200 0.01 Operation & Sup Equip. 523,846.04 195,626.00 719,472.04 1 89210 0.01 (332,930.22) (29,184.51) (362,114.73)

2 (1,290,559.59) (1,290,559.59) 189000 0.04 Outfall/Sewer Lines - -0- 189110 0.04 189200 0.01 Operation & Sup Equip. 523,846.04 195,626.00 719,472.04 1 89210 0.01 (332,930.22) (29,184.51) (362,114.73) 189200 0.02 Operation & Sup Equip. 710,445.74 (204,962.80) 505,482.94 189210 0.02 (223,552.16) (24,101.96) (247,654.12) 189200 0.11 Operation & Sup Equip. 6,985,855.00 6,985,855.00 189210 0.11 (184,533.35) (184,533.35) 189300 0.01 Tools & Test Equip. 237,773.88 202,345.82 440,119.70 1893 10 0.01 (412,710.31) (4,505.63) (417,215.94) 189300 0.02 Tools & Test Equip. 182,735.25 204,962.80 387,698.05 1893 10 0.02 (245,251.58) (1,569.94) (246,821.52) 189300 0.03 Tools & Test Equip. 108,736.04 108,736.04 189310 0.03 (108,736.04) (108,736.04) 189300 0.05 Tools & Test Equip. 247,530.85 247,530.85 189310 0.05 (203,348.86) (203,348.86) 189400 0.01 Mobile Equipment 2,212,565.58 117,152.12 (117,693.47) (130,553.24) 2,081,470.99 189410 0.01 (1,153,985.21) (134,442.18) 16,629 .17 (1,271,798.22) 189400 0.02 Mobile Equipment 1,213,802.53 122,152.06 (55,919.44) (130,000.00) 1,150,035.15 189410 0.02 (655,357.26) (46,674.49) 7,922.77 (694,108.98) 189400 0.03 Mobile Equipment 22,437.03 22,437.03 189410 0.03 (22,437.03) (22,437.03) 189500 0.01 Office Furn. & Equip. 257,658.06 130,553.24 388,211.30 189510 0.01 (255,617.44) (23,246.89) (278,864.33) 189500 0.02 Office Furn. & Equip. 248,129.91 130,000.00 378,129.91 18 9510 0.02 (301,823.59) (10,271.34) (312,094.93) 189500 0.03 Office Furn. & Equip. 4,849.56 4,849.56 189510 0.03 (4,849.56) (4,849.56) 189600 0.01 Land & Right-Of-Ways 421,632.89 421,632.89 189600 0.02 Land & Right-Of-Ways 2,648,934.91 2,648,934.91

189500 0.03 Office Furn. & Equip. 4,849.56 4,849.56 189510 0.03 (4,849.56) (4,849.56) 189600 0.01 Land & Right-Of-Ways 421,632.89 421,632.89 189600 0.02 Land & Right-Of-Ways 2,648,934.91 2,648,934.91 119,271,183.50$ 2,717,285.53$ (173,612.91)$- $- $ 121,814,856.12$ (17,594,190.10)$ (458,530.29) 24,551.94 -0- (18,028,168.45) $Net Investment in Capital Assets Summary (Unaudited) For the Year Ended December 31, 2020 Source: District capital asset records Notes: Building & Facilities, and Outfall/Sewer Lines are n ot depreciated per GASBS 34" Modified Approach" to capital asse tsSchedule 26 122 Indust. Capital Collections Plants Pretreat. Expansion WRR Asset Description ID # (.01) (.02) (.03) (.04) (11) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $ - $ - $ - $ - $ - $ IMPROVEMENTS OTHER THAN BUILDINGS (184000) - $ - $ - $ - $ - $ - $ CONSTRUCTION WORK IN PROGRESS (188000) South Plant Rehab 275,737.35 275,737.35 SUBTOTAL - $ 275,737.35$ - $ - $ - $ 275,737.35 $ OUTFALL/SEWER LINES (189000) Deeded Subvisions 5999 2,006,618.00 $ 2,006,618.00$ SUBTOTAL 2,006,618.00 $ - $ - $ - $ - $ 2,006,618.00$ OPERATION & SUPPORT EQUIPMENT (189200) Push Camera System (CS) 5938 195,626.00 $ 195,626.00 $ SUBTOTAL 195,626.00 $ - $ - $ - $ - $ 195,626.00 $ TOOLS AND TEST EQUIPMENT (189300) -0-

) 5938 195,626.00 $ 195,626.00 $ SUBTOTAL 195,626.00 $ - $ - $ - $ - $ 195,626.00 $ TOOLS AND TEST EQUIPMENT (189300) -0SUBTOTAL -0- -0- -0- -0- -0- - $ MOBILE EQUIPMENT (189400)2021 Ford F350 Truck (CS) Inspector 3566 58,576.06 $ 58,576.06$ 2021 Ford F350 Truck (CS) Superintendent 3564 58,576.06 58,576.06 2015 Ford F250 Truck (SP) 3569 11,000.00$ 11,000.00 2021 Ford F350 Truck (TP) Superintendent 3568 58,576.06 58,576.06 Crane Station 3570 13,876.00 13,876.00 Hyster Forklift 3571 13,500.00 13,500.00 Brown Bear Loader 3565 25,200.00 25,200.00 SUBT OTAL 117,152.12 $ 122,152.06$ - $ - $ - $ 239,304.18$ OFFICE FURNITURE & EQUIPMENT (189500) SUBTOTAL - $ - $ - $ - $ - $ - $ LAND & RIGHT OF WAYS (189600) -0SUBTOTAL -0- -0- -0- -0- -0- - $ GRAND TOTAL 2,319,396.12 $ 673,626.76 $ - $ - $ - $ 2,717,285.53 $ Source: District capital asset records & accounts payaable reco rds SOUTH DAVIS SEWER DISTRICT Notes : Building & facilities, and outfall/sewer lines are not depreciated per GASBS 34 "Modified Approach" to capital assetsNet Investment in Capital Assets Additions (Unaudited) For the Year Ended December 31, 2020Schedule 27 123 Industrial Capital

es are not depreciated per GASBS 34 "Modified Approach" to capital assetsNet Investment in Capital Assets Additions (Unaudited) For the Year Ended December 31, 2020Schedule 27 123 Industrial Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $- $- $- $- $ CONSTRUCTION WORK IN PROGR ESS (188000) SUBTOTAL - $- $- $- $- $ OUTFALL/SEWER LINES (189000) SUBTOTAL - $- $- $- 0 - - $ OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL - $- $- $- $- $ TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL - $- $- $- $- $ MOBILE EQUIPMENT (189400) 2020 Ford F350 Truck (CS) Superintindent 3563 61,964.61 $ 61,964.61 $ 2020 Ford F350 Truck (CS) Inspector 3564 55,728.96 55,728.96 2020 Ford F150 Truck (TP) Superintindent 3561 55,919.44 55,919.44 SUBTOTAL 117,693.57 $ 55,919.44 $- $- $ 173,613.01 $ OFFICE FURNITURE & EQUIPMENT (189500) SUBTOTAL -0- -0- -0- -0- -0LAND & RIGHT OF WAYS (188600) - $ SUBTOTAL -0- - $- 0 - - 0 - GRAND TOTAL 117,693.57 $ 55,919.44 $- $- $ 173,613.01 $ Source: District capi tal asset records SOUTH DAVI S SEWER DISTRICT Schedule 28 Notes: Building & facilities, and outfall/sewer lines are not depreciated per GASBS34" Modified Approach" to capital assetsNet Investment in Capital Assets Disposals (Unaudited) For the Year Ended December 31, 2020 124 Net Investment in Ca pital Asset Transfers (Unaudited ) For the Year Ended December 31, 2020 Indust. Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) -0SUBTOTAL -0- - $ -0- -0- - $

sion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) -0SUBTOTAL -0- - $ -0- -0- - $ CONSTRUCTION WORK IN PROGRESS (188000) SUBTOTAL -0- - $ -0- -0- - $ OUTFALL/SEWER LINES (189000) SUBTOTAL -0- -0- -0- -0- -0OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL -0- -0- -0- -0- -0TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL -0- -0- -0- -0- -0MOBILE EQUIPMENT (189400) SUBTOTAL -0- -0- - -0- - $ OFFICE FURNITURE & EQUIPMENT (189500) -0- -0- -0- -0- -0SUBTOTAL LAND & RIGHT OF WAYS (188000) -0- -0- -0- -0- -0SUBTOTAL - $ - $ - $ - $ - $ GRAND TOTAL Source: District capital asset records Notes: Building & facilities, and outfall/sewer Lines are not depreciated per GASBS34" Modifi ed Approach" to capital assets SOUTH DAVIS SEWER DISTRICT Schedule 29 125 Indust. Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $- $- $- $- $

Schedule 29 125 Indust. Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $- $- $- $- $ CONSTRUCTION WORK IN PROGR ESS (188000) South Plant Rehab 6525 275,737.35 $ 275,737.35 $ SUBTOTAL - $- $- $ 275,737.35 $ 275,737.35 $ OUTFALL/SEWER LINES (189000) SUBTOTAL -0- -0- -0- -0- -0OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL -0- -0- -0- -0- -0TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL -0- -0- -0- -0- -0MOBILE EQUIPMENT (189400) SUBTOTAL -0- -0- - $- 0- - $ OFFICE FURNITURE & EQUIPMENT (189500) SUBTOTAL -0- -0- -0- -0- -0LAND & RIGHT OF WAYS (188000) SUBTOTAL -0- -0- -0- -0- -0GRAND TOTAL - $- $- $ 275,737.35 $ 275,737.35 $ Source: District capi tal asset recordsSOUTH DAVIS SEWER DISTRICT Notes: Building & Facilities, and Outfall/Sewer Lines are not depreciated per GASBS34" Modified Approach" to capital assetsNet Investment in Capital Assets Construction in Progress (CIP) (Unaudited) For the Year Ended December 31, 2020Schedule 30 126 Collection Treatment Capital Debt Total Year System O & M Plants O & M Expenses Service Expenses 2011 1,301,539 $ 2,791,597 $ 3,350,410 $ - $ 7,443,546 $ 2012 1,230,974 $ 3,459,306 $ 2,822,042 $ - $ 7,512,322 $ 2013 1,358,286 $ 4,049,164 $ 2,127,162 $ - $ 7,534,612 $ 2014 1,650,804 $ 3,534,549 $ 2,201,175 $ - $ 7,386,528 $ 2015 1,698,607 $ 4,245,168 $ 1,360,467 $ - $ 7,304,242 $ 2016 2,032,653 $ 3,208,443 $ 1,182,621 $ - $ 6,423,717 $ 2017 1,037,903 $ 1,950,307 $ 12,494,590 $ 451,461 $ 15,934,260 $

7,304,242 $ 2016 2,032,653 $ 3,208,443 $ 1,182,621 $ - $ 6,423,717 $ 2017 1,037,903 $ 1,950,307 $ 12,494,590 $ 451,461 $ 15,934,260 $ 2018 1,703,696 $ 7,120,946 $ 17,407,486 $ 837,173 $ 27,069,301 $ 2019 1,758,181 $ 3,687,189 $ 5,405,460 $ 1,637,763 $ 12,488,593 $ 2020 1,848,955 $ 3,834,360 $ 1,215,753 $ 1,895,843 $ 8,794,911 $ Source : District acc ounting records, Zions Bank,Trust Dep artment.

Notes: 2017 issued 20-y ear taxable re venue bonds ($21,19 5,000) for construction of the WRR project.

T otal expenses excludes depreciation expense and G&A expensesSOUTH DAVIS SEWER DISTRICT Expenses by Function (Unaudited) Last Ten Fiscal Years Treatment Plants include Pre-treatment, OU2 facil ity and WQG expenses 2019 issued 20-year revenue bonds ( $12,179,00 0) for construction of the ABNR project and plant rehabilitatio n Schedule 31 127 Source: D istrict accounting and fina ncial records, Zions B ank Trust Department.SOUTH DAVIS SEWER DISTRICT Expenses by Function (Unaudited) Last Ten Fiscal Years $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Collection System O & M $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2011 20122013 2014 20152016201720182019 2020Treatment Plants O & M $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2011 2012 2013 2014 2015 2016 2017 20182019 2020Captial Expenses $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 2011 2012201320142015201620172018 2019

2 2013 2014 2015 2016 2017 20182019 2020Captial Expenses $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 2011 2012201320142015201620172018 2019 2020Debt Service $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2011 2012 20132014201520162017 2018 20192020Total ExpensesSchedule 32 128 Carrier Policy No. Coverage Policy Period Philadelphia PHPK1754717 General L iability ($3,000,000) 1/1/20 to 1/1/21 Olympus Insurance Ag ency Bodily Injury Personal Injury Property Damage Public Officials Errors/Omissions Philadelphia PHUB8612738 Excess Liability ($10,000,000) 1/1/20 to 1/1/21 Olympus Insurance Agency Philadelphia PHPK1754717 Property ($52,030,580) 1/1/20 to 1/1/21 Olympus Insurance AgencyPhiladelphia PHPK1754717 *Fidelit y Bond ($750,000) 1/1/20 to 1/1/2 1 Olympus Insurance Agency Treasurer Philadelphia PHPK1754717 Crime ($50,000) 1/1/20 to 1/1/21 Olympus Insurance Agency Employees Computer Fraud Employee Dishonesty Worker Compensation Fund 1494897 Workers Compensation 1/1/20 to 1/ 1/21 Liability ($1,000,000) Source: Olympus Insurance Ag ency, WCF of Utah and District re cordsSOUTH DAVIS SEWER DISTRICT Summary of Insurance Coverage (Unaudited) For the Year Ended December 31, 2020 Notes: In accordance with Ut ah Code 51-7-15 and Rule 4 of t he Utah Money Management Cou ncil, the insurance bonds are calculated from the previous years budget (2019 amended budget). Settled claims have not exceeded commercial exce ss coverage in any of the past three years.Schedule 33 129 COMPLIANCE SECTION 130 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

Schedule 33 129 COMPLIANCE SECTION 130 INDEPENDENT AUDITORS’ 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 Board of Trustees South Davis Sewer District We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of South Davis Sewer District (the “District”) as of and for the years ended Decembe r 31, 2020 and 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements and have issued our report thereon dated June 17, 2021.

Internal Control over Financial Reporting In planning and performing our audit, we considered the Distric t’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 opinions on the financial sta tements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allo w 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 the re is a reasonable possibility that a material

t and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that the re is a reasonable possibility that a material misstatement of the entity’s financial statements will not be p revented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important eno ugh to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpo se described in the first paragraph of this section and was not designed to identity all deficiencies in in ternal 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 mat erial weaknesses. However, material weaknesses may exist that have not been identified.

  131 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Dis trict’s financial statements are free of material misstatement, we performed tests of its compliance wit h certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, pro viding an opinion on compliance with those provisions was not an objective of our audit, and accordi ngly, we do not express such an opinion.

The results of our tests disclosed no instances of noncomplianc e or other matters that are required to be reported under General Auditing Standards .

Purpose of this Report

t express such an opinion.

The results of our tests disclosed no instances of noncomplianc e or other matters that are required to be reported under General Auditing Standards .

Purpose of this Report The purpose of this report is solely described in 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.

Salt Lake City, Utah June 17, 2021 132 INDEPENDENT AUDITORS’ REPORT IN ACCORDANCE WITH THE STATE COMPLIANCE AUDIT GUIDE ON COMPLIANCE WITH GENERAL STATE COMPLIANCE REQUIREMENTS AND ON INTERNAL CONTROL OVER COMPLIANCE Board of Trustees South Davis Sewer District West Bountiful, Utah Report on Compliance with General State Compliance Requirements We have audited the compliance of South Davis Sewer District’s (the “District”) compliance with the applicable state compliance requirements described in the State Compliance Audit Guide , issued by the Office of the State Auditor, that could have a direct and material effect on the District for the year ended December 31, 2020.

General state compliance requirements were tested for the year ended December 31, 2020 in the following areas: Budgetary Compliance Fund Balance Fraud Risk Assessment Restricted Taxes and Related Revenues Open and Public Meetings Act Treasurer’s Bond Cash Management Management’s Responsibility Management is responsible for compliance with the state compliance requirements referred to above.

Auditor’s Responsibility

ic Meetings Act Treasurer’s Bond Cash Management Management’s Responsibility Management is responsible for compliance with the state compliance requirements referred to above.

Auditor’s Responsibility Our responsibility is to express an opinion on the District’s compliance based on our audit of the state compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of A merica; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptr oller General of the United States; and the State Compliance Audit Guide . Those standards and the State Compliance Audit Guide require that we plan and perform the audit to obtain reasonabl e assurance about whether noncompliance with the state compliance requirements referred to above that could have a direct and material effect on a state compliance requirement occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requ irements and performing such other procedures as we considered necessary in the circumstances.

  133 We believe that our audit provides a reasonable basis for our opinion on compliance for each state compliance requirement referred to above. However, our audit do es not provide a legal determination of the District’s compliance with those requirements. Opinion on Compliance In our opinion, South Davis Sewer District complied, in all mat erial respects, with the compliance requirements identified above for the year ended December 31, 2 020.

Report on Internal Control over Compliance Management of the District is responsible for establishing and maintaining effective internal control over

ified above for the year ended December 31, 2 020.

Report on Internal Control over Compliance Management of the District is responsible for establishing and maintaining effective internal control over compliance with the state compliance requirements referred to a bove. In planning and performing our audit of compliance, we considered the District’s internal control over compliance with the state compliance requirements referred to above to determine the audi t procedures that are appropriate in the circumstances for the purpose of expressing an opinion on c ompliance with those state compliance requirements and to test and report on internal control over co mpliance in accordance with the State Compliance Audit Guide , but not for the purpose of expressing an opinion on the effec tiveness of internal control over compliance. Accordingly, we do not expres s an opinion on the effectiveness of the District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the norma l course of performing their assigned functions, to prevent or to detect and correct noncomp liance with a state compliance requirement on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a state compliance requirement will not be prevented or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a

r detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a state compliance requirement that is less severe than a materia l weakness in internal control over compliance, yet important enough to merit attention by those ch arged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant def iciencies. We did not identify any deficiencies in internal control over compliance that we consid er to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control and compliance and the results of t hat testing based on the requirements of the State Compliance Audit Guide . Accordingly, this report is n ot suitable for any other purpos e.

Salt Lake City, Utah June 17, 2021 SOUTH DAVIS SEW ER DISTRICT South Treatment Plant North Salt Lake, Utah