Park Lofts ACFR 2022 Document SDSD

SOUTH DAVIS SEWER DISTRICT West Bountiful, Utah Annual Comprehensive Financial Report For the Fiscal Year Ending December 31, 2022 SOUTH DAVIS SEWER DISTRICT North Treatment Plant West Bountiful ,Utah Annual Comprehensive Financial Report South Davis Sewer District West Bountiful, Utah For the Fiscal Year Ending December 31, 2022 Office Location: 1800 West 1200 North West Bountiful, U T 84087- 2501 801-295-3469 Mailing Address: PO Box 140111 Salt Lake City, UT 84 114-0111 Prepared By: Administration and Accounting Department s Matthew J. Myers, P.E.

General Manager/Treasurer Mark R. Katter, CPA Accounting Manager/Clerk TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal ................................ ................................ ........ 1-18 Certificate of Achievement for Excellence in Financial Reporting .......... 19 Organization Chart ................................ ................................ ................. 20 Board of Trustees ................................ ................................ .................. 21 Board of Trustees, 2022 Meeting Schedule ................................ ........... 22 District Map ................................ ................................ ............... . ........... 23 FINANCIAL SECTION Independent Auditor ’s Report ................................ ....................... 24-26 Management ’s Discussion and Analysis ................................ ........... 27-34 Basic Financial Statements: Statement of Net Position ................................ ................................ . 35-36 Statement of Revenues, Expenses and Changes in Net Position ......... 37

ic Financial Statements: Statement of Net Position ................................ ................................ . 35-36 Statement of Revenues, Expenses and Changes in Net Position ......... 37 Statement of Cash Flows ................................ ................................ ....... 38 Notes to Financial Statements ................................ ....................... 39-55 Required Supplemental Information: Schedule of Revenues and Expenses, Budgetary and Actual .......... 56-57 Net Pension Liability and Measurement Date (URS) ........................ 58-61 Supplementary Information: Modified Approach for Eligible Infrastructure Assets ........................ 62-67 Schedule of Impact Fees and Certification ................................ ....... 68-71 SOUTH DAVIS SEWER DISTRICT Comprehensive Annual Financial Report For the Year Ended December 31, 2022 I STATISTICAL SECTION PAGE Statistical Section Table of Contents ................................ ..................... 72 Statement of Net Position (Schedule 1) ................................ ................... 73 Statement of Changes in Net Position (Schedule 2) ................................ ......... 74 Operating Revenues (Schedule 3) ................................ ............................ 75 Non Operating Revenues (Schedule 4) ................................ .................... 76 Revenue by Source Bar Graph ’s (Schedules 5 & 6) ............................. 77-78 Property Tax Levies and Collections (Schedule 7) ................................ ... 79 Sewer Service and Impact Fee Rates (Schedule 8) ................................ . 80

................ 77-78 Property Tax Levies and Collections (Schedule 7) ................................ ... 79 Sewer Service and Impact Fee Rates (Schedule 8) ................................ . 80 Principle Wastewater Contributors (Schedule 9) ................................ . 81-82 Principle Rate Payers (Schedule 10) ................................ ........................ 83 Revenue Bond Coverage (Schedule 11) ................................ .............................. 84 Outstanding Debt (Schedule 12) ................................ ............................... 85 Debt to Asset Ratios (Schedule 13) ................................ .......................... 86 Debt Service to Total Expenses Ratios (Schedule 14) .............................. 87 Bond Debt Service (Schedule 15) ................................ ............................ .............. 88 Davis County Demographic and Economic Statistics (Schedule 16) ........ 89 Davis County Principle Employers (Schedule 17) ................................ ..... 90 Overlapping and Direct Tax Rates (Schedule 18) ................................ ..... 91 Davis County Tax Factors (Schedule19) ................................ .................. 92 Principle Tax Payers (Schedule 20) ................................ .......................... 93 Operator Certifications (Schedule 21) ................................ ....................... 94 Public Treasurer Investment Fund Interest Rates (Schedule 22) .............. 95 Employees Full -Time Equivalent by Function (Schedule 23) ......................... 96 Equivalent Dwelling Units (EDU ’s) (Schedule 24) ................................ ....... 97

............. 95 Employees Full -Time Equivalent by Function (Schedule 23) ......................... 96 Equivalent Dwelling Units (EDU ’s) (Schedule 24) ................................ ....... 97 Net Investment in Capital Assets Balances (Schedule 25) .............. .............. 98 Net Investment in Capital Asset Schedules (Schedules 26 -29) ..... .... 99-102 Expenses by Function (Schedule 30) ................................ ...................... 103 Expenses by Function Graphs (Schedule 31 ................................ ......... 104 Summary of Insurance Coverage (Schedule 32) ................................ .... 105 COMPLIANCE SECTION Report on Compliance & Internal Controls ................................ ... 106-107 Auditors Report on State Legal Compliance ................................ . 108-110 II SOUTH DAVIS SEWER DISTRICT Comprehensive Annual Financial Report For the Years Ended December 31, 2022 TABLE OF CONTENTS INTRODUCTORY SECTION 1 August 14, 2023 To the Chair, members of the Board of Trustees, and the Citizens of the South Davis Sewer District: State law requires that all local governments publish within six (6) months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed ce rtified accountants. The South Davis Sewer District (District) hereby submits this Annual Financial Report for the year ended December 31, 2022, in compliance with these requirements.

District management assumes full responsibility for the completeness and reliability of the

s this Annual Financial Report for the year ended December 31, 2022, in compliance with these requirements.

District management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive 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 absolute, 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 o perations of the District. T his report fairly presents the financial position of the District and all disclosures necessary to enable the reader to gain an understanding of the District’s financi al activities .

Squire and Company, P.C., a firm of licensed, certified public accountants has audited the District’s financial statements . The goal of the independent audit i s to provide reasonable assurance that the financial statements of the District for the fiscal year e nded, December 31, 2022, are free of material misstatement. The independent audit involved examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant esti mates made by management, and evaluati ng the overall financial statement presentation.

The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the District’s financial statements for the fiscal year ended

tion.

The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the District’s financial statements for the fiscal year ended December 31, 2022, are presented fairly in all material respects, the District’s financial position with GAAP.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statement s in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal complements the MD&A. Please read t he transmittal letter in conjunction with the MD&A.

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 Analysis, the basic financial statements, notes thereto and required supplementary information.

2 3. Statistical Section contains additional un audited financial and gener al information presented on a multi- year basis.

4. Compliance and Internal Control Section includes the independent auditor’s reports on internal control, bond resolution compliance and S tate legal compliance.

Background In the late 1950’s, Bountiful City was the only area of South Davis County, consisting of Bountiful, Centerville, North Salt Lake, West Bountiful, Woods Cross, and the unincorporated areas south of Lund Lane, served by a sewer system. The treatment facility serving that sys tem was at capacity and

, Centerville, North Salt Lake, West Bountiful, Woods Cross, and the unincorporated areas south of Lund Lane, served by a sewer system. The treatment facility serving that sys tem 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 anticipated growth . The five cities and Davis County formed the District in1959 t o meet the area- wide need for wastewater collection and treatment.

Other Key Capital Milestones for South Davis Sewer District: • District Created: 1959 • North Plant Construction: 1962 • South Plant Construction: 1962 • North Plant Expansion: 1991 • South Plant Expansion: 1994 • Bountiful City transfers sewer to District: 2004 • South Plant Upgrades: 2023 • North Plant Upgrades: 2026 (anticipated) The District currently serves a total po pulation of approximately 103,000 ( 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. The Plants are operating at approximately 75 % of hydraulic capacity , however they are nearly at their capacity for solids treatment . For some time, the District has been accommodating growth, as planned, by pumping excess flows to the North Plant from the 2600 South trunk line.

The District has seen significant increases in density in new subdivisions and apartment projects throughout the District. To account for higher densities t he District inventoried the remaining va cant

District has seen significant increases in density in new subdivisions and apartment projects throughout the District. To account for higher densities t he District inventoried the remaining va cant land in the District along with its planned use and density in May 2022. From this inventory, the District estimates the saturation population to be 120,486. T his agrees closely with the Wasatch Front Regional Council’s current estimate for the year 2040 population of 120,155. Build -out will certainly occur during the next 20 to 25-year design horizon for plant rehabilitation. A Wasatch Front Regional Council report states , “Davis County has the smallest land area of any county in the State and will be the 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 requires significant upgrading of our treatment processes. It has been 28 years and 31 years since the South Plant and the North Plant respectively were expanded and rehabilitated. The District has been waiting for the nutrient removal requirement issue to be better defined. Now that nutrient removal requirements have been adopted, the Dis trict is proceeding with plant upgrades 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 estimate indicates that the total cost may be $ 80,000,000. This is a result of construction cost and equipment cost inflation due to COVID- 19 impacts and the enormous amount of light and heavy industrial and commercial construction taking place both locally and nationally.

t of construction cost and equipment cost inflation due to COVID- 19 impacts and the enormous amount of light and heavy industrial and commercial construction taking place both locally and nationally.

3 The District is empowered to levy a property tax on both real and 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 a nnexed by our member cities from time to time . The District subsequently annexes these parcels as well.

Governance Davis County organized the District as an independent special district in response to petitions by the member cities of the District under Title 17, Part 6 of the Utah Code . All special district statutes were recodified during the 2008 Legislative Session. This statute is now Title 17B of the Utah Code. Under the new statute, the South Davis Sewer District is considered a “local district.”

A seven-(7) member Board of Trustees governs the District. Each City within the District appoints one Board Member for a four- year term. The two remaining Board Members are elected from the District at large. These Board Members are elected in municipal elections held in odd numbered years. Elected terms are also for four years. Board terms are staggered to provide continuity. The Board elects a chair and vice-chair from its members to serve two (2) year terms. A General Man ager who serves 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

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 appropr iate notices and hearings. The annual budget serves as the basis for the District’s financial planning and control.

Finance Financial Guidelines The Board of Trustees has adopted the following: • Revenues should be enough to support current expenditures, including debt service and other obligations of the system.

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

• Contingency reserves should be maintained at levels sufficient to provide for unanticipated, non-recurring costs such as major equipment failures.

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

• 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.

• Net revenues that exceed operating expenses and debt service should be used for capital expenditures, restoration of contingency reserves of the wastewater system, and other wastewater purposes.

• Capital financing should be provided through debt financing, current revenues, and contributions from developers, customers, and other governmental entities.

• Cost of service studies should be performed periodically and the relation of revenues to cost be reviewed annually.

Reserves Policy

tions from developers, customers, and other governmental entities.

• Cost of service studies should be performed periodically and the 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, replacement and improvements needs.

4 The basic goals for reserve balances are: • Operating Capital-50 percent of one year’s operations & maintenance budget.

• Self-Insurance R eserve-The District is self -insured for vehicle casualty and accepts responsibility for sewer backups on a no- fault basis. Net position set by Board action.

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

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

• 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 accumulates funds for this purpose. The target balance is based on planning and forecasts for these needs.

time -to-time capacity needs and changing technologies must be addressed. This reserve fund accumulates funds for this purpose. The target balance is based on planning and forecasts for these needs.

These funds are accumulated and designated at the Board’s sole discretion. Any of these funds can be used for any lawful purpose as directed by the Board.

This capital reserves policy shall be reviewed at a minimum of every five (5) years.

Investments Moreton Asset Management, LLC, is the District’s investment advisor. M oreton 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 funds that can be inves ted with a term of a year or more.

Long Term Financial Planning The District has a written Facilities Plan. This plan is reviewed at intervals of five (5) years or less.

The Plan has been reviewed in detail in each of the last three (3) years because of the current amount of capital planned. T he existing condition of all District facilities is assessed. It also assesses the current and projected wastewater flows and strengths and reviews this information 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 improvement needs.

The ability of existing and projected District reserves and revenues to support the anticipated financial needs is then assessed. If necessary, the District then adjust s impact fees, user fees, and tax assessments as needed . This plan was most recently updated in its entirety in 20 19.

ted financial needs is then assessed. If necessary, the District then adjust s impact fees, user fees, and tax assessments as needed . This plan was most recently updated in its entirety in 20 19.

Demographics and flow projections were updated in May 2022, and a final draft submitted to the State of Utah Division of Water Quality (DWQ) in October of 2022.

Rates The District ha d not raised user fees since 1988 when they were raised from $2 to $5 per month per residence and residential equivalent to support major plant rehabilitation and expansion. Bonding for funding of the nutrient removal and rehabilitation project s discussed later in the Annual Financial Report requires increased annual debt service . These projects along with increased wastewater flows and inflation will increase operation and maintenance cost s. District sewer rates were inadequate to meet these funding needs.

5 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 i ts reserves. However, increasing responsibilities, facilities age and inflation have reduced our net operating revenues to a small margin.

The purpose of the study was to review rates relative to bonding requirements for South Plant expected capital impr ovement needs, and increased operating and maintenance costs over time. The study concluded that the basic rate would have to be raised from $5 per month to $10 per month to cover debt service for th is 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

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 supportive of the nutrient 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 nutrient removal, projected operation and maintenance cost increases due to nutrient removal, and short- term cash flow impacts of the Wasatch Resource Recovery (WRR) food waste to energy project.

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

As the South Plant rehabilitation and nutrient removal projects neared completion in mid-2021, the amount of inflation due to economic conditions created by the COVID pande mic became evident.

Inflation increased the cost of these projects by a minimum of 20%.

In 2021 the Utah Division of Water Quality proposed additional reduction of discharge permit limits for ammonia for both plants. The new limits for the South Plant can be met by current improvements.

The proposed limits for the North Plant reduced both the 30-day average and the daily maximum limits for ammonia by 50%. These limits were promulgated on January 1, 2021, with a compliance

rovements.

The proposed limits for the North Plant reduced both the 30-day average and the daily maximum limits for ammonia by 50%. These limits were promulgated on January 1, 2021, with a compliance schedule to allow the District time to complete design and construction of projects to meet these limits.

These two developments have a significant impact on the scope and cost of construction. To meet increased funding needs, t he District initiated a new rate study. This study updated construction cost projections and project schedules . Based on the new study the District adopted a rate increase of $3.50 per month. Th is increased the residential and residential equivalent rate to $19 .00 per month.

The District will examine rates again in 2023 to focus on financing the major improvements necessary for the North Plant. Property Tax Historically, the District has funded its operations with both sewer user rates and a property tax. This has provided some level of equity between large and small users and between residential and industrial users. A larger home pays more in property tax, while a small apartment pays the minimum user fee.

Each year the Utah State Tax Commission calculates a “Certified Tax Rate” for each local government entity. This rate provides the entity with the same amount of revenue that it received from property taxes the previous year plus any increased revenue due to growth, but not for appreciation of property values. If the entity needs to increase its property tax revenue, it must follow a “Truth in Taxation” procedure to include public notices, public hearings, etc. Since the mid eighties when this program began, the District has adopted the Certified Tax Rate. Over time this has

“Truth in Taxation” procedure to include public notices, public hearings, etc. Since the mid eighties when this program began, the District has adopted the Certified Tax Rate. Over time this has 6 eroded the balance between user fees and property tax revenues. In 2020 the Board chose to divide increased revenue requirements between sewer rates and property tax.

By way of comparison, assuming an average home value of $527,000 (2022 average) and based on a 55% assessed value, the average tax per home is $88.68, or $7.39 monthly. Combined with user rate, this is $316.68 annually or $26.39 monthly. The Wasatch front annual average total sewer charge is $492.00 or $41.00 monthly. In 2021 the national average sewer charge is $551.00 annually or $45.92 monthly. This places the District at approximately the 10 th percentile of the national average in 2021.

Impact Fees In 2023, the District , with the assistance of Capex planning and AQUA Engineering, completed a review of its impact fees in accordance with State Statute. The impact fee was increased from $1,596.00 for a single- family residence to $ 2,453.00. This impact fee represents the value of the infrastructure provided to a ne w home that has been built and financed by existing District users.

Bonding The construction of the Wasatch Resource Recovery project discussed below is a joint venture . The District and ALPRO SD, our private partner, share equally in all project expenses. Each partner made a $2,000,000 cash equity contribution to the project. The debt financing for the balance of the projects costs is also shared equally.

To finance its portion of the project the District issued 20-year Revenue bonds in the amount of

ution to the project. The debt financing for the balance of the projects costs is also shared equally.

To finance its portion of the project the District issued 20-year 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 District is not liable for the debt service on these bonds.

In December 2019, the District closed bond funding (Series 2019) for the North and South Plant rehabilitation and nutrient removal projects in the amount of $12,17 9,000. This was a private placement bond. The All- Inclusive Cost (AIC) interest rate is 2.24%.

To provide on -gong funding for planning, engineering, and equipment pre- purchase for these projects, the District issued series 2021 Bonds in the amount of $10,000,000. This was again a private placement bond. The All-Inclusive Cost (AIC) interest rate is 2.13%.

Additional bonding will be needed to complete the project. This amount of additional bonding is uncertain because of the economic conditions in the heavy construction industry and the US economy in general. It is estimated to be in excess of $60,000,000.

Current Major Activities - Accounting Annual Financial Report The 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 performance. This Annual Financial Report is not required, but according to

dit. The purpose of the Annual Financial Report is to assist the user in assessing the District’s financial condition and performance. This Annual Financial Report is not required, but according to GASB Codification Sec. 2200.101, “every government entity should prepare and publish, as a matter of public record, an Annual Financial Report that encompasses all funds of the primary government.”

In addition to this transmittal letter the Management’s Discussion and Analysis (MD&A) and the Notes to the Financial Statements contain useful detail about the District’s policies and activities.

7 Local Economy Construction & Development Increased wastewater flows and loads from residential, commercial, and industrial developments affect collection system and treatment plant capacity, operations and maintenance costs, and revenues. There is also a significant workload from site plan reviews, construction inspections, closed circuit television ( CCTV) inspections , and cleaning of co mpleted projects. Therefore, local development activities are closely followed.

With developable land in the District becoming smaller in supply, the number of high-density development projects continues to increase relative to traditional single family dwellings. Housing inflation reached a peak in 2022, but recent trends indicate that value as well as home sales are beginning to decline. The Davis County Assessor’s office reports that in January of 2022 the median assessed home value in Davis County was $400,000. This crested in mid -2022 at $456,000 and ended up back down to $402,000 in January of 2023, essentially where it started.

Record inflation coupled with increased interest rates from the Federal Reserve, are the likeliest

2022 at $456,000 and ended up back down to $402,000 in January of 2023, essentially where it started.

Record inflation coupled with increased interest rates from the Federal Reserve, are the likeliest causes for this decline . Perhaps the larges t local indicator of this downward trend for the District is impact fees collected. The chart below shows the stark decline from 2021 to 2022.

Statewide indicators, however, are not so quick to show the decline in housing construction. The two charts below from the Kem C. Gardner Policy Institute’s Ivory-Boyer Construction Report and Database, show that while building permit total value decreased from 2021 to 2022, the total number of residential units went up thanks to a strong showing from high density (apartment) construction, and a 22% increase in single family detached as well.

Despite the increase in housing construction from 2021 to 2022, the median value across all of Utah showed a similar decrease in median value to what the County A ssessor described for Davis County.

This can be seen in the graph from the Kem C. Gardner Policy Institute below: $- $200,000 $400,000 $600,000 $800,000 $1,000,000 2014 2015 2016 2017 2018 2019 2020 2021 2022Impact Fees 8 Employment Since 2010, Utah’s job growth has remained well above the U.S. average. Below are charts showing job growth by industry sector for Utah in 2022, and unemployment by county in Utah as of the end of 2022.

Current Economic Conditions In the post-covid economy, “uncertainty” is the best description of what Utah’s best economi c minds and institutions have indicated. In the summary section of the Utah Economic Council’s report to the Governor for 2023 the following paragraph provides a nutshell statement:

ah’s best economi c minds and institutions have indicated. In the summary section of the Utah Economic Council’s report to the Governor for 2023 the following paragraph provides a nutshell statement: “Current economic challenges amid an overheated economy include stubbornly high inflation, rapidly rising interest rates, low consumer sentiment, and unmistakable construction and real estate slowdowns. At the same time, many often underappreciated economic buffers exist.

Extremely low unemployment coupled with improving supply chains and very strong overall household, firm, and state and local government financial reserves combine to provide a hedge against economic challenges that could spiral into a recession. Economic performance in 2023 will depend on economic decisions made in this complex new environment.”

The Utah Economic Council surveyed its membership regarding the possibility of recession. Below are the results: • 0% of respondents believe Utah is currently in recession.

• 5% of respondents believe the U.S. is currently in recession.

• 30% median probability of recession in Utah is the consensus respondent prediction.

• 60% median probability of recession in the U.S. is the consensus respondent prediction.

9 Again, with significa nt economic uncertainty cutting across many sectors, only time will tell.

Historically, the District has not had to significantly change its operations in times of recession .

However, management will continue to monitor and adjust as necessary.

Current Major Activities – Human Resources One of the key elements in the District's success is the quality of its workforce. There will be approximately six (6) employees retiring over the next five (5) years and ten (10) employees over the

ne of the key elements in the District's success is the quality of its workforce. There will be approximately six (6) employees retiring over the next five (5) years and ten (10) employees over the next seven (7) years. As nutrient removal facilities come on -line at both plants, additional operators and maintenance personnel will be required. Finding qualified and motivated replacements is likely to be a problem. There is no established pathway leading to employment in the resource recovery industry. The District's compensation is competitive, but we must make a concerted effort to locate and recruit suitable replacements. Salary budgets will be higher in the near term as we hire replacements early enough to be trained before existing employees retire and to staff Wasatch Resource Recovery. Because of the pandemic and the Federal stimulus program, Utah is experiencing extraordinar ily tight conditions in the labor market. The W asatch Front is also experiencing a 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 contrib utes 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 System s (URS). URS provides retirement benefits, annual cost of living adjustments and death benefits to plan members and beneficiaries in accordance with retirement statutes established and amended by the Utah State Legislature.

Retirement benefits for District employees who began employmen t prior to July 1, 2011, are “Tier 1” employees. “Tier 2” employees are those who begin initial employment on or after July 1, 2011.

e.

Retirement benefits for District employees who began employmen t prior to July 1, 2011, are “Tier 1” employees. “Tier 2” employees are those who begin initial employment on or after July 1, 2011.

Retirement benefits for these employees are significantly reduced. Additional information is contained in the Notes to the Financial Statements.

The District does not provide any other post -employment benefits.

Medical Insurance Perhaps because of the nature of our work we are particularly sensitive to health issues. The District provides medical, dental, and vision insurance. 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 Insura nce carriers. This was done for 20 18. The Utah Public Employees Health Plan, which is a part of the Utah Retirement Systems, was competitive with the commercial market and was again selected to be our insurer. By dropping a tier in coverage and reducing the number of providers available in the system, we were able to reduce our renewal premium s significantly.

The District offers a high deductible health plan (HDHP) as well as a traditional plan. In the HDHP plan, a high deductible is combined with a Health Savings Account (HSA). Funds are contributed to the HSA before taxes. Contributions 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. Savi ngs from the reduced premiums of HDHP s allow the District to fund the maximum allowable annual contribution to the

n the account are used for qualifying medical expenses, they are not taxed. Savi ngs from the reduced premiums of HDHP s allow the District to fund the maximum allowable annual contribution to the HSA. The District has offered the high deductible option to employees since 2012. Most District employees have chosen the high deductible program. Some employees’ personal circumstances do not permit participation in a HDHP.

10 The high deductible health plan gives the employee an incentive to shop and otherwise manage medical utilization. It also removes a significant portion of the cash flow for medical transacti ons from insurance company rules and overhead. The resulting savings and benefits to employees are significant .

The District or its health insurance covers all immunizations. Employees are urged to maintain all common immunizations such as flu , MMR, and tetanus. Employees are encouraged to have immunizations for any disease such as hepatitis that concerns them. In addition to concerns about contacting communicable diseases at work, it is felt that because of the essential service nature of 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 maintain and operate District facilities.

Current Major Activities - Regulatory Issues Emerging Constituents of Concern The most recent Emerging Constituents of Concern (ECC) are Polyfluoroalkyl Substances (PFAS) .

PFAS includes many chemicals that are used in food packaging and making things grease and stainresistant. They are also used in firefighting foams and in a wide range of manufacturing pr ocesses.

Minute traces of these elements are found in wastewater.

ging and making things grease and stainresistant. They are also used in firefighting foams and in a wide range of manufacturing pr ocesses.

Minute traces of these elements are found in wastewater.

The District’s existing trickling filter plants are not capable of treating these constituents to the low levels being discussed. If the District must treat any of these constituents, extensive treatment plant modifications could be required. University researchers and wastewater treatment equipment manufacturers are just beginning to develop processes that can be added to existing treatment plants to remove both .

PFAS are of particular concern in the land application of biosolids which is the preferred method of beneficial use of our biosolids. EPA, research groups and industry groups are urgently studying the presence and fate of PFAS in biosolids and grappling with how to regulate PFAS . Some states have already adopted limits for PFAS in biosolids and soils. The Publicly Owned Treatment Works (POTWs) in Utah are working together to gather information and guidance on this issue and to arrange for sampling and testing of biosolids and soils.

PFAS could have significant impact on required treatment and distribution of biosolids. This, in turn, would impact biosolids costs.

Utah P ollutant Discharge Elimination System (UPDES) Permit Renewal The District has been working with the Utah Division of Water Quality for the past several years on iterations of the UPDES permits for both the North and South Plants. Based on various factors, the permitted limits for ammonia have been one of the main focal points. As indicated earlier in this letter, ammonia (and phosphorus) limits are the main drivers of necessary upgrades to both plants.

he permitted limits for ammonia have been one of the main focal points. As indicated earlier in this letter, ammonia (and phosphorus) limits are the main drivers of necessary upgrades to both plants.

The Wasatch Front Water Quality Council The District has joined nine (9) other POTWs discharging to Utah Lake, the Jordan River and/or Farmington Bay 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 quality concerns surrounding these water bodies. The group provides ongoing funding to hire a full-time PhD level scientist to assist the group in understanding and responding to technical issues and to direct research contracts funded 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 planning issues such as procuring equipment, materials, transportation, etc. We provide day-to-day supervision of employees as needed. Other members of 11 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 permit. Currently the permits for both plants contain permit limits for biochemical oxygen demand, total suspended solids, ammonia, dissolved oxygen, oil and grease, E. coli, pH, percent removal, total residual chlorine , and recently phosphorus . The plants must also routinely conduct Whole Effluent Toxicity (WET) testing. This is a biological test involving extremely sensitive sentinel species to detect any toxicity in the treatment

rus . The plants must also routinely conduct Whole Effluent Toxicity (WET) testing. This is a biological test involving extremely 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 nature of our treatment plant processes permit violations are inevitable. Permit violations are taken extremely seriously, and aggressive remedial actions are always taken when they occur.

As discussed, lower ammonia limits have created difficulty for the North Plant to achieve consistent compliance. This can happen when stressors on the process biology cause sub optimal performance.

In December 2020 and January 2021 cold temperatures caused biology to underperform and resulted in ammonia violations. In July and August of 2021 an equipment failure resulted in more ammonia violations. Then in July of 2022 another process change (using mechanical dewatering instead of solar dewatering of solids residuals) caused another violation. In October of 2022 the State issued a Notice of Violation (NOV) for these exceedances. The District is working with the State to settle the matter .

Meanwhile engineering design proceeds for the i mprovements necessary to achieve compliance with current and future ammonia limits.

South Plant The South Plant had good compliance for 2022. Process changes to correct violations from 20202021 were effective, and construction was completed on a moving bed bioreactor in June of 2022 which then improved performance further regarding ammonia.

DWQ performs on -site detailed audits of plant maintenance, the industrial pretreatment program, and

a moving bed bioreactor in June of 2022 which then improved performance further regarding ammonia.

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.

Current Major Activities - Wasatch Resource Recovery (WRR) Resource Recovery The Water Environment Federation (WEF), the professional association for the wastewater industry , has undertaken rebrand ing wastewater treatment 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 environment. Wastewater and its constituents are not a pollutant to be gotten rid of, but 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 landfill 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 energy, plant nutrients and organic carbon.

Over one hundred (100) resource recovery facilities in the U.S. have become net energy exporters in addition to providing all their own energy requirements. This has been achieved by: 12 o Increased capture of raw biosolids before any aerobic treatment of the wastewater .

o Pretreatment of biosolids to enhance digestibility .

o Advanced digestion technologies such as phased digestion.

o Import organic material such as Fats, Oil, and Grease (FOG) from grease traps.

o Advanced gas -scrubbing technologies to increase utilization options.

igestion technologies such as phased digestion.

o Import organic material such as Fats, Oil, and Grease (FOG) from grease traps.

o Advanced gas -scrubbing technologies to increase utilization options.

o Utilization of digester gas (methane) to generate power.

o Sale of methane as renewable natural in the natural gas utility grid .

o Public/Private Partnerships to provide technical and business expertise as well as capital.

Wasatch Resource Recovery Beginning in 2015 the District began to explore the potential for a food waste to energy project. T he District collaborated with ALPRO; a Utah company founded to develop resource recovery projects.

An initial feasibility study was performed which found that a project to produce energy from imported organic wastes 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 highly likely to divert their waste to the Resource Recovery Project once it is operational to make the project feasible. T he major sources of organic waste for the project are: o Food processing wa ste.

o Source Separated Organics (SSOs) from grocery stores, restaurants, schools, etc.

o Fats, oil, and grease from grease trap pumping.

o Bottled beverages from bottling companies.

o Aerobic biosolids from wastewater treatment plants.

These organic wastes are extensively pretreated and then anaerobically digested. The methane gas produced by digestion is scrubbed of impurities and injected into the natural gas utility system. The project will ultimately produce three million cubic feet of renewable natural gas (RNG) per day. This

d by digestion is scrubbed of impurities and injected into the natural gas utility system. The project will ultimately produce three million 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 Petroleum for the transport and sale of the RNG produced by the project. WRR has contracts with Dominion Energy to trans port the RNG and a 12-year purchase agreement with British Petroleum of the sale of its RNG. It pays the WRR $10.50 per decatherm (million BTUs). Over the last several years, the market for RNG has strengthened considerably. The current price is as much as $25 per decatherm. WRR management is seeking to renegotiate this contract.

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 economics. Their assignment was to document and opine on all aspects of the project that would be required to support a bond rating for sale of bonds to fi nance the project. The District made the decision to proceed with the Project 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-fence operations of feedstock procurement, customer serv ice, permits, biosolids marketing and delivery and energy sales. The District is responsible for the operation and

onsible for the outside-the-fence operations of feedstock procurement, customer serv ice, permits, biosolids marketing and delivery and energy sales. The District is responsible for the operation and maintenance of the waste receiving, anaerobic digestion, RNG scrubbing and solids processing facilities.

13 The Wasatch Resource Recovery project is a joint venture. A six (6) member management committee governs this enterprise. The District is represented on this committee by Board of Trustee members; Brian J. Horrocks, Ryan T. Westergard and John K. Davies. ALPRO SD, LLC, our joint venture partner, is represented by Bruce Alder, Eric Alder, and L. Scott Rogers. Eric Alder serves as Chair.

This is a large and complex project on a small site. The high 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 proceeded smoothly and on budget. The project is, however, 30 -months behind schedule. This is due entirely to the gas scrubbing equipment. The supplier of the gas scrubbing equipment is a new company located in the Netherlands. There were significant problems wi th engineering issues, shop drawing approvals, equipment delivery and electrical code compliance. Commissioning of the unit has had numerous problems and is not yet complete.

The Project began sending gas to the grid in January 2021. Gas has been delive red to the grid intermittently since that time. All significant problems except the gas compressor that delivers gas to

The Project began sending gas to the grid in January 2021. Gas has been delive red to the grid intermittently since that time. All significant problems except the gas compressor that delivers gas to the membrane filters have been solved. This main compressor was eventually replaced by the manufacturer. The change out of this compr essor was completed on 3/15/2022. The motor for the new compressor failed on 3/31/2022. The motor was rewound, and the compressor was back in service on 5/4/2022. During the first day of operation the rewound motor was overheating. A number of reviews by the electrician , the compressor supplier, and the motor manufacturer as well as two outside consultants have not been able to identify a root cause of the problem. The suppliers are proposing a new motor . Fortunately, there are several in stock at various sites. It is expected that we can have one here in five to ten days. It will then take another week to change out the motors.

Current Major Activities - Treatment Plants North Plant As reported in previous Letters of Transmittal, the District has been working to pilot and ultimately use algae full scale to treat for nutrients (phosphorus and ammonia nitrogen specifically). The District has encountered significant difficulty getting this technology to work properly. Additional time to troubleshoot and further pilot was requested by the District of the State of Utah Division of Water Quality . However, the State could not grant any more time . As such the District is pivoting in its design for North Plant improvements away from Algae as a treatment mechanism and to the technology already successfully employed at the South Plant. The process is known as a Moving Bed Bioreactor (MBBR) .

for North Plant improvements away from Algae as a treatment mechanism and to the technology already successfully employed at the South Plant. The process is known as a Moving Bed Bioreactor (MBBR) .

Engineering design is progressing on plan upgrades and must be completed and submitted to the State for review by September of 2023. Construction must be bid out by the end of January 2024, and completed by August of 2026. These dates are all part of the North Plant UPDES permit and enforceable as such.

This plant is generally in a clean, orderly, and workmanlike condition. There is no known deferred maintenance that is not addressed in the plant rehabilitatio n project which would adversely affect permit compliance or the life of significant, existing plant assets .

South Plant The District had been following a policy of minimizing treatment plant upgrades and improvements until the outcome of proposed new nut rients limits bec ame clearer. With new limits in place rehabilitation of the South Plant and construction of ammonia removal facilities was begun. These facilities consist of the MBBR as previously discussed as well as some other rehabilitation and phosphorus control improvements.

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

Biosolids The treatment and ultimate utilization of biosolids generated during the wastewater treatment process and WRR operations is a significant part of operations. Regulations pertaining to biosolids are

s The treatment and ultimate utilization of biosolids generated during the wastewater treatment process and WRR operations is a significant part of operations. Regulations pertaining to biosolids are detailed and demanding. Compliance with regulations and maintaining viable biosolids management options is necessarily a high priority for the District.

The South Davis Sewer District is committed to following the principles of conduct set forth in the National Biosolids Code of Good Practice. It is the polic y of the District to promote and practice the beneficial use of biosolids and the reuse/recycling of resources. The District strive s to maintain, improve, and protect the environment during the production and treatment of biosolids. The District makes every effort to ensure that the public is not endangered or inconvenienced by the production and treatment of biosolids. The District seeks to obey all applicable federal, state, county and local laws, rules, and regulations.

Long-term biosolids options continue to be a concern for all POTWs in the area. Historically , the District has beneficially used its biosolids as a soil amendment in local agricultural operations. The 2021 spring and fall hauling and spreading campaigns went very smoothly. We have wet weather issues that 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 treatment p lants produce 1,000 dry tons per year. Th is increased volume of biosolids to be utilized presents challenges, but also creates opportunities. The current land application site is in a

treatment p lants produce 1,000 dry tons per year. Th is increased volume of biosolids to be utilized presents challenges, but also creates opportunities. The current land application site is in a conservation easement which 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 sites are being sought. 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 products is commercialization for the agricultural market. We are currently negotiating a contract with a fertilizer broker to market the ammonium sulfate.

Current Major Activities - Collection System Most of the District's trunklines (lines over 8- inches in diameter) 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 chemicals under certain conditions. Historically, if RCP needed to be replaced the only alternative was to excavate and install new pipe. A process called Cured -InPlace-Pipe (CIPP) has become a technically and economically superior option.

In this process, a tube of polyester felt and/or fiberglass is saturated 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 resulting composite pipe is structurally independent of the original pipe and provides both a smooth and corrosion resistant product. This process involves less interference with

water or steam. The resulting composite pipe is structurally independent of the original pipe and provides both a smooth and corrosion resistant product. This process involves less interference with traffic and other activities, is accomplished in a fraction of the time, and is far less expensive than traditional cut-and- cover methods.

Laterals The District has its own equipment for lining 4 -inch diameter laterals. We have lined an aver age of ninety-two (92) laterals per year over the last three-(3) years, saving the District and homeowners many thousands of dollars.

15 The District's lateral lining program provides an effective way for the District to rehabilitate the District-owned portion of a lateral that has roots and/or structural deficiencies. In the event that the problem(s) are in both the District-owned and the privately-owned portion of an owner-occupied residential lateral, the District works with the property owner to line t heir portion of the lateral. The cost to line the privately -owned portion of the lateral is billed back to the property owner. The District takes no responsibility for commercial laterals, including rentals.

The table and chart below show the work orders associated with lateral linings completed for the three (3) years leading up to and including this report year (based on actual finish dates). In addition to tasks related to lining the lateral (1 - Line Lateral (CIPP)), which may include installing a cleanout, it is critical that the District clean and maintain the lateral (1 -Clean Lateral) between the time the lateral is identified for lining, and it can be lined. In some instances, the finished liner extends into the sewer main and must be trimme d following the lining (1-Cut Liner).

WORK ORDER 2020 2021 2022 TOTAL

identified for lining, and it can be lined. In some instances, the finished liner extends into the sewer main and must be trimme d following the lining (1-Cut Liner).

WORK ORDER 2020 2021 2022 TOTAL 1- Line Lateral (CIPP) 83 100 103 286 1-Clean Lateral 148 155 159 462 1-Cut Liner 44 54 68 166 TOTAL 275 309 330 914 Work O rders (I mmediate and Unstable Damage) The District generat es work orders for immediate and unstable damage. These work orders are assigned a priority of URGENT. The tables and charts below show the number of work orders completed by our crew s for immediate and unstable damage for the three (3) years leading up to and including this report year.

Work Orders (Stable Damage) District staff generate work orders to stable damage, which are assigned a priority of HIGH, MEDIUM, or LOW depending on the nature and severity of the damage. Work orders for stable damage may not be completed for an extended period, but when crews are dispatched to repair a specific type of stable damage, they use priority to determine the order in which they will complete the work. The table and chart below show the total work orders completed by the crew to address stable damage for the three (3) years leading up to and including this report year.

16 The collection system is in all respects in clean, orderly, and workmanlike condition. The Collection System Operations Facility and collection system mobile equipment is likewise in workmanlike condition. There is no deferred maintenance, which would advers ely affect the performance, permit compliance, or the life of these assets.

Major Activities - Future Accounting The District has purchased a full accounting software package from Black Mountain Software to

ect the performance, permit compliance, or the life of these assets.

Major Activities - Future Accounting The District has purchased a full accounting software package from Black Mountain Software to support WRR . We have completed configuring and populating this software to support the WRR project. This accounting system track s all WRR costs for labor, equipment, parts, materials, power, chemicals etc. The accounting workload for these operations and maintenance cost s is significant.

We have added one full-time clerk for this workload .

Safety District facilities are periodically assessed to identify potential safety hazards. The purpose of these evaluations is to provide the information necessary to improve the working environment and reduce the potential for injuries.

The major safety and health related regulations require written program components, many of which are extensive. The District has developed, writ ten, and implemented programs specific to our facilities.

The implementation process involves working with all District personnel to ensure that everyone understands their role within the program. Those personnel affected by a given regulation or program must be trained o n proper, safe work practices through regularly scheduled training sessions. They also get hands -on instruction and advice whenever necessary. In 2021 a safety and industrial hygiene consulting firm completed updating all the District's health and safety programs and documents.

The safety program creates a base from which a safety culture can thrive. As employees develop an attitude of working with safety in mind, accident risk goes down, and, as a result, there are fewer on the job incidents. Lower a ccident rates reduce insurance premiums and workers compensation rates.

titude of working with safety in mind, accident risk goes down, and, as a result, there are fewer on the job incidents. Lower a ccident rates reduce insurance premiums and workers compensation rates.

Cyber Security The District worked closely with our IT services provider, Clearlink IT, to review and complete an application for cyber liability insurance at the end of 2021 that l ed to the purchase and implementation of new cyber security measures. Among those measures, the District entered into a contract with Adlumin for security information and event management, including 24x7 Security Operations Center (SOC) services. Additionally, the District integrated IRONSCALES email security services with Microsoft Office 365, augmenting protections for phishing and impersonation attacks that are on the rise. The District also implemented multifactor authentication on all email accounts and other online accounts where possible as well as on Virtual Private Network (VPN) connections for employees whose work activities require remote connection to District serve rs.

In February 2022, the District hosted a training with Olympus Insurance on cyber security and email fraud for all employees. Regular training will become part of the District’s ongoing cyber security efforts.

U.S. Environmental Protection Agency ( EPA) Operating Grant EPA has a superfund, groundwater remediat ion project for removing a plume of perchlorethylene (PCE), a dry-cleaning solvent. This plume is located between 1100 West and Redwood Road and between 500 South and 400 Nor th in West Bountiful. The District was awarded a grant to operate 17 this facility for 10 years. The District’s proposal was half the amount that EPA had budgeted. Our

etween 500 South and 400 Nor th in West Bountiful. The District was awarded a grant to operate 17 this facility for 10 years. The District’s proposal was half the amount that EPA had budgeted. Our twelve (12) years of operating (operating unit 2) OU2 ha ve been successful and about one -half of the originally proposed budget. Responsibility for OU2 has been transferred to the Utah Division of Waste Management and Radiation Control (DWMR). DWMR has asked the District to continue operating the system.

Risk Management For 2022 and 2023 the D istrict’s Property, Inland Marine, Crime, General Liability, Wrongful Acts/Professional Liability , Employment Practices Liability, Automobile Liability, Excess Liability, Network Security/Data Breach Liability, (WRR), Wrongful Acts/Professional Liability (WRR), and Excess Liability (WRR) insurance i s provided by the Philadelphia Indemnity Insurance Company XV). Environmental Liability is provided by Navigators (A+ XV). The local agent, Olympus Insurance Agency, specializes in insuring local government agencies and provides exte nsive risk management support including audits, training, and consultation.

Worker’s Compensation insurance for 2022 and 2023 is being provided by Utah Work er’s Compensation Fund (A XI). The District's experience modifier is 1.07. This is up from 0. 95, a reflection of the higher number of claims for 2019 and 2020. The number of claims in 2021 is down to three (3) from 2019 and 2020’s five (5) and seven (7) respectively . The District is self-insured for

ection of the higher number of claims for 2019 and 2020. The number of claims in 2021 is down to three (3) from 2019 and 2020’s five (5) and seven (7) respectively . The District is self-insured for unemployment. The District is also self-insured for vehicle casualty except for our expensive collection system cleaning trucks and closed-circuit television units, which are insured for casualty as well as liability .

The District believes in being proactive in providing a safe and healthy workplace for its employees.

We provide training in -house and use resources such as the Utah Workers Compensation Fund and the Utah Safety Council. In addition to in-house safety 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 States 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 the fiscal year ended December 31, 2021. This was the 24th consecutive year that the District has achieved this prestigious award. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive Annual Financial Report. This report must satisfy both generally accept ed accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one (1) year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement progra m’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

omprehensive Annual Financial Report continues to meet the Certificate of Achievement progra m’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 2000 issue, “The Certificate of Achievement Award [is] the real standard -setter in the realm of professional accomplishment.”

An Annual Financial Report is not required by the Governmental Accounting Standards Board (GASB), but according to the GASB Code Sec. 2200.101, "every government entity should prepa re and publish, as a matter of public record, an ANNUAL FINANCIAL REPORT that encompasses all funds of the primary government." The District Board of Trustees agrees that good governance requires that the District produce an Annual Comprehensive Financial Report .

18 Conclusion This report has been prepared to provide meaningful data and commentary to anyone interested in understanding the financial and other activities of the South Davis Sewer District. Further information is available in the Management's Discussion and Analysis and in the N otes 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 tremendous amount of time and effort put into the ANNUAL COM PREHENSIVE FINANCIAL REPORT and the Audit by our Accounting Manager, Mark R. Katter and the manager of our Audit, Kyle Greene .

We would also like to express our appreciation to the District’s Board of Trustees for providing their continued support in main taining the highest standards of professionalism in the management of the

would also like to express our appreciation to the District’s Board of Trustees for providing their continued support in main taining the highest standards of professionalism in the management of the District’s finances.

Respectfully submitted, Matthew J. Myers, P.E. Mark R. Katter , CPA General Manager/Treasurer Accounting Man ager/Clerk SOUTH DAVIS SEWER DISTRICT Organizational Chart For the Year Ending December 31, 2022 CITIZENS BOUNTIFUL CENTERVILLE NORTH SALT LAKE Kendalyn K. Harris, Mayor Clark Wilkinson, Mayor Brian J. Horrocks, Mayor WEST BOUNTIFUL WOODS CROSS Kenneth Romney , Mayor Ryan T. Westergard, Mayor UNINCORPORATED DAVIS COUNTY AREA Lorene Miner Kamalu, Commission Chair BOARD OF TRUSTEES Howard G. Burningham, Chair Mark W. Preece, Vice Chair Ryan T. Westergard Leonard K. Arave Kendalyn K. Harris Brian J. Horrocks Gina H. Hirst AUDITOR Kyle Greene Squire CPA ’s ATTORNEY Mark H. Anderson GENERAL MANAGER Matthew J. Meyers 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 20 ENGINEERING Lanese Hendrickson District Engineer WATER QUALITY GROUP Theron G. Miller PhD Director SOUTH DAVIS SEWER DISTRICT Board of Trustees As of December 31, 2022 Name Title Representing Term Expires Howard G. Burningham (elected) Chairman District at Large 12/31/2025 Mark W. Preece (appointed) Vice-Chairman West Bountiful 12/31/2024

Expires Howard G. Burningham (elected) Chairman District at Large 12/31/2025 Mark W. Preece (appointed) Vice-Chairman West Bountiful 12/31/2024 Ryan T. Westergard (appointed) Trustee Woods Cross City 12/31/2024 Brian J. Horrocks (appointed) Trustee North Salt Lake City 12/31/2025 Kendalyn Harris (appointed) Trustee Bountiful 12/31/2025 Gina H. Hirst ( appointed ) Trustee Centerville 12/31/2023 Leonard K. Arave (appointed) Trustee District at Large 12/31/2025 Source: District human resource and election records 21 Ryan T. Westergard Leonard K. Arave Howard G. Burningham Mark W. Preece Kendalyn K. Harris Brian J. Horrocks Gina H. Hirst 22 SOUTH DAVIS SEWER DISTRICT 2022 Meeting Schedule Board of Trustees PUBLIC NOTI CE is hereby given that the 20 22 Meeting Schedule of the Board of Trustees of the South Davis Sewer District, Davis County, Utah, is as follows: REGUL AR MEETINGS DATES January 20th February 17th March 17th April 21st May 19th June 23rd July 21st August 18th September 15th October 20th November 17th December 1st The regular meetin g 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 Cities Serviced by South Davis Sewer District Approximate Square Date City Population (2022) Miles Incorporated Centerville 16,884 5.99 May 5, 1915

Sewer District Approximate Square Date City Population (2022) Miles Incorporated Centerville 16,884 5.99 May 5, 1915 West Bountiful 5,917 2.96 Dec. 31, 1948 Bountiful 49,107 13.22 Dec. 5, 1892 Woods Cross 11,410 3.76 Sep. 4, 1930 North Salt Lake 21,907 8.45 Sep. 3, 1946 Totals 105,225 Source: City Offices, Davis County, State of Utah, U.S Census, Wasatch Front Regional Council (WFRC) 23 SOUTH DAVIS SEWER DISTRICT Davis County and District Map For the Year Ending December 31, 2022 FINANCIAL SECTION Salt Lake City Office 801.533.0409 215 S State Street #850 Salt Lake City, UT 84111 squire.com Orem Office 801.225.6900 1329 South 800 East Orem, UT 84097 Squire is a dba registered to Squire & Company, PC, a certified public accounting firm -24-INDEPENDENT AUDITOR’S REPORT Board of Trustees South Davis Sewer District Report on the Basic Financial Statements Opinion We have audited the statement of net position of Sout h Davis Sewer District (the District) as of and for the year ended December 31, 2022, and the statement of revenues, e xpenses, and changes in net position and statement of cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of South Davis Sewer District as of December 31, 2022, and the changes in its financial

ion, the financial statements referred to above present fairly, in all material respects, the financial position of South Davis Sewer District as of December 31, 2022, and the changes in its financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion We conducted our audit in accordance with auditing st andards generally accepted in the United States of America (GAAS) and the standards applicable to the financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the A udit of the Financial Statements section of our report. We are require d to be independent of South Davi s Sewer District and to meet our other ethical responsibilities, in accordance with the rele vant ethical requirements relating to our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements South Davis Sewer District’s management is responsib le for the preparation and fair presentation of the financial statements in accordance with accounting pr inciples generally accepted in the United States of America, and for the design, implementation, and ma intenance 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.

In preparing the financial statements, management is required to evaluate whether there are conditions or

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substa ntial doubt about the District’s ability to continue as a going concern for twelve months beyond the financ ial statement date, including any currently known information that may raise substa ntial doubt shortly thereafter.

-25-Auditor’s Responsibilities for the Au dit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high le vel of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than fo r one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misreprese ntations, or the override of internal control.

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we: Exercise professional judgment and maintain pr ofessional skepticism throughout the audit.

Identify and a ssess the risks of material misstatem ent of the financial statements, whether due to

we: Exercise professional judgment and maintain pr ofessional skepticism throughout the audit.

Identify and a ssess the risks of material misstatem ent of the financial statements, whether due to fraud or error , and design and perform audit procedures responsive to those risks. Such procedures include examining, o n a test basis, evidence regarding the amounts and disclosures in the financial state ments.

Obtain an understanding of internal control rele vant to the audit in order to design audit procedures that are appropriate in the circumstanc es, but not for the purpose of expressing an opinion on the effectivene ss of the District’s in ternal control. Accordingly, no such opini on is expressed.

Evaluate the appropriateness of accounting polic ies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant au dit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the Unite d States of America require that management’s discussion and analysis, the information about infrastructure assets reported using the modified approach, the schedules of the District’s proportionate share of the net pension liability (asset) – Utah Retirement

analysis, the information about infrastructure assets reported using the modified approach, the schedules of the District’s proportionate share of the net pension liability (asset) – Utah Retirement Systems, the schedules of District c ontributions – Utah Retirement Systems, and the related notes to the required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is th e responsibility of management and, although not a required 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 operati onal, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which cons isted of inquires of management regarding the methods of preparing the information and comparing the information for consis tency with management’s -26-responses to our inquiries, the basic financial stat ements, 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 pr ovide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The schedule of revenues and expenses, budgetary and

as conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The schedule of revenues and expenses, budgetary and actual and the schedule of impact fees and certifica tion are presented for purposes of additional analysis and are not a required part of the basic financial st atements. Such information is the responsibility of management and was derived from and relates direc tly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financ ial statements and certain additional procedures, including comparing and reconciling such informati on directly to the underlying accounting and other records used to prepare the basic fi nancial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of re venues and expenses, budge tary and actual and the schedule of impact fees and certification are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opini on or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other

cover the other information, and we do not express an opini on or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material incons istency exits between the other information and the basic financial statements, or the other information othe rwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrect ed material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued a report, dated August 14, 2023, on our consideration of the District’s internal cont rol over financial reporting and on our tests of its compliance with certain provisions of laws, regula tions, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of th at testing, and not to provide an opinion on the effectiveness of the District’s 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 the District’s internal control over financial reporting and compliance.

Orem, Utah August 14, 2 023 27 SOUTH DAVIS SEWER DISTRICT Management’s Discussion and Analysis For the Fiscal Year Ended December 31, 2022 (Unaudited ) This section presents management’s discussion and analysis of the financial position and performance of the South Davis

scussion and Analysis For the Fiscal Year Ended December 31, 2022 (Unaudited ) This section presents management’s discussion and analysis of the financial position and performance of the South Davis Sewer District (District) for the fiscal year end ing December 31, 2022, with comparative totals for December 31, 20 21. 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 . See p p.1-23, in the Introductory Section, the Basic Financial Statements (pp. 59-63) and Notes to the Financial Statements (pp. 64-82,) and the other information which is presented in the Financial Section and Statistical Section of this Annual Comprehensive Financial Report (ACFR) .

Financial Highlights • The assets and deferred outflows of the District exceeded its liabilities and deferred inflows of resources at the close of the fiscal year 20 22, therefore the 2022 net position is $98,316,452 a 5% increase from 20 21. In 2021 the District’s net position was $ 94,061,962 . Net investment in capital assets is 90% of the District’ s total net position .

• Three debt service payments were made: Series 2017 A taxable revenue bond , Series 2019 revenue bond and Series 2021 revenue bond, were $1,638,513, $788,651, and $613, 611, respectively, totaling $ 3,040,775 .

• 2022 impact fee revenue was $ 353,562, a 55% decrease from 20 21. Impact fee revenue in 20 21 was $778,076 . The 2022 impact fee revenue was primarily the result of the following major construction developments : Towne Plaza, Orchard Grove, The Ridge, Cottages on Main, Village Station, and Shamrock Station. You can read more about the District’s impact fee revenue in the Supplement al Information Section

nts : Towne Plaza, Orchard Grove, The Ridge, Cottages on Main, Village Station, and Shamrock Station. You can read more about the District’s impact fee revenue in the Supplement al Information Section pp. 93-95, and p.100 in the Statistical Section.

• Interest income in 202 2 increase came from cash, cash equivalents, and investments that totaled $273,562 a 442% increase from 2021. Interest income in 20 21 was $ 50,435 . (p.101 Statistical Section).

• Operating revenues for 202 2 and 20 21 were $ 10,817,73 5 and $ 9,542,350 respectively, a 13% increase .).

2022 operating expenses ( net depreciation) increased by 16%, or $ 1,185,820 from 20 21. (See pp. 53-54 in the MD&A Section; p. 61 in the Financial Statements; and pp. 98,99 in the Statistical Section).

Overview of the Financial Statements This analytical review and communication are intended to serve as an introduction to the District’s financial position . The District’s basic financial statements are comprised of the following : (1) the Statement of Net Position , (2) the Statement of Revenues, Expenses , and Changes in Net Position, (3) the Statement of Cash Flows, ( 4) Notes to Financial S tatements, (5) Required Supplementary I nformation, and (6) Other S uppleme ntal Information in addition to the basic financial statements themselves.

The scope of the District’s financial statements is the entire entity . The basis of accounting is accrual, and the measurement focus is all economic resources. All revenues and expenses are recorded, regardless of when the cash transactions occur.

The District uses an enterprise fund to account for the fi scal activities relating to the collection and treatment of

venues and expenses are recorded, regardless of when the cash transactions occur.

The District uses an enterprise fund to account for the fi scal activities relating to the collection and treatment of wastewater in South Davis County. An enterprise fund is a proprietary type of fund (business type) used by governments to report an activity for which a fee is charged to users for goods or servi ces provided. The financial statements of the District are designed to provide readers with a broad overview of the District’s finances in a manner 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, deferred outflows of resources, liabilities, and deferred inflow of resources, with the difference reported as net position . Over time, increases or decreases in the net position may serve as a useful indicator of the financial condition of the District.

28 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 soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows.

The Statement of Cash Flows presents information about the District’s cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash payments, and net changes in cash resulting from operating , investing, and financing activities and provides a nswers to such questions as where cash came from, what was cash used for, and what was the change in cash balance during the reporting period.

ing , investing, and financing activities and provides a nswers to such questions as where cash came from, what was cash used for, and what was the change in cash balance during the reporting period.

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

Other supplementary I nformation is additional to the basic financial statements and accompanying notes . These reports present certain required and non -required supplementary information about 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 operating 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 n et position at the end of fiscal year 2022 was $98,316,452 (5% increase from 20 21).

(see pp. 35 ,36 Financial Statements and p p.29, 30 in the MD&A Section, and p p. 35, 36 in the Statistical Section).

The largest portion of the District’s net position reflects its investment in capital assets less any related debt used to acquire (90% in 202 2), those assets. The District uses these capital assets to provide wastewater s ervices to its customers (citizens) . It should be noted that resources needed 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

esources needed 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 2022 in the amount of $ 38,353,967 , in the form of three revenue bonds to finance the District ’s renewal energy project (WRR) , treatment plant rehabilitation , and the advance biological nutrient removal system (A BNR ) project.

In 20 22 the District’s operating revenues were $10,817,73 5, an increase from $9,542,380 (2021) by 13%. 2022 operating expenses were $8, 451,481 (net depreciation) a 16% increase from 2021 ($ 7,255,661 ). See pp. 29, 30 in the MD&A section , pp. 35-37 in the Financial Statements, and in the Statistical Section pp. 75-80 and pp. 103,104 .

Key factors driving the preceding results include : Sewer service revenue for 20 22 was $ 9,999 ,186 an increase of 24% compared to fiscal year 20 21 ($8,093,281 ). This increase came from continued growth in the new construction of homes and businesses within the District and a rate increase from $ 15.50 per EDU per month to $ 18.00 per EDU per month effective January 2022. The purpose of this rate increase was to cover inflationary costs and debt service. (see pp.

75,80, and 86 in the Statistical Section and the Notes to the Financial Statements, pp. 39-55 of this report for more information ).

2022 and 20 21 property tax revenue were $4,838,069 and $ 3,448,081 respectfully, an increase of 40%. Davis County has a collection rate of 98.5%, the increase in property taxes was due to a property tax rate increase.

(see p 79 in the Statistical Section for more information ).

Contribution s to capital revenue were $2,093,844 and $318,187 and for 202 2 and 2 021 respectively .

to a property tax rate increase.

(see p 79 in the Statistical Section for more information ).

Contribution s to capital revenue were $2,093,844 and $318,187 and for 202 2 and 2 021 respectively .

Contributions to capital revenue primarily come s from deeded sewer lines to the District from developers and contractors. 2021 contributions were down as result of a COVID creating supply and labor issues for the construction industry. (see p .89 and p. 98-102-119 in the Statistical Section for more information ).

Impact fee revenue is a result of new buildin g construction and development . Impact fee revenue was $353,562 and $1,092,233, for 202 2 and 2021 respectively . (see pp. 93-95 in the Supplemen tary Information Section ).

With the implementation of the Modified Approach to Accounting for Infrastructure in 2004 per GASB S No.34 depreciation expense for 2022 and 2021 were $292,787 and $467,448 respectively. Depreciation decreased in 29 2022 due to asset disposals and longevity. The District assets are lasting longer because of the execution of effective maintenance facilitating th is longevity. The Modified Approach is discussed in greater detail in the red Supplementa ry Information section of this report , pp.62-67. Also, see the Notes to the Financial Statements, pp.

39-55 In 2022 person nel services ( salaries and benefit expenses ) decreased 3% from 20 21. This is a result of a tight labor market, health care increase s, and the increase in the cost of living (COLA) (see financial statements p .

37).

The District had a net pension liability totaling $0 and $110,823 in 2022 and 2021 respectively .

South Davis Sewer District Condensed Statement s of Net Position 2022-2021 Fiscal Year Fiscal Year Dollar Percent 2022 2021 Change Change

ity totaling $0 and $110,823 in 2022 and 2021 respectively .

South Davis Sewer District Condensed Statement s of Net Position 2022-2021 Fiscal Year Fiscal Year Dollar Percent 2022 2021 Change Change Current and Other Assets 22,795,190 $ 25,454,172$ (2,658,982) $ -10% Capital Assets 118,938,307 110,882,996 8,055,311 $ 7% Total Assets 141,733,497$ 136,337,168$ 5,396,329 $ 4% Deferred Outflows of Resources 913,405 745,609 167,796 $ 23% Total Assets & Deferred Outflows of Resources 142,646,902$ 137,082,777$ 5,564,125 $ 4% Current Liabilities 3,811,384 2,594,642 1,216,742 $ 47% Non-Current Liabilities 37,093,368 38,982,100 (1,888,732) $ -5% Total Liabilities 40,904,752 $ 41,576,742$ (671,990) $ -2% Deferred Inflows of Resources 3,425,698 1,444,073 1,981,625 $ 137% Total Liabilities & Deferred Inflows of Resources 44,330,450 $ 43,020,815$ 1,309,635 $ 3% Net Position: Net Investment in Capital Assets 88,632,423 $ 76,143,162$ 12,489,261 $ 16% Restricted - Net Pension Asset 3,035,089 10,068,063 (7,032,974) $ -70% Restricted - Debt Service - 2,029,815 (2,029,815) $ 0% Unrestricted 6,648,940 5,820,922 828,018 $ 14% Total Net Position 98,316,452 $ 94,061,962$ 4,254,490 $ 5% Total Liabilities, Deferred Inflow of Resources & Net Position 142,646,902$ 137,028,777$ 5,618,125 $ 4% Collection System 30% Treatment Plant 42%Pre-treatment 4%Capital Expenses 9%Water Quality GroupExpenses by Department 2022

rces & Net Position 142,646,902$ 137,028,777$ 5,618,125 $ 4% Collection System 30% Treatment Plant 42%Pre-treatment 4%Capital Expenses 9%Water Quality GroupExpenses by Department 2022 30 South Davis Sewer District Revenues, Expenses, and Changes in Net Position 2022 - 2021 Fiscal Year Fiscal Year Dollar Percent 2022 2021 Change Change Operating Revenues: Sewer Service Fees 9,999,186 $ 8,093,281 $ 1,905,905 $ 24% Special Treatment Fees 658,907 652,034 6,873 1% Inspection & Project Fees 63,660 85,118 (21,458) -25% Other 95,982 711,947 (615,965) -87% Total Operating Revenues 10,817,735 $ 9,542,380 $ 1,275,355 $ 13% Operating Expenses: Operating Expenses 4,962,536 3,670,645 $ 1,291,891 $ 35% Salaries & Benefits 3,488,946 3,585,016 (96,070) -3% Depreciation 292,788 467,448 (174,660) -37% Total Operating Expenses 8,744,270 $ 7,723,109 $ 1,021,161 $ 13% Non-Operating Revenue (Expense) General Property Tax 4,838,069 $ 3,448,081 $ 1,389,988 $ 40% Impact Fees 353,562 778,076 (424,514) -55% Interest Income 273,562 50,435 223,127 442% Interest Expense (1,234,371) (1,158,733) (75,638) 7% Intergovernmental Contributions 804,000 800,000 4,000 1%

% Interest Expense (1,234,371) (1,158,733) (75,638) 7% Intergovernmental Contributions 804,000 800,000 4,000 1% Gain (Loss) on Disposal of Property 48,615 38,463 10,152 26% Unrealized Gain (Loss) on Investments 5,568 (8,438) 14,006 -166% Contributions to Other Governments (163,918) (163,918) 0% Impairment Loss (2,500,000) (2,500,000) 0% Equity in Earnings (Loss) (2,337,907) (1,293,403) (1,044,504) 81% Total Non-Operating Revenue (Expense) 87,180 $ 2,654,481 $ (2,567,301) $ -97% Increase in Net Position Before Capital Contributions 2,160,646 $ 4,473,752 $ (2,313,106) $ -52% Capital Contributions 2,093,844 318,187 1,775,657 558% Increase in Net Position 4,254,490 $ 4,791,939 (537,449) -11% Net Position at Beginning of Year 94,061,962 $ 89,270,023 $ 4,791,939 $ 5% Net Position at End of Year 98,316,452 $ 94,061,962 $ 4,254,490 $ 5% Taxes 23% Sewer Fees 52%Special Treatment 4%Impact Fees 6%Interest 2%Other 5% Water Quality Group 8%Revenue by Source 2022 31 Cash, Cash Equivalents, and Investments The District’s cash and cash equivalents that are temporarily 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

nts that are temporarily 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 investment and management of its cash assets in the short -term. The average interest rate s paid by the PTIF for 2022 and 20 21 were 4.28% and 0.38% respectively . A ten-year history of the PTIF interest rates i s found in the Statistical Section p.95.

$1,550,000 is invested with Moreton Asset Management which has a net earning s rate is 3.73% as of December 31, 2022. These funds are considered “sustainable funds.” The fair value as of December 31, 2022, is $1,834,385 .

.

The District has five demand deposit accounts all of which earn interest.

Interest income from cash and cash equivalents in 2022 and 20 21 was $273,562 and $50,435 respectfully , a 442% increase . This increase was the result of increases in the Federal Reserve interest rate . See p p.100, 118 in the Statistical Section for more information.

The Utah State Money Management Act sets forth investment limitations and standards for proper cash management for local government agencies. Th is act also defines the type of securities 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, buildings and treatment plant facilities, a collection system of lines and pipes, energy recovery facility and equipment.

The District had $123,853,926 and $115,576,631 as of 202 2 and 20 21 respectively (historical cost) in capital assets. This

ection system of lines and pipes, energy recovery facility and equipment.

The District had $123,853,926 and $115,576,631 as of 202 2 and 20 21 respectively (historical cost) in capital assets. This represents a net increase of 7% as shown in the table s below : Capital Assets 2022-2021 2022 2021 Change Change Land 3,070,568 $ 3,070,568 $ 0% Infrastructure 93,959,242 91,865,398 2,093,844$ 2% Equipment 14,421,180 13,668,546 752,634 6% Construction in Progress 12,402,936 6,972,119 5,430,817 78% Total 123,853,926$ 115,576,630$ 8,277,295$ 7% Demand Deposits 12% PTIF 59%Investments 18%Cash and Cash Equivalents 32 The m ajor capital asse t events for fiscal year 2022 included the following: • Construction costs for South Treatment Plant rehabilitation are $5,17 5,840.

• Construction costs for North Treatment Plant rehabilitation are $254,977.

• Contribution of sewer lines from developers valued at $2,093,844 .

• Purchased Speedy Light UV LED system for $99,670 .

• Purchased a 1989 Tadano 33 -ton crane for $31,055.

• Purchased 2012 Snorel Boom lift for $38,000 .

• Purchased GapVac Jet Washer for $308,861 • Purchased 2013 Volvo dump truck for $75,000.

• Purchased John Deere 7610 trailer $58,200.

• Purchased 20” tilt deck trailer for 11,600.

• Purchased solids spreader 2021 for $60,650.

• Purchased a horizontal end chopper pump for $86, 150.

• Purchased150 W Cumm ings Portable generator for $54,250 • Disposed 1980 Grove Crane 7.5 ton for $12,150.

• Disposed 1975 Michigan Loader for $19,189.

• Disposed Bear engine analyzer for $22,780.

• Disposed (2) 9000 -gal water tanks for $10,000.

• Disposed (2) Trailers $6,683.

e Crane 7.5 ton for $12,150.

• Disposed 1975 Michigan Loader for $19,189.

• Disposed Bear engine analyzer for $22,780.

• Disposed (2) 9000 -gal water tanks for $10,000.

• Disposed (2) Trailers $6,683.

The Distr ict spent $631,430 on the maintenance and rehabilitation of the collection system and treatment plant assets in 2022. Studies have show n that every dollar of preventative maintenance spent in the first 10 years of an asset will save $4-5 over the second 10 years (Iowa Department of Transportation). The District has an aggressive asset management program to prolong the useful life of its assets.

2022 capital asset additions included: Sewer Lines $2,093,844 Equipment 823,437 Construct ion-In-Progress (CIP) 5,430,817 Total $8,348,097 Additional information on the District’s capital assets can be found in the Required S upplement al Information section ( pp.

62-67), the Statistic al Section pp. 98-102 and the Notes to the Financial Statements, pp.39-55 Debt Administration and Long-Term Liabilities The District issued 20-year taxable revenue bond s (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 (net book value) amount is $ 17,565,967 as of the end of FY2022. The closing date for the bonds was May 17, 2017, and the matur ity date December 1, 2037 . The average coupon rate is 4.17% . Bonds maturing on and after December 1, 2027, are callable at par on December 1, 2026 . Debt service costs were $1, 638,513.

On December 3, 2019, the District issued revenue bonds, Series 2019 in the amount of $12,1 79,000. These bonds will

, are callable at par on December 1, 2026 . Debt service costs were $1, 638,513.

On December 3, 2019, the District issued revenue bonds, Series 2019 in the amount of $12,1 79,000. These bonds will mature December 21, 2039, and have a n average coupon rate of 2.16%. The purpose of the Series 2019 bonds is to fund treatment 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.

On December 21, 2021, the District issued combined utility revenue bonds, Series 2021, in the amount of $10,000,000 to fund additional treatment plant rehabilitation and the ABNR proje ct. These bonds mature in 20 years (2041). The average coupon rate is 2.05% 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 33 indicated that the “A” rating is what Questar or Rocky Mountain Power would have received. The District’s credit rating has not changed.

As of December 31, 20 22, the District had non-current liabilit ies relating to compensated absences due to employees is $758,401, an increase of 10% ($683,957). This was the result of a cost-of-living adjustment (COLA) , merit increases, and two employee s retired . For more informatio n, see the “ Notes to the Financial Statements” pp39-55.

The District had a net pension liability totaling $0 and $110,823 for 2022 and 2021 and respectively . The Utah Retirement System’s actuaries lowered its assumed rate of return of 6.85% and the actual rate of return was 7.5% consequently

y totaling $0 and $110,823 for 2022 and 2021 and respectively . The Utah Retirement System’s actuaries lowered its assumed rate of return of 6.85% and the actual rate of return was 7.5% consequently resulting in a decrease to the net pension liability. See the Notes to Financial Statements, pp . 39-55 and the Required Supplemental Section, pp. 58-61 for more information.

Outstanding Non-Current Debt and Non-Current Liabilities 2022-2021 and 2021-2020 Fiscal Year Fiscal Year Percent 2022 2021 Change Change Compensated Absences 708,401 $ 648,957 $ 59,444 $ 9% Net Pension Liability - 110,823 (110,823) -100% Revenue Bonds Payable 36,384,967 38,222,320 (1,837,353) -5% Total 37,093,368$ 38,982,100$ (1,888,732)$ -5% Modified Approach to Accounting for Infrastructure Starting January 1, 2004, the District elected to use the Modified Approach instead of the Depreciation Approach to manage capital assets and correct any deficiencies of its qualifying networks or subsystems of infrastructure assets (Collection system , lift stations and treatment plant facilities ) as de fined by GASB Statement No. 34 . The Modified Approach reflects a more accurate portrayal of in frastructure value. Using the Depreciation A pproach does not consider the value added or mai ntained due to maintenance and rehabilitation efforts to extend the life of the asset. When possible, the District utilizes the experience and knowledge of its employee s to perform most of the preservation procedures to its infrastructure assets in order to keep costs low.

The District’ s Asset Management Plan (AMP) defines a condition rating scale between 1 and 5, with 1 being very good

preservation procedures to its infrastructure assets in order to keep costs low.

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

Funds totaling $903,000 were budgeted and funds expended were $ 868,000 in 20 22 to rehabilitate and correct those identified deficiencies in the collection system, treatment plants and lift station systems. Funds totaling $981,000 have been budgeted for 20 23. The District has always budgeted and expended significant funds for this purpose . The estimated budget required to maintain and preserve the current overall condition through the fiscal year end ing December 31, 2030, is $6 85,800 per year .

There have been no significant changes in the condition level of the collection system, treatment plants, lift stations and their related subsystems compared to the target levels , (See the table on page s 82-83) 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 next conditional assessment sample is scheduled for 20 23 for all infrastructure assets.

Additional information about the Modified Approach can be found in the Supplement ary Information Section of this report (pp. 62-67) and the Notes to the Financial Statement s, pp. 39-55.

Economic Factors , Next Year’s (2022) Budgets , and Rates • The District continues to approach budgeting for revenues conservatively with the focus on long -term sustainability. The economy in Utah is projected to be strong, especially in the construction and development of

ntinues to approach budgeting for revenues conservatively 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 ( 2023 Governor Economic Report). The unemployment rate in Utah is forecasted at 2.3% for 2023.

Low unemployment is a factor in a strong economy. Currently, Utah is one of the strongest in the United States despite the challenges of COVID , inflation , employment, and supply chain issues.

34 • The 20 23 debt service for the three 20-year revenue bonds, (series 2017 A, 2019 and 2021 ), will be interest payment s totaling $1,170,213 and principal payment s totaling $1,869,000. Total debt service for 202 3 will be $3,039,213.

• The Utah State Tax Commission proposed certified tax rate property tax values for 2023 is $1 3,273,919.295.

According to the Davis County Assessor, property values are to level off in 2023. The certified tax rate revenue for 2023 is projected to be $4,114,915 . The proposed property tax rate for 20 23 is.000 310, a 1.30% increase (.000 306) from 20 22.

• Short-term interest rate s have been significantly trending upward since the 2nd quarter of 20 21. 2022 interest rates are still trending upward due to high inflation , supplies chain shortages, and labor shortages. It is projected the short -term interest rate for 2023 will be above 7.0%.

• $903,000 is budgeted for repairs and maintenance of the District’s infrastructure and is broken down as follows: $540,000 for the c ollection system and lift stations , $363,000 for treatment plants . It is projected that four to six new employees at a projected cost of $ 800,000 will be needed in 20 23 to operate the WRR facility. Revenue from

and lift stations , $363,000 for treatment plants . It is projected that four to six new employees at a projected cost of $ 800,000 will be needed in 20 23 to operate the WRR facility. Revenue from the sale of this energy is projected to be $2,634,000 and tipping fees $579,000.

• To comply with the new nutrient restrictions issued by the Environmental Protection Agency (EPA) and the Utah State Division of Wate r Quality (DWQ) , the District is exploring the possibility of building an nutrient removal facility ( ABNR) that will use algae to facilitate this nutrient removal process . It is anticipated th is algae project will cost approximately $30 million and would be funded by state revolving loans . As of December 31, 2022, this was still in the planning and feasibility stage.

• A monthly sewer service rate increase in 2023 is probable. The current monthly sewer service rate is $18.00. The purpose of these rate increases is to increase is to cover additional debt service of the ABNR and District treatment plant s rehabilitation expenses. As of the date of this report, the District is still exploring i f additional funding will be needed (sewer service rate increase) .

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 transparency in its operations. If you have questions about this report or need additional information, please contact the District’s General Manager , Matt Myers , or the Accounting Manager , Mark Katter , at 1800 W 1200 N, West Bountiful, mailing address P. O. Box 140111, Salt Lake City , Utah 84 114-0111 , by phone at (801) 295 SOUTH DAVIS SEWER DISTRICT

W 1200 N, West Bountiful, mailing address P. O. Box 140111, Salt Lake City , Utah 84 114-0111 , by phone at (801) 295 SOUTH DAVIS SEWER DISTRICT STATEMENT OF NET POSITION December 31, 2022 ASSETS Current Assets: Cash and cash equivalents 4,310,683$ Investments 1,834,385 Receivables: Sewer service charges 607,775 Property taxes 1,382,994 Special treatment charges 110,887 Leases 250,769 Other 54,461 Inventory 16,104 Prepaid expenses 22,341 Total current assets 8,590,399 Capital Assets: Land, construction in progress, sewer treatment facility and collection system 109,432,746 Machinery and equipment, mobile equipment, and office furniture and collection system, net of accumulated depreciation 9,505,561 Net capital assets 118,938,307 Other Assets: Restricted cash and cash equivalents 8,651,079 Investment in WRR, LL C 2,491,555 Reimbursable costs 27,068 Net pension asset 3,035,089 Total other assets 14,204,791 Total assets 141,733,497 DEFERRED OUTFLOWS OF RESOURCES RELATED TO PENSION S 913,405 The accompanying notes are an integral part of these financial statements.

-35SOUTH DAVIS SEWER DISTRICT STATEMENT OF NET POSITION (Continued) December 31, 2022 LIABILITIES Current Liabilities: Current portion of bonds payable 1,869,000 Accounts payable 1,574,679 Construction retention payable 120,600 Accrued salaries and related benefits 99,587 Accrued interest 97,518 Current portion of compensated absences 50,000 Total current liabilities 3,811,384 Long-Term Liabilities: Bonds payable, net of unamortized discount, less current portion 36,384,967 Compensated absences, less current portion 708,401 Total long-term liabilities 37,093,368 Total liabilities 40,904,752 DEFERRED INFLOWS OF RESOURCES: Related to pensions 3,174,929

t portion 36,384,967 Compensated absences, less current portion 708,401 Total long-term liabilities 37,093,368 Total liabilities 40,904,752 DEFERRED INFLOWS OF RESOURCES: Related to pensions 3,174,929 Leases 250,769 Total deferred inflows of resources 3,425,698 NET POSITION Net investment in capital assets 88,632,423 Restricted for net pension asset 3,035,089 Unrestricted 6,648,940 Total net position 98,316,452$ The accompanying notes are an integral part of these financial statements.

-36SOUTH DAVIS SEWER DISTRICT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Year Ended December 31, 2022 Operating Revenues: Sewer service charges 9,999,186 $ Sewer special treatment charges 658,907 Inspection and project fees 63,660Other operating revenues 95,982 Total operating revenues 10,817,735 Operating Expenses: Personnel services 3,488,946 Contractual services 575,766 Utilities 504,072 Repairs and maintenance 3,110,967 Supplies 585,972 Insurance 185,758 Depreciation 292,788 Total operating expenses 8,744,269 Operating Income 2,073,466 Nonoperating Revenues (Expenses): Property taxes 4,838,069 Intergovernmental contributions 804,000 Impact fees 353,562 Interest income 273,562 Unrealized gain on investments 5,568 Interest expense (1,234,371) Loss in investment in WRR, LLC (2,337,907) Impairment loss in WRR, LL C (2,500,000) Contributions to other governments (163,918) Gain on the sale of capital assets 48,615 Total nonoperating revenues (expenses) 87,180 Income Before Capital Contributions 2,160,646 Capital Contributions: Developer contributed sewer lines 2,093,844 Change in Net Position 4,254,490 Net Position at Beginning of Year 94,061,962 Net Position at End of Year 98,316,452$ The accompanying notes are an integral part of these financial statements.

-37-

44 Change in Net Position 4,254,490 Net Position at Beginning of Year 94,061,962 Net Position at End of Year 98,316,452$ The accompanying notes are an integral part of these financial statements.

-37SOUTH DAVIS SEWER DISTRICT STATEMENT OF CASH FLOWS Year Ended December 31, 2022 Cash Flows from Operating Activities: Cash received from customers 10,706,451 $ Cash paid to suppliers (3,794,363) Cash paid to employees and for benefits (4,624,153) Net cash provided by operating activities 2,287,935 Cash Flows from Noncapital Financing Activities: Intergovernmental contributions collecte d 804,000 Property taxes collected 4,370,266 Net cash provided by noncapital financing activities 5,174,266 Cash Flows from Capital and Related Financing Activities: Interest paid (1,204,654) Impact fees collected 353,562 Purchases of capital assets (6,254,253) Proceeds from sale of capital assets 48,615 Principal payments on bonds payable (1,836,000) Net cash used by capital and related financing activities (8,892,730) Cash Flows from Investing Activities: Contributions made to WRR, LLC (4,331,337) Interest received 236,361 Net cash used by investing activitie s (4,094,976) Net Change in Cash (5,525,505) Cash at Beginning of Year 18,487,267 Cash at End of Year (see Note 2) 12,961,762$ A reconciliation of operating income to cash flows used by operating activities follows: Operating income 2,073,466$ Depreciation 292,788 Changes in operating assets and liabilities: Recievables (118,129) Prepaid expenses (12,974) Inventory (2,352) Reimbursable costs 6,845 Accounts and construction retention payable 1,159,498 Accrued expenses 85,617 Net pension asset and related deferrals (1,196,824) Net cash provided by operating activitie s 2,287,935$ Noncash financing, capital, or investing activities:

payable 1,159,498 Accrued expenses 85,617 Net pension asset and related deferrals (1,196,824) Net cash provided by operating activitie s 2,287,935$ Noncash financing, capital, or investing activities: Change in investment in WRR (2,337,907) $ Impairment loss in investment in WRR (2,500,000) Contributed sewer lines 2,093,844 Change in fair value of investments 5,568 Recording of lease receivable and related deferred inflow 253,614 Pass-through taxes contributed to other governments (163,918) The accompanying notes are an integral part of these financial statements.

-38SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -39- NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of South Davis Sewer District (the District) are in compliance with generally accepted accounting principles applicable to local gover nmental units. The following is a summary of the more significant policies. The Reporting Entity South Davis Sewer District is organized as a special service district in Davis County. The District’s purpose is to provide sewage treatment and disposal services and facilities for participating cities and customers. The District accounts for its operations as an enterpri se (proprietary-type) fund; activities are financed and operated in a manner similar to private business enterpri ses where the intent of the Board is that the costs (expenses, including depreciation) of providing good s or services to members and the general public on a continuing basis be financed or rec overed primarily through user charges.

Measurement Focus and Basis of Accounting

epreciation) of providing good s or services to members and the general public on a continuing basis be financed or rec overed primarily through user charges.

Measurement Focus and Basis of Accounting The financial statements are maintained on the accrual basis of accounting, under which revenues are recognized in the period in which they are earned a nd become measurable, and expenses are recorded in the period incurred if measurable. The District distinguishes operating revenues and expenses from nonoperating items by whether or not transactions are related to the District's daily operatio ns of its wastewater treatment and disposal services and facilities.

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

Budgetary Basis The basis of budgeting is the same as the basis require d by accounting principles generally accepted in the United States of America (GAAP) except for the follow ing: 1) bond principal payments, 2) depreciation, and 3) capital expenditures are budgeted as nonoperating e xpenditures. The District is required by state statute to adopt a budget prior to the beginning of each fiscal year. The budgetary report is reconciled to the basic financial statements (GAAP basis) as noted in the other supplementary information.

Cash and Cash Equivalents For cash flow reporting, cash and cash equivalents include amounts in demand deposits, investments in the Utah Public Treasurers’ Investment Fund, as well as short-term investments with original maturities of three months or less from the date of acquisition. Accounts Receivable

osits, investments in the Utah Public Treasurers’ Investment Fund, as well as short-term investments with original maturities of three months or less from the date of acquisition. Accounts Receivable Accounts receivable from customers primarily represen t assessments to member cities. An allowance for doubtful accounts has been established of $0 at December 31, 2022.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -40- Leases During the year ended December 31, 2022, the Dist rict adopted Governmental Accounting Standards Board Statement No. 87, Leases. The new standard establishes a single model for lease accounting based on the foundation principle that leases are financings of the right-to-use an underlying asset. The statement requires a lessee to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. There was no impact to beginning net position in the government-wide fina ncial statements or beginning fund balances as a result of adopting this standard.

Lessor – The District is a lessor for noncancelable leases of cell tower sites. The District recognizes a lease receivable and a deferred inflow of resources in the government wide financial statements.

At the commencement of the leases, the District initially measures the lease receivable at the present value of payments expected to be received during the lease term. S ubsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferre d inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before

principal portion of lease payments received. The deferre d inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the District determines (a) the discount rate it uses to discount the expected lease receipts to present value, (b) least term, and (c) lease receipts.

 The District uses its estimated incremental bo rrowing rate as the discount rate for leases.

 The lease term includes the noncancelable period of the lease. Lease receipts included in the measurement of the lease receivable is com posed of fixed payments from the lessees.

The District monitors changes in the circumstances that would require a remeasurement of its leases and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of lease receivable. Inventory and Prepaid Items Inventory is valued at cost using the first-in/first-out method and consist of expendable supplies.

Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items. The cost of prepaid items is record ed as an expense when cons umed rather than when purchased. Capital Assets The District elects to use the Modified Approach for infrastructure reporting for its sewer treatment facility and collection system. Infrastructure assets accounted for under the modified approach are not depreciated, and maintenance and preservation costs are expensed. Capital assets are recorded at cost.

and collection system. Infrastructure assets accounted for under the modified approach are not depreciated, and maintenance and preservation costs are expensed. Capital assets are recorded at cost.

The capitalization threshold is defined to be assets with an initial or individual cost greater than $5,000.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -41- Donated capital assets are recorded at their estimated acquisition value at the date of donation. When constructing capital assets, interest expense incurred relating to activities is not capitalized, but expensed in the period in which the cost is incurred. Capital assets, except land and easements, are depreciated using the straight-line method over the estimat ed useful lives of the assets as follows: Machinery and equipment 7 to 15 years Mobile equipment 5 to 10 years Office furniture and equipment 2 to 10 years Upon the sale or retirement of capital assets, the re lated asset’s cost and accumulated depreciation are removed from the applicable accounts and a gain or loss on disposal is recorded.

Compensated Absences The District permits eligible employees to accumula te earned, but unused, vacation and sick leave benefits while they are working for the District. When an employee terminates or retires, the District pays 100 percent of their vacation leave. In addition to the vacation payout, the District also pays that employee 50 percent of their accrued sick leave. A ccrued vacation and sick leave are recorded in longterm liabilities. Pensions For purposes of measuring the net pension liability (a sset), deferred outflows of resources and deferred inflows of resources related to pensions, and pens ion expense, information about the fiduciary net

urposes of measuring the net pension liability (a sset), deferred outflows of resources and deferred inflows of resources related to pensions, and pens ion expense, information about the fiduciary net position of the Utah Retirement Systems (URS) and additions to/deductions from the URS’s fiduciary net position have been determined on the same basis as th ey are reported by the URS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Pension plan investments are reported at fair value.

Long-Term Obligations Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of unamortized bond premiums or discounts.

Deferred Outflows of Resources In addition to assets, financial statements will sometim es report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources , represents a consumption of net assets that applies to a future peri od(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

Deferred Inflows of Resources In addition to liabilities, the fina ncial statements will sometimes re port a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources , represents an acquisition of net assets that applies to a future pe riod(s) and so will not be recognized as an inflow of resources (revenue) until that time.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -42- Net Position

ts that applies to a future pe riod(s) and so will not be recognized as an inflow of resources (revenue) until that time.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -42- Net Position Net position is divided into three components: net in vestment in capital assets (capital assets net of related debt less unspent bond proceeds and other capital related liabilities), restricted, and unrestricted. Net position is report as restricted when constraints are placed upon it by external parties or are imposed by constitutional provisions or enabling legislation.

Impact Fees The District collects connection fees that are define d as impact fees. The District must expend these impact fees on capital expenditures relating to the infrast ructure of the District. Impact fees collected in respect of the District’s existing wastewater treatme nt facilities are not restricted to future capital expenditures, but may be used for any purpose of the District. The District had impact fee reserves of $0 at December 31, 2022. Revenues from impact fees were $353,562 for the year ended December 31, 2022.

NOTE 2 – DEPOSITS AND INVESTMENTS Deposits and investments are carried at fair value. A reconciliation of cash and investments, as shown on the financial statements, is as follows at December 31, 2022: Carrying amount of deposits 658,285$ Carrying amount of investments 14,137,862 Total deposits and investments 14,796,147$ Current assets - cash and cash equivalents 4,310,683$ Current assets - investments 1,834,385 Other assets - restricted cash and cash equivalents 8,651,079 Total deposits and investments 14,796,147$ The District complies with the State Money Manageme nt Act (Utah Code Section 51, Chapter 7) (Act)

er assets - restricted cash and cash equivalents 8,651,079 Total deposits and investments 14,796,147$ The District complies with the State Money Manageme nt Act (Utah Code Section 51, Chapter 7) (Act) and related Rules of the Money Ma nagement Council (Council) in hand ling its depository and investing transactions. The District funds are deposited in qualified depositories as defined by the Act. The Act also authorizes the District to invest in the Utah Public Treasurers’ Investment Fund (PTIF), certificates of deposit, US Treasury obligations, US agency issues, high-grade commercial paper, bankers’ acceptances, repurchase agreements, corporate bonds, m oney market mutual funds, and obligations of governmental entities within the state of Utah.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -43- The Act and Council rules govern the financial reporti ng requirements of qualified depositories in which public funds may be deposited and prescribe the conditions under wh ich the designation of a depository shall remain in effect. The District considers the ac tions of the Council to be necessary and sufficient for adequate protection of its uninsured bank deposits.

Deposit The District’s carrying amount of bank deposits at December 31, 2022 is $658,285 and the bank balance is $869,383 ($250,000 of which is covered by federal depository insura nce). Uninsured deposits are not collateralized.

Custodial Credit Risk – Custodial credit risk for deposits is th e risk that, in the event of a bank failure, the District’s deposits may not be returned to it. The District does not have a formal policy for custodial credit risk in regard to the custody of the District’s deposits.

Investments

bank failure, the District’s deposits may not be returned to it. The District does not have a formal policy for custodial credit risk in regard to the custody of the District’s deposits.

Investments The District had a balance of $12,303,477 held in the PTIF at December 31, 2022. The PTIF is an external local government investment pool managed by th e Utah State Treasurer. The PTIF is authorized and makes investments in accordance with the Act. Participant accounts with the PTIF are not insured or otherwise guaranteed by the state. Participants in the PTIF share proportionally in the income, costs, gains and losses from investment activities. The de gree of risk of the PTIF depends upon the underlying portfolio, which consists of debt securities held by the state or in the state’s name by the state’s custodial banks, primarily consisting of corporate bonds and notes. The portfolio has a weighted average maturity of 90 days or less. The majority of the PTIF’s corporate bonds and notes are variable-rate securities, which reset every three months to prevailing market interest rates. The PTIF has no debt securities with more than 5% of its total investments in a single issuer . The PTIF is not rated. The reported fair value of the pool is the same as the fair value of the pool shares.

Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District’s policy for reducing its exposure to credit risk is to comply with the Act and related rules.

The District had the following investment and quality ratings as of December 31, 2022: Fair Investment Type Value Aaa Aa3 A1 A2 A3 Unrated Investments:

isk is to comply with the Act and related rules.

The District had the following investment and quality ratings as of December 31, 2022: Fair Investment Type Value Aaa Aa3 A1 A2 A3 Unrated Investments: PTIF 3,652,398$ - $ -$ - $ - $ -$ 3,652,398 $ Mutual funds 528,462 528,462 - - - - Certificates of deposits 425,007 - 241,995 - 89,509 93,503 93,503 Corporate bonds 880,916 - 252,351 502,668 - 125,897 125,897 5,486,783 528,462 494,346 502,668 89,509 219,400 3,871,798 Restricted investments: Bond Reserve Account - PTIF 8,651,079 - - - - - 8,651,079 Total investments 14,137,862$ 528,462$ 494,346$ 502,668$ 89,509$ 219,400 $ 12,522,877$ Quality Rating SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -44- Interest Rate Risk – Interest rate risk is the risk that chang es in interest rates will adversely affect the fair value of an investment. The District manages its exposure to interest rate risk by complying with the Act, which requires that the remaining term to maturity of investments to not exceed the period of availability of the funds invested. Except for endow ments, the Act further limits the remaining term to maturity on all investments in commercial pa per and bankers’ acceptances to 270 days or less and fixed-income securities to 365 days or less. In addition, variable-rate securities may not have a remaining term to final maturity exceeding two years.

nd bankers’ acceptances to 270 days or less and fixed-income securities to 365 days or less. In addition, variable-rate securities may not have a remaining term to final maturity exceeding two years.

The District’s investment balances by investment type and maturity are as follows at December 31, 2022: Fair Less More Investment Type Value Than 1 1-5 5-10 Than 10 Investments: PTIF 3,652,398$ 3,652,398$ -$ -$ -$ Mutual funds 528,462 528,462 - - Certificates of deposits 425,007 241,995 183,012 - Corporate bonds 880,916 504,304 376,612 - 5,486,783 4,927,159 559,624 - Restricted investments: Bond Reserve Account - PTIF 8,651,079 8,651,079 - - Total investments 14,137,862$ 13,578,238$ 559,624$ -$ -$ Investment Maturities (in Years) Concentration of Credit Risk – Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The District’s policy for managing this risk is to comply with the Act and related rules. The Act limits investments in commercial paper and or corporate obligations to 5% of the District’s to tal portfolio with a single issuer. The District places no other limits on the amount it may invest in any one issuer.

Custodial Credit Risk – For an investment, custodial credit risk is the risk that, in the 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 ou tside party. The District’s investment policy is

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 ou tside party. The District’s investment policy is to follow the Utah Money Management Act and to invest mainly in the PTIF. The District’s investment policy does not limit the amount that can be held by counterparties.

NOTE 3 – FAIR VALUE MEASUREMENTS The District categorizes its fair value measurement s within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The District has the following recurring fair va lue measurements as of December 31, 2022: Utah Public Treasurers’ Investment Fund of $12,303,477 is valued at the District’s position in the PTIF multiplied by the published fair value factor (Level 2 inputs).

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -45- Mutual funds of $528,462 are valued at the daily closing price as reported by the fund (Level 1 inputs).

Certificates of deposit of $425,007 are valued at the original amount deposited at the financial institution plus the interest earned on the certificate through the end of the fiscal year (Level 2 inputs).

Corporate bonds of $880,916 are valued using a matrix pricing model (Level 2 inputs).

NOTE 4 – PROPERTY TAXES District Property Tax Revenue The property tax revenue of the District is collect ed and distributed by the Davis County treasurer as an

matrix pricing model (Level 2 inputs).

NOTE 4 – PROPERTY TAXES District Property Tax Revenue The property tax revenue of the District is collect ed and distributed by the Davis County treasurer as an agent of the District. Utah statutes establish the process by which taxes are levied and collected. The county assessor is required to assess real property as of Ja nuary 1 (the legal lien da te) and complete the tax rolls by May 15. By July 21, the county auditor is to mail assessed value and tax notices to property owners. A taxpayer may then petition the County Boar d of Equalization between August 1 and August 15 for a revision of the assessed value. The county auditor makes approved changes in assessed value by November 1 and on this same date the county auditor is to deliver the complete d assessment rolls to the county treasurer. Tax notices are mailed with a due date of November 30. An annual uniform fee based on the value of motor ve hicles is levied in lieu of an ad valorem tax on motor vehicles. This uniform fee was 1.5% of th e fair market statewide value of the property, as established by the State Tax Commission. Legislation requires motor vehicles be subject to an “agebased” fee that is due each time a vehicle is register ed. The revenues collected in each county from motor vehicle fees is distributed by the county to each taxing entity in which the property is located in the same proportion in which revenue collected from ad valore m real property tax is distributed. The District recognizes motor vehicle fees as property tax revenue when collected.

As of December 31, 2022, property taxes receivable by the District includes uncollected taxes assessed as

tributed. The District recognizes motor vehicle fees as property tax revenue when collected.

As of December 31, 2022, property taxes receivable by the District includes uncollected taxes assessed as of January 1, 2022 or earlier. It is expected that all assessed taxes (including delinquencies plus accrued interest and penalties) will be collected within a five-year period, after which time the county treasurer may force sale of property to collect the delinquent portion .

In addition to property taxes the District levies for it own purposes, the District levies property taxes for community development agencies (lo cated within their boundaries). During the year ended December 31, 2022, taxes levied by the District for community deve lopment agencies were reco rded as revenue with an equivalent amount of expenses in the amount of $163,918. NOTE 5 – JOINT VENTURE In 2017, the District entered into a joint ventur e with ALPRO SD, LLC (ALPRO), a Utah limited liability company to construct a project that would be jointly owned by the District and ALPRO. The District and ALSPRO each own a 50 percent investment in the Resource Recovery Project as tenants in common. Operations of the jointly owned project are ma naged by Wasatch Resource Recovery, LLC (WRR), a Utah limited liability company. The District has a 50 pe rcent member interest in WRR. At December 31, 2022, the District’s investment in WRR of $2,491,5 55 represents amounts contributed to WRR less the District’s equity in the accumulated earnings (losses) as of December 31, 2022 and any adjustments for impairment.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -46- The Company evaluates the recoverability of the investment in the joint venture whenever events or

and any adjustments for impairment.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -46- The Company evaluates the recoverability of the investment in the joint venture whenever events or changes in circumstances indicate th at the investment’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1 ) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of operating losses in the joint venture. Due to the uncertainty of the District to recover the full value of the investment, management has estimated and recognized an impairment loss of $2,500,000 during the year ended December 31, 2022. Manageme nt’s estimate is based on assumptions that require significant judgment and actual results may differ from estimated amounts.

Summary financial information for WRR is as follows: Cash $ 282 ,099 Accounts receivable 730 ,407 Capital assets 13 ,500 Total assets 1,026,006 Accounts payable 321 ,044 Net position $ 704,962 Operating revenue $ 3,412,522 Operating expenses (8,088,337) Net loss $ (4,675,815)WRR. LLC Summary Financial Information As of and for the Year Ended December 31, 2022 NOTE 6 – LEASE RECEIVABLE The District leases a site to a third party for cell tower operations under lease terms of 26 years. The District will receive monthly payments of $1,061 escal ating by 2 percent a year. For the year ended December 31, 2022, the District recognized lease revenue of $2,845 and interest revenue of $10,145. At December 31, 2022, the District reports a lease re ceivable and an equal deferred inflow of resources

er 31, 2022, the District recognized lease revenue of $2,845 and interest revenue of $10,145. At December 31, 2022, the District reports a lease re ceivable and an equal deferred inflow of resources related to leases of $250,769.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -47- NOTE 7 – CAPITAL ASSETS The following changes occurred with respect to capital assets during the year ended December 31, 2022: Balance at Balance at Jan. 1, 2022 Additions Deletions Dec. 31, 2022 Capital assets not being depreciated: Land 3,070,568$ - $ - $ 3,070,568$ Construction in progress 6,972,119 5,430,817 - 12,402,936 Infrastructure - (sewer treatment facility) 91,865,398 2,093,844 - 93,959,242 Total capital assets not being depreciated 101,908,085 7,524,661 - 109,432,746 Capital assets being depreciated: Machine and equipment 9,457,084 140,400 (32,780) 9,564,704 Mobile equipment 3,440,272 683,036 (38,022) 4,085,286 Office furniture and equipment 771,191 - - 771,191 Total capital assets being depreciated 13,668,547 823,436 (70,802) 14,421,181 Accumulated depreciation for: Machine and equipment (1,957,561) (43,852) 32,780 (1,968,633) Mobile equipment (2,109,840) (220,948) 38,022 (2,292,766) Office furniture and equipment (626,233) (27,988) - (654,221)

pment (2,109,840) (220,948) 38,022 (2,292,766) Office furniture and equipment (626,233) (27,988) - (654,221) Total accumulated depreciation (4,693,634) (292,788) 70,802 (4,915,620) Net capital assets being depreciated 8,974,912 530,648 - 9,505,561 Net capital assets 110,882,997$ 8,055,309$ - $ 118,938,307 $ The District’s construction commitments are mostly complete as of December 31, 2022.

NOTE 8 – RETIREMENT PLANS Description of Plans Eligible employees of the District are provided with the following plans thro ugh the Utah Retirement Systems (URS) administered by the URS: Defined Benefit Pension Plans (cost- sharing, multiple-employer plans):  Public Employees Noncontributory Retirement System (Tier 1 Noncontributory System)  Public Employees Contributory Retirement System (Tier 1 Contributory System)  Tier 2 Public Employees Contributory Retirem ent System (Tier 2 Contributory System) SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -48- Defined Contribution Plans (individual account plans):  401(k) Plan (includes the Tier 2 Defined Contribution Plan)  457 Plan and other individual plans District employees qualify for membership in the retirement systems if a) employment, contemplated to continue during a fiscal or calendar year, normally re quires an average of 20 or more hours per week and the employee receives benefits normally provided by the District as approved by the Utah State Retirement Board, b) the employee is a classified school employee whose employment normally requires

nd the employee receives benefits normally provided by the District as approved by the Utah State Retirement Board, b) the employee is a classified school employee whose employment normally requires an average of 20 hours or more per week regardless of benefits, c) the employee is a teacher who teaches half-time or more and receives benefits normally prov ided by the District as approved by the Utah State Retirement Board, or d) the employee is an appointed officer.

The Tier 2 systems became effective July 1, 2011. All eligible employees beginning on or after July 1, 2011, who have no previous service credit with URS, are members of the Tier 2 systems.

The plans are established and governed by th e respective sections of Title 49 of the Utah Code. The plans are amended statutorily by the Utah State Legislature. Title 49 provides for the administration of the plans under the direction of the Utah State Retirem ent Board, whose members are appointed by the Governor.

The URS (a component unit of the State of Utah) i ssues a publicly available financial report that can be obtained at www.urs.org.

Benefits Provided The URS provides retirement, disability, and death be nefits to participants in the plans.

Retirement benefits in the define d benefit pension plans are determined from 1.50% to 2.00% of the employee’s highest 3 or 5 years of compensation tim es the employee’s years of service depending on the pension plan; benefits are subject to cost-of-livin g adjustments up to 2.50% or 4.00%, limited to the actual Consumer Price Index increase for the year. Employees are eligible to retire based on years of service and age.

Defined contribution plans are available as supplementa l plans to the basic retirement benefits of the

ndex increase for the year. Employees are eligible to retire based on years of service and age.

Defined contribution plans are available as supplementa l plans to the basic retirement benefits of the defined benefit pension plans and as a primary retirement plan for some Ti er 2 participants. Participants in the defined contribution plans are fully vested in employer and employee contributions at the time the contributions are made, except Tier 2 required contri butions and associated earnings are vested during the first four years of employment. If an employee terminates prior to the vesting period, employer contributions and associated earnings for that employee are subject to forfeiture. Forfeitures are used to cover a portion of the plan’s administrative expenses paid by participants. Benefits depend on amounts contributed to the plans plus investment earnings . Individual accounts are provided for each employee and are available at termination, retiremen t, death, or unforeseeable emergency.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -49- Contributions As a condition of participation in the plans, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and specified by the Utah State Retirement Board. Contributions are actuarially determined as an amount that, when 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 fi nance any unfunded actuarial accrued liability.

District required contribution rates for the plans were as follows for the year ended December 31, 2022: Paid by District Rates District Amortization District for for 401(k)

uarial accrued liability.

District required contribution rates for the plans were as follows for the year ended December 31, 2022: Paid by District Rates District Amortization District for for 401(k) Tier 1 Noncontributory System 11.86% 6.11% - - 17.97 % Tier 1 Contributory System 6.09% 7.87% 6.00% - 19.96 % Tier 2 Public Employees System 9.90% 6.11% 0.18% 16.19 % Tier 2 Defined Contribution System 0.08% 6.11% - 10.00% 16.19 %Defined Benefit Plans Rates * District contribution includes 0. 08% of covered-employee payroll of the Tier 2 plans for death benefits.

Employees can make additional contributions to de fined contribution plans subject to limitations.

District and employee contributions to the plans were as follows for the year ended December 31, 2022: District Employee Contributions * Contributions Tier 1 Noncontributory System 359,342$ - $ Tier 1 Contributory System 53,742 22,711 Tier 2 Public Employees System 158,296 Tier 2 Defined Contribution System 7,942 401(k) Plan 55,706 141,853 457 Plan and other individual plans - 84,941 * A portion of required contributions in the Tier 2 plans is used to finance the unfunded actuarial accrued liab ility in the Tier 1 plans.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -50- Pension Assets and Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

TH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -50- Pension Assets and Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At December 31, 2022, the District reported a net pension asset of $3,035,088 and a net pension liability of $0 for the following plans: Net Pension AssetNet Pension Liability Tier 1 Noncontributory System 1,219,414 $ - $ Tier 1 Contributory System 1,794,979 Tier 2 Public Employees System 20,695 Total 3,035,088$ - $ The net pension liability (asset) was measured as of December 31, 2021 and the total pension liability (asset) used to calculate the net pension liability (asset) was determined by an actuarial valuation as of January 1, 2021, rolled-forward usi ng generally accepted actuarial procedures. The District’s proportion of the net pension liability (asset) is equal to the ratio of actual contributions compared to the total of all employer contributions during the plan year. The following presents the District’s proportion (percentage) of the collective net pension liability (as set) at December 31, 2021 and the change in its proportion since the prior measurement date for each plan: 2021 Change Tier 1 Noncontributory System 0.2129198 % 0.0136363 % Tier 1 Contributory System 2.4794490 % 0.3255332 % Tier 2 Public Employees System 0.0488969 % (0.0109109)%Proportionate Share The District recognized pension expense for th e plans as follows at December 31, 2022: Pension Expense Defined benefit pension plans: Tier 1 Noncontributory System (148,899)$ Tier 1 Contributory System (540,866) Tier 2 Public Employees System 72,174 Total (617,591)$ Defined contribution plans: Tier 2 Defined Contribution Plan 7,942 $ 401(k) Plan 55,706

ry System (148,899)$ Tier 1 Contributory System (540,866) Tier 2 Public Employees System 72,174 Total (617,591)$ Defined contribution plans: Tier 2 Defined Contribution Plan 7,942 $ 401(k) Plan 55,706 Total 63,648$ SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -51- The District reported deferred outflows of resources re lated to defined benefit pension plans from the following sources at December 31, 2022: Tier 1 Noncontributory SystemTier 1 Contributory SystemTier 2 Public Employees System Total Differences between expected and actual experience 127,721$ - $ 10,054$ 137,775$ Changes of assumptions 114,447 - 19,297 133,744 Changes in proportion and differences between District contributions and proportionate share of contributions 46,762 - 15,800 62,562 Contributions subsequent to the measurement date 359,342 53,742 166,237 579,321 Total 648,272$ 53,742$ 211,388$ 913,403$ The District reported deferred inflows of resources re lated to defined benefit pension plans from the following sources at December 31, 2022: Tier 1 Noncontributory SystemTier 1 Contributory SystemTier 2 Public Employees System Total Differences between expected and actual experience - $ - $ 2,666 $ 2,666 $ Changes of assumptions 7,871 - 196 8,067 Net difference between projected and actual earnings on pension plan investments 1,641,778 1,470,306 51,135 3,163,219 Changes in proportion and differences between District

ifference between projected and actual earnings on pension plan investments 1,641,778 1,470,306 51,135 3,163,219 Changes in proportion and differences between District contributions and proportionate share of contributions - - 977 977 Total 1,649,649$ 1,470,306$ 54,974$ 3,174,929$ Deferred Inflows of Resources Related to Pensions The $579,321 reported as deferred outflows of res ources related to pensions resulting from our contributions subsequent to the measurement date of December 31, 2022 will be recognized as a reduction of the net pension liability (asset) in th e year ending December 31, 2023. The other amounts reported as deferred outflows of resources and deferred inflows of resources related to defined benefit pension plans will be recognized in pension expense as follows: Year Ending December 31,Tier 1 Noncontributory SystemTier 1 Contributory SystemTier 2 Public Employees System Total 2022 (241,667)$ (354,908)$ (9,296)$ (605,871)$ 2023 (450,390) (513,670) (12,005) (976,064) 2024 (395,876) (362,338) (8,623) (766,837) 2025 (272,786) (239,390) (4,833) (517,009) 2026 - - 4,354 4,354 Thereafter - - 20,579 20,579 SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -52- Actuarial Assumptions The total pension liability (asset) in the January 1, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Assumptions The total pension liability (asset) in the January 1, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.50% Salary increases 3.25% to 9.25%, average, including inflation Investment rate of return 6.85%, net of pension plan investment expense, including inflation Mortality rates were based on actual experience and mo rtality tables, consideri ng gender, occupation, and age, as appropriate, with adjustments for future im provement in mortality based on Scale AA, a model developed by the Society of Actuaries.

The actuarial assumptions used in th e January 1, 2021 valuation were based on the results of an actuarial experience study for the five-year period ended Dece mber 31, 2019. Assumptions remained unchanged that affect measurement of the total pension lia bility (asset) since the prior measurement date.

The long-term expected rate of return on defined be nefit pension plan investments 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 major 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 estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Target AllocationLong-Term Expected Real Rate of Return Equity securities 37% 2.43% Debt securities 20% (0.06%)

of return for each major asset class are summarized in the following table: Asset Class Target AllocationLong-Term Expected Real Rate of Return Equity securities 37% 2.43% Debt securities 20% (0.06%) Real assets 15% 0.87% Private equity 12% 1.18% Absolute return 16% 0.47% Total 100% Discount Rate The discount rate used to measure the total pensi on liability (asset) was 6.85%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contribut ions from all participating employers will be made at contractually required rates, actuarially determined and certified by the Utah State Retirement Board. Based on those assumptions, the plans’ fiduciary net position was projected to be available 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 projected benef it payments to determine the total pension liability (asset).

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -53- Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the District’s proportionate sh are of the net pension liability (asset) calculated using the discount rate of 6.85%, as well as what its proportionate share of the net pension liability (asset) would be if it were calculated using a discount ra te that is 1-percentage-point lower (5.85%) or 1percentage-point higher (7.85%) than the current rate: 1% Decrease (5.85%)Discount Rate (6.85%)1% Increase (7.85%) District's proportionate share of the net pension (asset) liability:

percentage-point higher (7.85%) than the current rate: 1% Decrease (5.85%)Discount Rate (6.85%)1% Increase (7.85%) District's proportionate share of the net pension (asset) liability: Tier 1 Noncontributory System 655,716 $ (1,219,414)$ (2,783,845)$ Tier 1 Contributory System (716,150) (1,794,979) (2,709,284) Tier 2 Public Employees System 123,305 (20,695) (131,257) Total 62,871$ (3,035,088)$ (5,624,386)$ Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued URS financial report. Payables to the Pension Plans The District reported payables of $11,913 for contributions to defined benefit pension plans and defined contribution plans at December 31, 2022. NOTE 9 – LONG-T ERM LIABILITIES Long-term liabilities were as follows for the year ended December 31, 2022: Balance at Balance at Due Within Jan. 1, 2022 Additions Deletions Dec. 31, 2022 One Year Revenue bonds 18,720,000$ - $ (875,000) $ 17,845,000$ 900,000$ Revenue bonds (direct placement) 21,649,000 - (961,000) 20,688,000 969,000 Unamortized discounts (310,680) - 31,647 (279,033) Compensated absences 683,957 407,312 (332,868) 758,401 50,000 Net pension liability 110,823 468,406 (579,229) - Total bonds payable, net 40,853,100$ 875,718$ (2,716,450)$ 39,012,368$ 1,919,000$ SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -54- A summary of principal debt requirements to matu rity for the revenue bonds (competitive and direct

,450)$ 39,012,368$ 1,919,000$ SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -54- A summary of principal debt requirements to matu rity for the revenue bonds (competitive and direct placements) for the years following December 31, 2022 are as follows: Year Ending December 31, Principal Interes t Principal Interest Total 2023 900,000 $ 737,263$ 969,000$ 432,950$ 3,039,213$ 2024 930,000 708,013 989,000 433,086 3,060,098 2025 960,000 676,625 1,010,000 392,811 3,039,436 2026 995,000 643,025 1,030,000 372,106 3,040,131 2027 1,030,000 606,956 1,052,000 350,991 3,039,948 2028-2032 5,835,000 2,360,138 5,587,000 1,422,693 15,204,831 2033-2037 7,195,000 999,900 6,191,000 820,872 15,206,772 2038-2041 - - 3,860,000 125,599 3,985,599 17,845,000$ 6,731,919$ 20,688,000$ 4,351,110$ 49,616,028$ Outstanding BondsOutstanding Bonds (Direct Placement) Revenue bonds payable with their ou tstanding balance are comprised of the following individual issues at December 31, 2022 : Original Interest Rate Final Maturirty Outstanding Series Purpose Amount Range Date Balance 2017A Investment in WRR 21,195,000$ 3.250% - 4.500% December 1, 2037 17,845,000$ 2019 (Direct placement)North and South Plant Rehab 12,179,000 2.050% December 1, 2039 11,108,000 2021 (Direct placement)North and South Plant Rehab 10,000,000 2.050% December 1, 2041 9,580,000 38,533,000$ NOTE 10 – CONDUIT DEBT The District has issued revenue bonds to provide financial assistance to private-sector entity for

uth Plant Rehab 10,000,000 2.050% December 1, 2041 9,580,000 38,533,000$ NOTE 10 – CONDUIT DEBT The District has issued revenue bonds to provide financial assistance to private-sector entity for acquisition and construction of industrial and commercial facilities deemed to be in the public interest.

The bonds are secured by property financed and ar e payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private -sector entity served by the bond issuance. The District is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. The District has made a limit ed commitment to maintain the issue’s tax-exempt status for the series of conduit debt.

At December 31, 2022, the principal amount payable for the one series was $22,905,000.

SOUTH DAVIS SEWER DISTRICT NOTES TO THE FINANCIAL STATEMENTS -55- NOTE 11 – ECONOMIC DEPENDENCY The District has contracted with its participating citi es, exclusively, to receive, treat, and dispose of the participating cities’ municipal wastewater. In th e event that participating cities, for economic or environmental reasons, were unable to continue using the District’s facilities, the District would be susceptible to risk of closure.

NOTE 12 – RISK MANAGEMENT The District maintains insurance coverage for genera l, automobile, personal injury, errors and omissions, employee dishonesty, and malpractice liability up to $3,000,000 per occurrence through policies administered by the Utah Local Governments Trust. Th e District also insures its buildings, including those

yee dishonesty, and malpractice liability up to $3,000,000 per occurrence through policies administered by the Utah Local Governments Trust. Th e District also insures its buildings, including those under construction, and contents against all insurable ri sks of direct physical loss or damage with the Utah Local Governments Trust. This all-risk insurance c overage provides for repair or replacement of damaged property at a replacement cost basis subject to a deduc tible of $1,000 per occurrence. Settled claims have not exceeded the District’s insurance covera ge for any of the past three years.

The District also maintains a public treasurer’s fidelity bond with a private carrier. All District employees are covered for workers’ compensation by the Utah Lo cal Governments Trust. Unemployment insurance is covered by the District on a pay-as-you-go basis. Claims have been minimal for the past three years.

NOTE 13 – ENVIRONMENTAL REMEDIATION LIABILITY The nature of the District’s operations is such that the District may be held liable for environmental cleanup costs. The District is unaware of any such issu es and has taken extensive measures to prevent potential environmental problems caused by its activities. The costs of potential remediation are not estimable since no knowledge of environmental probl ems currently exists. Therefore, no liability has been accrued.

REQUIRED SUPPLEMENTA RY INFORMATION Final Variance Original Amended Favorable Budget Budget Actual (Unfavorable) REVENUES Operating Revenues Sewer Service Fees 9,400,000 $ 10,500,000$ 9,999,186 $ (500,814) $ Sewer Special Treatment 250,000 600,000 658,907 58,907 Inspection Fees 22,000 21,000 21,960 960 Project Fees 55,000 55,000 41,700 (13,300) Permit Fees 5,800 5,800 5,750 (50)

9,999,186 $ (500,814) $ Sewer Special Treatment 250,000 600,000 658,907 58,907 Inspection Fees 22,000 21,000 21,960 960 Project Fees 55,000 55,000 41,700 (13,300) Permit Fees 5,800 5,800 5,750 (50) Sampling Fees 15,000 15,000 18,649 3,649 Lab Testing Fees 26,000 25,000 34,752 9,752 Taxable Sales 1,000 2,000 1,093 (907) General Other Revenue 240,000 260,000 (88,862) (348,862) Total 10,014,800 11,483,800 10,693,134 (790,666) Non-operating Revenues Property Taxes 4,585,000 4,093,700 4,838,069 744,369 Impact Fees 400,000 350,000 353,562 3,562 Delinquent Account Administration Fees 130,000 125,000 124,600 (400) Interest 110,000 100,000 273,562 173,562 Surplus Property Sales 200,000 100,000 48,615 (51,385) WFWQC Contributions 804,000 804,000 804,000 Total 6,229,000 5,572,700 6,442,408 869,708 Total Revenue 16,243,800$ 17,056,500$ 17,135,542 $ 79,042 $ EXPENSES Operating Expenses Operating Expenses 471,000 $ 239,500 $ 298,346 $ (58,846) $ Repairs & Maintenance 503,000 460,000 531,430 (71,430) Utilities 397,000 385,300 348,970 36,330 Payroll and Benefits 4,059,000 4,751,000 4,663,116 87,884 Biosolid Disposal 50,000 50,000 48,630 1,370 No-Fault Sewer Back-up 12,000 10,000 3,935 6,065 Outside Services 662,000 708,000 551,429 156,571 Chemicals 640,000 950,000 1,321,349 (371,349) Lab Testing 310,000 209,000 266,009 (57,009) Transportation 63,000 70,000 108,918 (38,918) Buildings & Grounds 46,000 40,500 37,104 3,396 Office & Computer 340,000 285,000 464,991 (179,991) Insurance 149,000 193,000 181,823 11,177 Audit & Accounting 15,000 22,000 15,000 7,000 Utah DWQ Fees 19,000 19,000 9,337 9,663 Education & Training 53,000 91,500 102,235 (10,735)

000 464,991 (179,991) Insurance 149,000 193,000 181,823 11,177 Audit & Accounting 15,000 22,000 15,000 7,000 Utah DWQ Fees 19,000 19,000 9,337 9,663 Education & Training 53,000 91,500 102,235 (10,735) Total 7,789,000 $ 8,483,800 $ 8,952,623 $ (468,823) $ SOUTH DAVIS SEWER DISTRICT Schedule of Revenues and Expenses, Budget to Actual (Non-GAAP Budgetary Basis) For the Year Ended, December 31, 2022 Continued next page 56 Final Variance Original Amended Favorable Budget Budget Actual (Unfavorable) Non Operating Expenses Capital Expenses Outfall/Sewer Lines - 300,000 298,087 1,913 Operating Equipment 137,000 60,650 54,250 6,400 Building and Facilities 1,350,000 4,525,000 5,176,619 (651,619) Mobile Equipment 274,000 683,000 683,043 (43) Major Equipment & Engineering 100,000 100,000 - 100,000 Office Equipment 3,000 3,000 - 3,000 Other Debt Service 2,427,529 2,427,529 2,427,529 Finance Costs - SP 12,750 12,750 Finance Costs - NP - - Total 4,291,529 8,111,929 8,652,279 (540,350) Total Expenses 12,080,529 16,595,729 17,604,902 (1,009,173) Excess of Revenue over Expenses 4,163,271$ 460,771$ (469,360)$ (930,131)$ - Schedule of Revenues and Expenses, Budget to Actual (Non-GAAP Budgetary Basis) For the Year Ended, December 31, 2022SOUTH DAVIS SEWER DISTRICTContinued next page 57 2021 2020 2019 2018 2017 2016 2015 2014 Tier 1 Noncontributory System: District's proportion of the net pension liability (asset) 0.2129198% 0.1992835% 0.1946828% 0.1854115% 0.1827746% 0.1859885% 0.1773809% 0.1714837% District's proportionate share of the net pension liability (asset) (1,219,414)$ 102,221$ 733,734$ 1,365,319$ 800,790$ 1,194,274$ 1,003,707$ 744,623$

District's proportionate share of the net pension liability (asset) (1,219,414)$ 102,221$ 733,734$ 1,365,319$ 800,790$ 1,194,274$ 1,003,707$ 744,623$ District's covered payroll 1,806,770 1,612,366 1,637,481 1,627,788 1,659,575 1,703,079 1,579,894 1,504,734 District's proportionate share of the net pension liability (asset) as a percentage of its covered payroll (67.5)% 6.3% 44.8% 83.9% 48.3% 70.1% 63.5% 49.5% Plan fiduciary net position as a percentage of the total pension liability 108.7% 99.2% 93.7% 87.0% 91.9% 87.3% 87.8% 90.2% Tier 1 Contributory System: District's proportion of the net pension liability (asset) 2.4794490% 2.1539158% 1.8822009% 1.7087889% 1.5504906% 1.2969910% 0.6854172% 0.5162013% District's proportionate share of the net pension liability (asset) (1,794,979)$ (386,029)$ 123,353$ 693,431$ 126,170$ 425,557$ 481,749$ 148,895$ District's covered payroll 364,186 355,299 337,278 319,834 314,619 311,199 292,048 275,901 District's proportionate share of the net pension liability (asset) as a percentage of its covered payroll (492.9)% (108.6)% 36.6% 216.8% 40.1% 136.7% 165.0% 54.0% Plan fiduciary net position as a percentage of the total pension liability 115.9% 103.9% 105.0% 91.2% 98.2% 92.9% 85.7% 94.0% Tier 2 Public Employees Retirement System: District's proportion of the net pension liability (asset) 0.0488969% 0.0598078% 0.0502777% 0.0733910% 0.0137612% 0.0105558% 0.0067634% 0.0079996%

5.7% 94.0% Tier 2 Public Employees Retirement System: District's proportion of the net pension liability (asset) 0.0488969% 0.0598078% 0.0502777% 0.0733910% 0.0137612% 0.0105558% 0.0067634% 0.0079996% District's proportionate share of the net pension liability (asset) (20,695)$ 8,602 $ 11,308$ 13,165$ 1,213 $ 1,177 $ (15) $ (242) $ District's covered payroll 908,362 956,444 697,698 359,127 134,222 86,566 43,693 39,225 District's proportionate share of the net pension liability (asset) as a percentage of its covered payroll (2.3)% 0.9% 1.6% 3.7% 0.9% 1.4% (0.0)% (0.6)% Plan fiduciary net position as a percentage of the total pension liability 103.8% 98.3% 96.5% 90.8% 97.4% 95.1% 100.2% 103.5%SOUTH DAVIS SEWER DISTRICT Schedules of the District's Proportionate Share of the Net Pension Liability (Asset)Utah Retirement SystemsLast Eight Plan Years -582022 2021 2020 2019 2018 2017 2016 2015 Tier 1 Noncontributor y System: Contractually required contribution 359,342 $ 332,906 $ 296,972 $ 300,655 $ 298,868 $ 304,458 $ 311,783 $ 288,938 $ Contributions in relation to the contractually required contribution (359,342) (332,906) (296,972) (300,655) (298,868) (304,458) (311,783) (288,938) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $

83) (288,938) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ District's covered payroll 1,977,219$ 1,806,770$ 1,612,366$ 1,637,481$ 1,627,788$ 1,659,575$ 1,702,246$ 1,579,894$ Contributions as a percentage of covered payroll 18.17% 18.43% 18.42% 18.36% 18.36% 18.35% 18.32% 18.29% Tier 1 Contributor y System: Contractually required contribution 53,742 $ 52,661 $ 51,376 $ 48,770 $ 46,248 $ 45,494 $ 44,999 $ 42,230 $ Contributions in relation to the contractually required contribution (53,742) (52,661) (51,376) (48,770) (46,248) (45,494) (44,999) (42,230) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ District's covered payroll 378,521$ 364,186$ 355,299$ 337,278$ 319,834$ 314,619$ 311,199$ 292,048$ Contributions as a percentage of covered payroll 14.20% 14.46% 14.46% 14.46% 14.46% 14.46% 14.46% 14.46% Tier 2 Public Em ployees S ystem: Contractually required contribution 158,296 $ 144,740 $ 150,446 $ 108,954 $ 55,056 $ 20,194 $ 12,907 $ 6,521 $ Contributions in relation to the contractually required contribution (158,296) (144,740) (150,446) (108,954) (55,056) (20,194) (12,907) (6,521)

lation to the contractually required contribution (158,296) (144,740) (150,446) (108,954) (55,056) (20,194) (12,907) (6,521) Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ District's covered payroll 987,001$ 908,362$ 956,444$ 697,698 359,127 134,222 86,566 43,693 Contributions as a percentage of covered payroll 0.00% 15.93% 15.73% 15.62% 15.33% 15.05% 14.91% 14.92% Tier 2 Defined Contribution S ystem: Contractually required contribution 7,942 $ 7,752 $ 5,796 $ 4,035 $ 1,948 $ - $ - $ - $ Contributions in relation to the contractually required contribution (7,942) (7,752) (5,796) (4,035) (1,948) - - Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ District's covered payroll 123,639$ 115,870$ 86,639$ 60,308 29,123 - - Contributions as a percentage of covered payroll 0.00% 6.69% 6.69% 6.69% 6.69% 0.00% 0.00% 0.00%SOUTH DAVIS SEWER DISTRIC T Schedules of District Contributions Utah Retirement SystemsLast Eight Reporting Years -59SOUTH DAVIS SEWER DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION -60- NOTE A – CHANGES IN ASSUMPTIONS – UTAH RETIREMENT SYSTEMS

ntributions Utah Retirement SystemsLast Eight Reporting Years -59SOUTH DAVIS SEWER DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION -60- NOTE A – CHANGES IN ASSUMPTIONS – UTAH RETIREMENT SYSTEMS Amounts reported in plan year 2021 reflect the following assumption changes adopted from the January 1, 2021 valuation:  The investment return assumption w as decreased from 6.95% to 6.85% Amounts reported in plan year 2020 reflect the following assumption changes adopted from the January 1, 2020 valuation:  The payroll growth assumption decreased from 3.00% to 2.90%.

 Other assumptions that were modified: retirement rate s, termination rates, disability rates, rate of salary increase, and pre and post retirement mortality tables.

Assumptions for plan years 2019 through 20 18 remain unchanged from the prior years.

Amounts reported in plan year 2017 reflect the following assumption changes adopted from the January 1, 2017 valuation:  The investment return assumption w as decreased from 7.20% to 6.95%.

 The inflation assumption decreased from 2.60% to 2.50%.

 The life expectancy assumption increased for most groups.

 The wage inflation assumption d ecreased from 3.35% to 3.25%.

 The payroll growth assumption decreased from 3.10% to 3.00%.

Amounts reported in plan year 2016 reflect the following assumption changes adopted from the January 1, 2016 valuation:  The investment return assumption w as decreased from 7.50% to 7.20%.

 The inflation assumption decreased from 2.75% to 2.60%.

 Both the payroll growth and wage infla tion assumptions were decreased by 0.15%.

Amounts reported in plan year 2015 reflect the following assumption changes adopted from the January 1, 2015 valuation:

oth the payroll growth and wage infla tion assumptions were decreased by 0.15%.

Amounts reported in plan year 2015 reflect the following assumption changes adopted from the January 1, 2015 valuation:  The wage inflation assumption for all employee groups was decreased from 3.75% to 3.50%.

 The payroll growth assumption was decreased from 3.50% to 3.25%.

 Other assumptions that were modified: rate of salary increases, post retirement mortality, and certain demographics.

NOTE B – SCHEDULES OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET) – UTAH RETIREMENT SYSTEMS These schedules only present information for the 2014 and subsequent measurement periods of the plans; prior-year information is not available.

SOUTH DAVIS SEWER DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION -61 -NOTE C – SCHEDULES OF DISTRICT CONTRIBUTIONS – UTAH RETIREMENT SYSTEMS These schedules only present informatio n for the 2015 and subsequent reporting periods of the plans; prior-year information is not available.

Contributions as a percentage of covered payroll may be different than the Utah State Retirement Board certified rate due to rounding or other administrative issues. A portion of the required contributions in the Tier 2 plans is used to finance the unfunded actuarial accrued liability of the Tier 1 plans.

SUPPLEMENT ARY INFORMATION ., 62 SOUTH DAVIS SEWER DISTRICT Modified Approach for Eligible Infrastructure Assets For the Year Ended December 31, 20 22 In accordance with GASB Statement No. 34 , the District is required to account for and report infrastructure capital assets.

The District defines infrastructure as the basic physical assets of the wastewater collection system and treatment plant

e District is required to account for and report infrastructure capital assets.

The District defines infrastructure as the basic physical assets of the wastewater collection system and treatment plant facilities. Infrastructure assets are capital assets which normally are stationary in n ature and can be preserved for significantly more years than other capital assets. The District’s major infrastructure system consists of the collection system , treatment plant facilities and the resource recovery facility and it can be divided into subsystems such as trunk lines, collection lines, manholes, lift stations, plant facilit ies, and other appurtenances. Subsystem detail s are not presented in the basic financial statements. H owever, the District maintains detailed information on these subsystems.

The D istrict has elected to use the Modified Approach as defined by GASB Stateme nt 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 ca pital assets using an asset management (AMP) system meeting the following minimum requirement : (A) have up -to-date inventory records , (B) perform condition assessments at least once every three years and summarize the results us ing a measurement scale, and (C) estimate annual amount to maintain and preserve at the established condition assessment level.

2.The District documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclose d condition assessment level.

tion assessment level.

2.The District documents that the eligible infrastructure capital assets are being preserved approximately at or above the established and disclose d condition assessment level.

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

The District make s use of a physical condition assessment of its coll ection 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 covered 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 2021 according to GASB Statement No. 34 . This allows the District to ensure that assets are maintained at a prescribed condition an d analyze future funding needs. The District’s collection system and treatment plant facilities are composed of approximately 376 miles (1,987,220 feet) of sewer lines , 9,221 sections of line, 8,988 manholes , 11 lift stations, 2 treatment plant s that can treat up to 16 million gallons (capacity) per day (MGD) of wastewater and one resource recovery facility.

In 2022, a pproximately 18% of the District’s collection system was cleaned and 13% was inspected by closed circuit television (CCT V) in 2020 (see Collection System GIS TV and Cleaning Maps in this section ).

The District expended $696,157 on maintenance and/or preservation of its infrastructure assets for the year ended

(CCT V) in 2020 (see Collection System GIS TV and Cleaning Maps in this section ).

The District expended $696,157 on maintenance and/or preservation of its infrastructure assets for the year ended December 31, 20 21. These expen ses add service life to capital asset s. A study by the Iowa Department of Transportation reported that for every dollar of preventative maintenance spent in the first 10 years of an asset, $4 -5 will be saved over the next 10 years. The District has an aggressive asset management program to prolon g the useful life of its capital assets.

The District is us ing trenchless technology or cured in place pipe (CIPP) as a means of being more efficient in repairing and maintaining the sewer collection system. CIPP equipment , resin, and liner s are used to complete r ehabilitation projects of the collection system . The collection sys tem operators performed 103,100 and 83 rehabilitation projects for CIPP on sewer lateral lines in 2022, 2021 and 20 20 for a total cost of $50,835, $49,537 and $34,770 respectfully.

The District developed condition grade scales to provide a means of rating the assets dur ing 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 t o yield a we ighted defect score. The weighted defect sc ores are totaled for each asset yielding a total asset rati ng that will range from 1 to 5. The District has set a target service level of 1 to 3 (moderate/fair) for all infrastructure assets (see ratin g system).

.

r each asset yielding a total asset rati ng that will range from 1 to 5. The District has set a target service level of 1 to 3 (moderate/fair) for all infrastructure assets (see ratin g system).

.

63 The following table makes known the most recent conditional assessments (GASB Statement No. 34, paragraph 132) .

Condition 2021 2019 2017 2021 2019 2015 2021 2019 2015 2021 2019 2017 Very Good 655 783 675 653 548 890 1540 1212 1440 11 11 11 Good 46 72 3 17 15 24 32 25 18 Fair 15 12 18 85 56 0 12 18 17 Poor 2 2 2 28 27 15 8 3 12 Very Poor 1 1 3 1Treatment Facilities Collection Line Segments Manholes Lift Stations I In 2021, the District performed 786 condition assessments of line segments for the collection system, calculated in accordance with GASB Statement No. 34 guideline. The District also performed an assessment of both treatment plant facilities , inspection of 2030 manholes , 11 lift stations and the WRR facility. The condition assessment of the line segments identified 25 deficiencies in line segments and 24 deficiencies in manholes resulting in a condition level lower than established by the District. 100% of the deficiencies identified in the line segments and manholes were corrected in the year 2021. 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 remainder of the infrastructure assets were at or above the minimum service level. These results were within the estimated expectations of the District.

The following condition assessments were noted: •The co-gen systems have been taken out of service due to problems with siloxane and digester gas and will

the estimated expectations of the District.

The following condition assessments were noted: •The co-gen systems have been taken out of service due to problems with siloxane and digester gas and will remain out of service until a cost-effective solution is found. The main compressor at WRR has been inconsistent in producing the energy to generate green natu ral gas (3 rating) . Replacing it with a new one is being considered.

•The c ondition of the co-gen facility itself is excellent (1 rating ).

The n ext condition assessment sample is scheduled for 20 23.

The actual amounts the District expended on rehabilitation , repair and replacement of the collection system and treatment plant facilities over the current and past five reporting period s are as follows: Estimated 2016 $668,287 2017 $691,323 2018 $672,067 2019 $650,370 2020 $676,500 2021 $693,000 2022 $903,000 Actual 2016 $782,817 2017 $557,777 2018 $517,768 2019 $489,365 2020 $696,157 2021 $885,754 2022 868,000 The budget required to maintain and preserve the current overall condition through the year ended December 31, 2030, is estimated to be $685,800 per year. This figure was arrived at by taking the average expenditures from 2011 to 20 22 and Funds totaling $ 903,000 are budgeted for fiscal year 20 22 for the continued maintenance and preservation of the D istrict’s infrastructure asset s and are allocated as follows: $540,000 Collection System $363,000 Plant & Equipment Facilities The amount estimated to achieve the 2021 minimal target conditional assessment is $693,000 and the actual cost was $885,754 . The District employees performed most of the repairs, maintenance, rehabilitation , and other preservation work

1 minimal target conditional assessment is $693,000 and the actual cost was $885,754 . The District employees performed most of the repairs, maintenance, rehabilitation , and other preservation work therefore lowering the cost.

The 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.

Target Level of Service: 1=Very Good - New or newer, no maintenance needed 2=Good – Asset provides adequate service, minor maintenance needed.

3=Fair - Natural wear, surface deficiencies, major repairs.

4=Poor – Deteriorated to extent of structural improvements needed. Major maintenance.

5=Very Poor – Asset is severely deteriorated and performance unacceptable.

See chart below : NorthSouthCollection Asset PlantPlant 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 Birnam Woods Lift Station 1 North Pointe Lift Station 1 Parrish Lane 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

on 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 2-364 65 .

WRR Asset Facility Chopper Pumps 1 Biosolid Strain Press 1 Receiving Building 1 Digester #1 1 Digester #2 1 Hyrolysis Tank Building 1 Digester Building 1 Liquid Receiving Building 1 Electrical Gear 1 Electrical Instruments 1 Pressure Tank #1 2 Pressure Tank #2 1 FOG Tank 1 Gas Conditioning System 1 Boiler Pumps Building 1 Truck Scales 2 Bottle/Can Conveyer 1 Bottle/Can Crusher 1 Grinder 2 Hydrocylone 1 Grit Classifer 1 FOG Waste 2 Xerxes Tank 1 Amonia Stripping 2 Boilers 2 Gas Safety Equipment 1 Dewater Press 2 Gas Conditioning System 1 GE Package 1 Conveyers 1 Poly Tanks 1 Heat Exchangers 2 Polymer Dosing System 1 Air Compressers 3 Source: District asset management records 66 67 South Davis Sewer District December 31, 20 22 Local Government Fiscal or Calendar Year Ending Certification of Impact Fee Report In compliance with section 11 -36-301, Utah Code , as amended , which states in affect: “Each local political subdivision collecting impact fees shall: . . . establish a report that: (a) identifies impact fee funds by the year in which they were received, the project from which the funds were collected, the capital projects for which the funds were budgeted, and the projected schedule for expenditure; (b) is in a format developed by the state auditor; (c) is certified by the local political subdivision’s chief financial officer; and (d) is transmitted an nually to th e state auditor. ”

expenditure; (b) is in a format developed by the state auditor; (c) is certified by the local political subdivision’s chief financial officer; and (d) is transmitted an nually to th e state auditor. ” I, the undersigned, certify that the attached impact fees report is a true, correct, and complete copy of the report of impact fees on hand at fiscal/calendar year ending December 31, 2022, and their scheduled intended use.

Chief Financial Officer Local Government 68 Customer Name Account Service Amount Post Date Comments STREBEL, SHARLEE ANNE 19540-00 IMPACT FEES 1596.00 01/03/2022 F22001 R36212 HARDY, NICK & ANA 13677-00 IMPACT FEES 1596.00 01/20/2022 R# 36270 F22-002 SIKTEL, PRATIMA GYANWALI & 25373-00 IMPACT FEES 1596.00 01/24/2022 R36287 F22-003 KRISTENSEN, COLBY & JULIE 25374-00 IMPACT FEES 1596.00 01/24/2022 R#36289 F#22-005 SEELEY, JENNIFER L & ROBERT 25375-00 IMPACT FEES 1596.00 01/24/2022 R#36291 F#22-007 CAMPBELL, KEVIN & HEATHER 25376-00 IMPACT FEES 1596.00 01/24/2022 R#36293 F#22-009 CEBALLOS, OSCAR A 25377-00 IMPACT FEES 1596.00 01/24/2022 R#36294 F#22-010 MALDONADO, GUILLERMO 25380-00 IMPACT FEES 1596.00 01/24/2022 R#36292 F#22-008 REYES, JENNIFER 25381-00 IMPACT FEES 1596.00 01/24/2022 R#36290 F#22-006 POULSON, BENJAMIN & ALLISON 25382-00 IMPACT FEES 1596.00 01/24/2022 R#36288 F#22-004 RIMINI PROPERTIES LLC 04434-00 IMPACT FEES 2214.60 01/26/2022 F22011 R36316 AG RIMINI PROPERTIES LLC 04434-00 IMPACT FEES 1635.90 02/03/2022 R#36379 F#22-012 MORIANCUMER BNK LLC 05488-00 IMPACT FEES 3591.00 02/11/2022 F22013 36421 THE HIVE OFFICE BUILDING 25393-00 IMPACT FEES 6184.50 02/11/2022 F22083 36491 THE HIVE OWNERS ASSOC., INC 25443-00 IMPACT FEES 1596.00 02/15/2022 F22064 R36472

EES 3591.00 02/11/2022 F22013 36421 THE HIVE OFFICE BUILDING 25393-00 IMPACT FEES 6184.50 02/11/2022 F22083 36491 THE HIVE OWNERS ASSOC., INC 25443-00 IMPACT FEES 1596.00 02/15/2022 F22064 R36472 THE HIVE OWNERS ASSOC., INC 25445-00 IMPACT FEES 1596.00 02/15/2022 F22066 R36474 LAWRENCE, SIMEON M II & JODI 25446-00 IMPACT FEES 1596.00 02/15/2022 F22067 R36475 HALLIDAY, RYLIE & RYAN 25447-00 IMPACT FEES 1596.00 02/15/2022 F22068 R36476 CRUZ, JESUS ALDAIR 25448-00 IMPACT FEES 1596.00 02/15/2022 F22069 R36477 WOROB, THOMAS & ELLIE 25449-00 IMPACT FEES 1596.00 02/15/2022 F22070 R36478 PRICE, DAVID 25450-00 IMPACT FEES 1596.00 02/15/2022 F22071 R36479 WILLDEN, BRETT & LARISA 25451-00 IMPACT FEES 1596.00 02/15/2022 F22072 R36480 THE HIVE OWNERS ASSOC., INC 25452-00 IMPACT FEES 1596.00 02/15/2022 F22073 R36481 THE HIVE OWNERS ASSOC., INC 25453-00 IMPACT FEES 1596.00 02/15/2022 F22074 R36482 CW URBAN LLC 25454-00 IMPACT FEES 1596.00 02/15/2022 F22075 R36483 CW URBAN LLC 25455-00 IMPACT FEES 1596.00 02/15/2022 F220476 R36484 RIDDLEBERGER, MORGAN C 25456-00 IMPACT FEES 1596.00 02/15/2022 F22077 R36485 HULIYAPPA, NITHIN 25457-00 IMPACT FEES 1596.00 02/15/2022 F22078 R36486 CW URBAN LLC 25458-00 IMPACT FEES 1596.00 02/15/2022 F22079 R36487 PHILLIPS, JEANNE & SCOTT 25459-00 IMPACT FEES 1596.00 02/15/2022 F22080 R36488 CW URBAN LLC 25460-00 IMPACT FEES 1596.00 02/15/2022 F22081 R36489 RINDLISBACHER, BRANDON & 25461-00 IMPACT FEES 1596.00 02/15/2022 F22082 R36490 THE HIVE OWNERS ASSOC., INC 25444-00 IMPACT FEES 1596.00 02/16/2022 F22065 36473 BENJAMIN SHELDON - TRUSTEE 10828-00 IMPACT FEES 1596.00 03/01/2022 F22-085 R#36552 NELSON, HANK & EMILY 34295-00 IMPACT FEES 1596.00 03/01/2022 F22-083 R#36551

BENJAMIN SHELDON - TRUSTEE 10828-00 IMPACT FEES 1596.00 03/01/2022 F22-085 R#36552 NELSON, HANK & EMILY 34295-00 IMPACT FEES 1596.00 03/01/2022 F22-083 R#36551 DUNN, RICHARD & TIFFANY 17220-00 IMPACT FEES 1596.00 03/04/2022 F22086 36572 WARNER, MARCELA CARRILLO & 19756-00 IMPACT FEES 1596.00 03/08/2022 F22-087 R#36582 SAX, KIMBERLY NASIEF & 19757-00 IMPACT FEES 1596.00 03/08/2022 F22-088 R#36583 NSL PARK LOFTS AT CITY 00973-00 IMPACT FEES 9576.00 03/10/2022 F22-089 R#36595 JUAREZ, OMAR & MICHELE 05487-00 IMPACT FEES 1596.00 03/14/2022 F22090 R36614 MORTENSEN, KIRSTIE & BRENT 25378-00 IMPACT FEES 1596.00 03/14/2022 F22-091 R#36615 HATCH, KORT JENSEN & 25379-00 IMPACT FEES 1596.00 03/14/2022 F22-092 R#36616 SALMON HVAC / PASTURE LLC 03014-00 IMPACT FEES 1596.00 03/17/2022 F22097 36636 SYMPHONY HOMES, LLC 05782-00 IMPACT FEES 1596.00 03/17/2022 F22-096 R#36634 CHAPMAN, KARA 05783-00 IMPACT FEES 1596.00 03/17/2022 F22094 36632 SYMPHONY HOMES, LLC 05784-00 IMPACT FEES 1596.00 03/17/2022 F22095 36633 NA'A, TEVITA P & LAVONI 25336-00 IMPACT FEES 1596.00 03/18/2022 F22098 R36641 POFFENBERGER, GREG 25337-00 IMPACT FEES 1596.00 03/18/2022 F22099 36642 ANATO, FERNANDO JAVIER 25338-00 IMPACT FEES 1596.00 03/18/2022 F22100 36643 SADLER, FRANKA & ROY 25339-00 IMPACT FEES 1596.00 03/18/2022 F22101 36644 WOODBURY, ARTHUR & ESTHER 25340-00 IMPACT FEES 1596.00 03/18/2022 F22102 36645 JOHNSTON, LINDSEY WILLIAMS & 25341-00 IMPACT FEES 1596.00 03/18/2022 F22103 36646 JOHNSON, QUECH CHIV & 25342-00 IMPACT FEES 1596.00 03/18/2022 F22104 R36647 SUAREZ, ANTONIO ALVAREZ 25343-00 IMPACT FEES 1596.00 03/18/2022 F22105 36648 CARLISLE, TRISTAN & SARAH 25344-00 IMPACT FEES 1596.00 03/18/2022 F22106 36649

T FEES 1596.00 03/18/2022 F22104 R36647 SUAREZ, ANTONIO ALVAREZ 25343-00 IMPACT FEES 1596.00 03/18/2022 F22105 36648 CARLISLE, TRISTAN & SARAH 25344-00 IMPACT FEES 1596.00 03/18/2022 F22106 36649 BEITEL, STUART & KRISSY 25345-00 IMPACT FEES 1596.00 03/18/2022 F22107 36650 WEBB, HEATHER & SPENCER 25346-00 IMPACT FEES 1596.00 03/18/2022 F22108 36651 KAHUHU, CLEMENT & ANGELA 25347-00 IMPACT FEES 1596.00 03/18/2022 F22109 36652 FEHR, KARLI 25348-00 IMPACT FEES 1596.00 03/18/2022 F22110 36653 STRONG, JORDAN & LAURA 25349-00 IMPACT FEES 1596.00 03/18/2022 F22111 36654 Continued next pageSOUTH DAVIS SEWER DISTRICT Schedule of Impact Fees For the Year Ending, December 31, 2022 69 HWANG, ISAAC DUSHKU & SUMIN 25350-00 IMPACT FEES 1596.00 03/18/2022 F22112 36655 LOW, WILLIAM W & SARAH M 25351-00 IMPACT FEES 1596.00 03/18/2022 F22113 36656 LIU, DANIEL FRYE & TONG 25352-00 IMPACT FEES 1596.00 03/18/2022 F22114 36657 ELLIOTT, ANNELIESA ALLRED & 25353-00 IMPACT FEES 1596.00 03/18/2022 F22115 36658 SCHULTZ, TERRY 25354-00 IMPACT FEES 1596.00 03/18/2022 F22116 36659 ERICKSON, RYAN~ 25355-00 IMPACT FEES 1596.00 03/18/2022 F22117 36660 FAISAL, AARON & PHILIP 25356-00 IMPACT FEES 1596.00 03/18/2022 F22118 36661 CHRISTIANSEN, DEVIN L & HALEE 25357-00 IMPACT FEES 1596.00 03/18/2022 F22119 R36662 GUSTAFSON, JUSTIN & VALERIE 25358-00 IMPACT FEES 1596.00 03/18/2022 F22120 36663 MOUNGA, KALOLAINE & PAULA 25359-00 IMPACT FEES 1596.00 03/18/2022 F22121 36664 GONZALEZ, YASMIN LOPEZ & 25360-00 IMPACT FEES 1596.00 03/18/2022 F22122 36665 TALIVAKAOLA, JANE & NIUTANA~ 25361-00 IMPACT FEES 1596.00 03/18/2022 F22123 36666 TURNER, KRYSTAL & CALEB 25362-00 IMPACT FEES 1596.00 03/18/2022 F22124 36667

EES 1596.00 03/18/2022 F22122 36665 TALIVAKAOLA, JANE & NIUTANA~ 25361-00 IMPACT FEES 1596.00 03/18/2022 F22123 36666 TURNER, KRYSTAL & CALEB 25362-00 IMPACT FEES 1596.00 03/18/2022 F22124 36667 MOULTRIE, DAVE & DEANNA 19507-00 IMPACT FEES 1596.00 03/28/2022 F22125 36688 NSL PARK LOFTS AT CITY 00973-00 IMPACT FEES 11172.00 03/31/2022 F22-126-132 R36707-36713 HANSEN, MARK & LESLIE 31789-00 IMPACT FEES 1596.00 04/01/2022 F22-133 R#36715 ANDERSON, PAUL & AINSLEY 19611-00 IMPACT FEES 1596.00 04/19/2022 F22-134 R36755 MUKAI, KRISTEN & KEVIN 19574-00 IMPACT FEES 1596.00 04/21/2022 F22-136 R36767 PLATT, RUSSELL 19905-00 IMPACT FEES 1596.00 04/27/2022 F22-137 R36788 NSL PARK LOFTS AT CITY 00973-00 IMPACT FEES 7980.00 05/05/2022 F22139 R36828 CAVANAUGH, BRAD & SHANNON 18684-00 IMPACT FEES 1596.00 05/05/2022 F22-140 R36831 WEST BOUNTIFUL CITY~ 04657-00 IMPACT FEES 3032.40 05/06/2022 F22141 R36834 JF SKY LANDING PARTNERS LLC 11068-00 IMPACT FEES 30164.40 05/09/2022 F22-142 R36839 STOUT, JAMES & REBECCA~ 25238-00 IMPACT FEES 1596.00 05/13/2022 F22143 R36858 DAILEY DEVELOPMENT GROUP 19755-00 IMPACT FEES 1596.00 05/16/2022 F22-144 R36867 SPENCER STEPHENS 13255-00 IMPACT FEES 1596.00 06/02/2022 F22145 R36924 WHITLEDGE, LYNNE 25136-00 IMPACT FEES 1596.00 06/09/2022 F22-146 R36946 RIORDAN, PAULA & DAVID L 19003-00 IMPACT FEES 1596.00 06/22/2022 F22147 R 36997 LEADING TECH CONSTRUCTION 18475-00 IMPACT FEES 8139.60 06/28/2022 F22148 R37036 BOUWHUIS, BRENN & KIMBERLY 17972-00 IMPACT FEES 1596.00 06/29/2022 F22-149 R37039 RUPP, JOSEPH & JENNIFER 16054-00 IMPACT FEES 1596.00 07/07/2022 F22-150 R37071 STOUT BUILDING CONTRACTORS 17988-00 IMPACT FEES 1596.00 07/20/2022 F22-152 R37120 STOUT BUILDING CONTRACTORS 17989-00 IMPACT FEES 1596.00 07/20/2022 F22151 R37119

STOUT BUILDING CONTRACTORS 17988-00 IMPACT FEES 1596.00 07/20/2022 F22-152 R37120 STOUT BUILDING CONTRACTORS 17989-00 IMPACT FEES 1596.00 07/20/2022 F22151 R37119 STOUT BUILDING CONTRACTORS 17990-00 IMPACT FEES 1596.00 07/20/2022 F22153 R37121 SI BUILDERS LLC 19521-00 IMPACT FEES 1596.00 07/28/2022 F22-155 R37173 TOMECEK, BRANDON & AUBREY 19701-00 IMPACT FEES 1596.00 08/01/2022 F22-174 R37211 TOLL BROS INC 19702-00 IMPACT FEES 1596.00 08/01/2022 F22185 R37222 TOLL BROS INC 19703-00 IMPACT FEES 1596.00 08/01/2022 F22-178 R37215 MORIC, KATELYN & ENDI 19704-00 IMPACT FEES 1596.00 08/01/2022 F22-175 R37212 TOLL BROS INC 19766-00 IMPACT FEES 1596.00 08/01/2022 F22-176 R37213 STOLPE, STANLEY A 19767-00 IMPACT FEES 1596.00 08/01/2022 F22-168 R37205 TOLL BROS INC 19768-00 IMPACT FEES 1596.00 08/01/2022 F22-169 R37206 MARTIN, BROOK 19775-00 IMPACT FEES 1596.00 08/01/2022 F22-172 R37209 LABOSSIERE, SARAH FLUHMAN & 19776-00 IMPACT FEES 1596.00 08/01/2022 F22-177 R37214 TOLL BROS INC 19777-00 IMPACT FEES 1596.00 08/01/2022 F22187 R37224 TOLL BROS INC 19779-00 IMPACT FEES 1596.00 08/01/2022 F22186 R37223 TOLL BROS INC 19780-00 IMPACT FEES 1596.00 08/01/2022 F22188 R37225 TOLL BROS INC 19781-00 IMPACT FEES 1596.00 08/01/2022 F22-179 R37216 TOLL BROS INC 19786-00 IMPACT FEES 1596.00 08/01/2022 F22183 R37220 TOLL BROS INC 19787-00 IMPACT FEES 1596.00 08/01/2022 F22-180 R37217 TOLL BROS INC 19788-00 IMPACT FEES 1596.00 08/01/2022 F22182 R37219 TOLL BROS INC 19789-00 IMPACT FEES 1596.00 08/01/2022 F22-181 R37218 TOLL BROS INC 19792-00 IMPACT FEES 1596.00 08/01/2022 F22184 R37221 TOLL BROS INC 19795-00 IMPACT FEES 1596.00 08/01/2022 F22-170 R37207

NC 19789-00 IMPACT FEES 1596.00 08/01/2022 F22-181 R37218 TOLL BROS INC 19792-00 IMPACT FEES 1596.00 08/01/2022 F22184 R37221 TOLL BROS INC 19795-00 IMPACT FEES 1596.00 08/01/2022 F22-170 R37207 TOLL BROS INC 19797-00 IMPACT FEES 1596.00 08/01/2022 F22-171 R37208 TOLL BROS INC 19798-00 IMPACT FEES 1596.00 08/01/2022 F22-173 R37210 CW URBAN LLC 25525-00 IMPACT FEES 1596.00 08/01/2022 F22-167 R37202 CW URBAN LLC 25526-00 IMPACT FEES 1596.00 08/01/2022 F22-157 R37192 CW URBAN LLC 25527-00 IMPACT FEES 1596.00 08/01/2022 F22-158 R37193 CW URBAN LLC 25528-00 IMPACT FEES 1596.00 08/01/2022 F22-159 R37194 CW URBAN LLC 25529-00 IMPACT FEES 1596.00 08/01/2022 F22-160 R37195 FISCHER, MARGARET 25530-00 IMPACT FEES 1596.00 08/01/2022 F22-161 R37196 CW URBAN LLC 25531-00 IMPACT FEES 1596.00 08/01/2022 F22-162 R37197 LONGSON, BART & JULIETTE 25532-00 IMPACT FEES 1596.00 08/01/2022 F22-163 R37198 CW URBAN LLC 25533-00 IMPACT FEES 1596.00 08/01/2022 F22-164 R37199 CW URBAN LLC 25534-00 IMPACT FEES 1596.00 08/01/2022 F22-165 R37200 Continued next page 70 CW URBAN LLC 25535-00 IMPACT FEES 1596.00 08/01/2022 F22-166 R37201 CW URBAN LLC 25536-00 IMPACT FEES 1596.00 08/01/2022 F22-167 R37202 DAILEY DEVELOPMENT GROUP 19741-00 IMPACT FEES 1596.00 08/04/2022 F22-189 R37250 HOGAN & ASSOCIATES 10840-00 IMPACT FEES 4537.75 08/08/2022 F22-190 R37260 RITZ, KENDALL & BROOKLYN 10925-00 IMPACT FEES 1596.00 08/18/2022 F22-191 R37308 MAIN STREET INVESTMENTS LLC 32092-00 IMPACT FEES 1635.90 08/23/2022 *8/23/22 F22192 R37329 BUILD OUT CHEVRON PIPE LINE COMPANY 03099-00 IMPACT FEES 1787.80 09/06/2022 9/2/22 IMPACT FEES OWED THROUGH BY LYNDON 8/24/22. SEE FILE FOR INVOICEKNOWLTON GENERAL 02160-00 IMPACT FEES 7980.00 09/12/2022 F22-195 R37394

E LINE COMPANY 03099-00 IMPACT FEES 1787.80 09/06/2022 9/2/22 IMPACT FEES OWED THROUGH BY LYNDON 8/24/22. SEE FILE FOR INVOICEKNOWLTON GENERAL 02160-00 IMPACT FEES 7980.00 09/12/2022 F22-195 R37394 BOUNTIFUL CITY 30327-00 IMPACT FEES 997.50 09/12/2022 F22-194 R37393 SKYLAND INVESTMENT & 19761-00 IMPACT FEES 15296.00 09/13/2022 F22-196 R37398 SKYLAND INVESTMENT & 19761-00 IMPACT FEES 1596.00 09/13/2022 F22-196 R37398 RENAISSANCE VENTURE #141402 30922-00 IMPACT FEES 1795.50 09/15/2022 F22-197 R37411 ENVISION RADIOLOGY LUKER, LAUREN & MCKAY 16053-00 IMPACT FEES 1596.00 09/19/2022 F22-198 R37424 HAVENHILL HOMES LLC 19587-00 IMPACT FEES 1596.00 10/04/2022 F22-199 R37476 CHAMBERLAIN, ROBERT 03007-00 IMPACT FEES 2016.80 10/05/2022 *10/3/22 ADDITIONAL IMPACT FEES WITH BECKY.

NEW TENNANT BUILDOUT - SHELL RONI. MDSECOND ANNA STEVENSON 04444-00 IMPACT FEES 3511.20 10/07/2022 F22-200 R37490 BRANDON BODELL 17224-00 IMPACT FEES 1596.00 10/19/2022 F22-201 R37526 MOSER, ANDREW & JAMIE 17219-00 IMPACT FEES 1936.00 10/24/2022 F22203 R37543 W/$400 FEE ST OLAFS CATHOLIC CHURCH & 31411-00 IMPACT FEES 3231.90 11/01/2022 F22-205 R37580 BROOKS LLC 30756-00 IMPACT FEES 12768.00 11/08/2022 F22206 R37604 14 APTS ADAMS, AIRETY & BRIAN 17269-00 IMPACT FEES 1596.00 11/21/2022 F22-208 R37644 JANISCH, ERIC & NIGEEN 25233-00 IMPACT FEES 1486.75 12/05/2022 F22210 R37691 ALLEN, JACE & KAMILLE 10594-00 IMPACT FEES 1377.50 12/08/2022 F22-211 R37700 SILVER SKY LLC 14186-00 IMPACT FEES 2033.00 12/19/2022 F22-213 R37738 SILVER SKY LLC 14187-00 IMPACT FEES 1596.00 12/19/2022 F22-214 R37739 SILVER SKY LLC 14188-00 IMPACT FEES 1596.00 12/19/2022 F22-215 R37740 SILVER SKY LLC 14189-00 IMPACT FEES 1596.00 12/19/2022 F22-216 R37741

14187-00 IMPACT FEES 1596.00 12/19/2022 F22-214 R37739 SILVER SKY LLC 14188-00 IMPACT FEES 1596.00 12/19/2022 F22-215 R37740 SILVER SKY LLC 14189-00 IMPACT FEES 1596.00 12/19/2022 F22-216 R37741 SILVER SKY LLC 14190-00 IMPACT FEES 1596.00 12/19/2022 F22-217 R37742 UPDWELL HOMES LLC 14976-00 IMPACT FEES 1596.00 12/19/2022 F22-212 R37737 Grand Total 353,562 Source: District engineering and receivable records Notes: Does not include $50 inspection fee 71 STATISTICAL SECTION 72 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 supple mentary 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 Statemen t1, GASB 44 provides the requirements for the schedules contained in this section of the District’s Annual Comprehensive Financial Report .

Contents Page Financial Trends 72 These schedules contain trend information to hel p the reader.

understand how the District’s financial performance and well-being.

have changed over time.

Revenue Capacity 75 These schedules contain information to help the reader assess the District ’s most significant local revenue sources .

Debt Capacity 84 These sched ules 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 Infor mation 94

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 Infor mation 94 These s chedule s offer demogra phic and economic indicators to help the reader understand the environment within which the District ’s financial activities take place.

Operating Information These schedules contain service and infras tructure data to assist 98 the reader unde rstands how the information in the District ’s financial report relates to the service the District provides and the activities it performs.

Sources: Unless otherwise noted, the information in these sched ules is de rived from the Annual Comprehensive Financial Reports for the relevant year.

2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Assets Current & Other Assets 8,590,399$ 25,454,172$ 19,048,196$ 8,597,216 $ 7,852,500$ 13,759,859$ 19,629,290$ 19,562,221$ 15,739,177$ 15,524,487$ Other Restricted Assets 14,204,791 12,097,878 12,105,663 12,790,626 5,007,571 16,200,816 - Capital 118,938,307 110,882,997 103,786,688 101,676,993 95,253,455 75,335,401 62,622,006 61,735,456 60,919,692 59,235,406 Total Assets 141,733,497$ 148,435,047$ 134,940,547$ 123,064,835$ 108,113,526$ 105,296,076$ 82,251,296$ 81,297,677$ 76,658,869$ 74,759,893$ Deferred Outflows of Resources 913,405 745,609 707,206 1,208,371 737,874 1,070,080 900,460 361,388 - Total Assets & Deferred Outflows of Resources 142,646,902$ 149,180,656$ 135,647,753$ 124,273,206$ 108,851,400$ 106,366,156$ 83,151,756$ 81,659,065$ 76,658,869$ 74,759,893$

- Total Assets & Deferred Outflows of Resources 142,646,902$ 149,180,656$ 135,647,753$ 124,273,206$ 108,851,400$ 106,366,156$ 83,151,756$ 81,659,065$ 76,658,869$ 74,759,893$ Liabilities Current Liabilities 3,811,384$ 2,247,166 $ 2,247,166$ 2,374,684 $ 720,046 $ 816,681 $ 522,624$ 403,320$ 330,507$ 486,103$ Non-Current Liabilities 37,093,368 31,317,639 31,317,639 33,979,354 22,271,761 22,868,453 1,948,777 1,343,615 403,555 381,180 Total Liabilities 40,904,752$ 33,564,805$ 33,564,805$ 36,354,038$ 22,991,807$ 23,685,134$ 2,471,401$ 1,746,935$ 734,062$ 867,283$ Deferred Inflows of Resources 3,425,698 1,444,073 707,262 38,377 568,209 207,617 128,199 127,979 Total Liabilities & Deferred Inflows of Resources 44,330,450$ 35,008,878$ 34,272,067$ 36,392,415$ 23,560,016$ 23,892,751$ 2,599,600$ 1,874,914$ 734,062$ 867,283$ Net Position: Net Investment in Capital Assets 88,632,423$ 76,143,162$ 74,410,887$ 69,480,107$ 74,470,294$ 56,736,773$ 62,253,415$ 61,660,782$ 60,838,477$ 59,235,406$ Restricted - Net Pension 3,035,089 - - - - Restricted - Capital Projects 10,068,063 10,075,848 10,725,278 2,942,223 14,184,170 Restricted - Debt Service 2,427,529 2,029,815 2,016,206 2,065,348 2,016,645 18,298,741 18,123,369 15,086,330 14,657,204 Unrestricted 6,648,940 5,423,208 2,753,473 5,659,200 5,813,519 9,535,817

2,065,348 2,016,645 18,298,741 18,123,369 15,086,330 14,657,204 Unrestricted 6,648,940 5,423,208 2,753,473 5,659,200 5,813,519 9,535,817 Total Net Position 98,316,452$ 94,061,962$ 89,270,023$ 87,880,791$ 85,291,384$ 82,473,405$ 80,552,156$ 79,784,151$ 75,924,807$ 73,892,610$ Source: District accounting and financial records, Zions Trust and Zions Public Finance 2012 Contracted with the EPA to operate a superfund site (OU2) in West Bountiful.

Issued 20-year taxable revenue bonds series 2017A to finance construction of the WRR facility ($21,195,000) Issued 20-year revenue bonds series 2019 to finance South Treatment Plant rehabilitation ($12,179,000).

Issued 20-year revenue bonds, series 2021 to finance both Treatment Plants rehabilitation ($10,000,000) GASB Statement No 68 (Pension Plans) implemented in 2015SOUTH DAVIS SEWER DISTRICT Statement of Net Position Last Ten Fiscal Years (Unaudited) Notes: SDSD is the agent entity for a interlocal agreement for the Wasatch Front Water Quality Council (WFWQC)Schedule 1 73 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Operating Revenues Sewer Service Fees 9,999,186 $ 8,093,281$ 5, 199,733$ 5, 082,655$ 3, 799,780$ 2, 503,469$ 2, 471,683$ 2, 266,210$ 2, 235,118$ 2, 188,651$ Sewer Special Treatment Fees 658,907 652,034 404, 955 383, 725 336, 261 205, 292 197, 526 180, 779 213, 554 255, 804 Inspection & Project Fees 63,660 85,118 68, 800 113, 135 93, 980 34, 276 33, 730 20, 470 40, 200 52, 460

804 Inspection & Project Fees 63,660 85,118 68, 800 113, 135 93, 980 34, 276 33, 730 20, 470 40, 200 52, 460 Other 95,982 711,947 523, 784 464, 083 470, 537 454, 201 278, 265 295, 526 253, 912 334, 343 Total Operating Revenue 10,817,735$ 9,542,380$ 6, 197,271$ 6, 043,598$ 4, 700,558$ 3, 197,238$ 2, 981,204$ 2, 762,985$ 2, 742,784$ 2, 831,258$ Operating Expenses Operating & Maintenance 8,451,481 $ 7,255,661$ 7, 571,711$ 6, 709,393$ 7, 120,946$ 6, 691,513$ 6, 666,828$ 5, 935,569$ 5, 532,400$ 5, 407,450$ Depreciation 292,788 467,448 458, 530 279, 873 285, 891 323, 330 326, 654 278, 380 342, 111 360, 330 Total Operating Expenses 8,744,269 $ 7,723,109$ 8, 030,241$ 6, 989,266$ 7, 406,837$ 7, 014,843$ 6, 993,482$ 6, 213,949$ 5, 874,511$ 5, 767,780$ Operating Income (Loss) 2,073,466 $ 1,819,272$ ( 1,832,970)$ (945,668)$ ( 2,706,279)$ (3,817,605)$ (4,012,278)$ (3,450,964)$ (3,131,727)$ (2,936,522)$ Nonoperating Revenue (Expenses) General Property Tax 4,838,069 $ 3,448,081$ 2, 304,411$ 2, 272,062$ 2, 483,497$ 2, 102,078$ 2, 282,560$ 2, 208,762$ 2, 078,046$ 2, 119,222$ Impact Fees 353,562 778,076 903, 643 624, 221 604, 760 589, 843 592, 322 4, 572,029 868, 201 1, 029,824 Miscellaneous Revenue - - - - 119, 065 140, 865 113, 190 175, 989

4, 572,029 868, 201 1, 029,824 Miscellaneous Revenue - - - - 119, 065 140, 865 113, 190 175, 989 Intergovernmental Contributions 804,000 800,000 800, 700 933, 285 1, 040,344 924, 746 900, 827 785, 000 600, 000 550, 000 Project Grant - - - - - - - - 69, 418 Interest Income 273,562 50,435 186, 855 184, 810 306, 480 302, 862 178, 050 94, 186 75, 657 81, 659 Gain (Loss) on Disposal of Property 48,615 38,463 24, 552 98, 114 256, 975 87, 959 36, 394 33, 603 104, 325 43, 625 Interest & Bond Costs (1,234,371) (1,158,733) ( 1,101,213) ( 914,791) - ( 483,601) - - - Net Change in Fair Value of Investments 5,568 (8,438) 34, 304 144, 118 58, 256 13, 482 20, 829 ( 14,326) ( 2,552) ( 6,336) Equity in Earnings (Loss) WRR (2,337,907) (1,293,403) ( 1,957,333) ( 1,046,350) ( 124,039) ( 123,714) Impairment Loss (2,500,000) Contributions to Other Governments (163,918) Total Non-Operating Revenue (Expense) 87,180 $ 2,654,481$ 1, 195,919$ 2, 295,469$ 4, 626,273$ 3, 413,655$ 4, 130,047$ 7, 820,119$ 3, 836,867$ 4, 063,401$

vernments (163,918) Total Non-Operating Revenue (Expense) 87,180 $ 2,654,481$ 1, 195,919$ 2, 295,469$ 4, 626,273$ 3, 413,655$ 4, 130,047$ 7, 820,119$ 3, 836,867$ 4, 063,401$ Income (Loss) Before Contributions 2,160,646 $ 4,473,752$ ( 637,051)$ 1, 349,801$ 1, 919,994$ ( 403,950)$ 117, 769 $ 4, 369,155$ 705, 140 $ 1, 126,879$ Capital Contributions - Assets 2,093,844 318,187 2, 026,283 1, 239,606 897, 985 2, 325,199 650, 236 266, 362 1, 327,057 2, 871,442 Increase in Net Assets 4,254,490 $ 4,791,939$ 1, 389,232$ 2, 589,407$ 2, 817,979$ 1, 921,249$ 768, 005 $ 4, 635,517$ 2, 032,197$ 3, 998,321$ Total Net Position at Beginning of Year 94,061,962 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 Prior Period Adjustment - - - - - - - ( 776,173) - 73, 694 Total Net Positon at End of Year 98,316,452$ 94,061,963$ 89,270,023$ 87,880,791$ 85,291,384$ 82,473,405$ 80,552,156$ 79,784,151$ 75,924,807$ 73,818,916$ Source: District accounting and financial records, Davis County Notes 2013 & 2015 prior period adjustment resulted from a journal entry error.

5,924,807$ 73,818,916$ Source: District accounting and financial records, Davis County Notes 2013 & 2015 prior period adjustment resulted from a journal entry error.

2015 GASB Statement No 68 (Penson Plan) implremented 2015 received impact fee from Holly Refinery for $3,702,000 Issued 20-year taxable revenue bonds series 2017A to finance construction of WRR facility Issued 20-year taxable revenue bonds series 2019 to finance plant rehabilitation of South Treatment Plant. Issued 15-year combined utility bonds, series 2021 to finance plant rehabilitation of South Treatment Plant.

Wasatch Resouce Recovery Impairment Loss 2022SOUTH DAVIS SEWER DISTRICT Statement of Revenues, Expenses and Changes in Net Position Last Ten Fiscal Years (Unaudited)Schedule 2 74 Special Treatment Project & Year Sewer Fees Inspection Fees Other Total 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$ 2021 8,093,281$ 791,683$ 249,328$ 9,134,292$ 2022 9,999,186$ 722,567$ 95,982 $ 10,817,735$ Source: District accounting records Notes: Sewer Service rate increase from $10.00 per month to $15.50 per month, effective January 2021SOUTH DAVIS SEWER DISTRICT Operating Revenues (Unaudited) Last Ten Fiscal Years

counting records Notes: Sewer Service rate increase from $10.00 per month to $15.50 per month, effective January 2021SOUTH DAVIS SEWER DISTRICT Operating Revenues (Unaudited) Last Ten Fiscal Years Sewer Service rate increase from $15.50 per month, to $19.00 per month, effective January 2022 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YearOperating RevenueSchedule 3 75 Grant & Capital Impact Misc Inter Govt Year Taxes Contributions Fees Interest Revenue Contributions Total 2013 2,119,222$ 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 $ 2021 3,448,081$ 318,187 $ 778,076 $ 50,435 $ 121,420$ 800,000$ 5,516,199 $ 2022 4,838,069$ 2,093,844$ 353,562 $ 273,562$ 163,918$ 804,000$ 8,526,955 $ Source: District financial and accounting records

,435 $ 121,420$ 800,000$ 5,516,199 $ 2022 4,838,069$ 2,093,844$ 353,562 $ 273,562$ 163,918$ 804,000$ 8,526,955 $ Source: District financial and accounting records Tax Increment from CDA is classified as Miscellaneous Income Received in 2015 impact fee from Holly Refinery expansion in the amount of $3,702,000Notes: Table & chart does not include realized, unrealized, gain or loss from investments and/or sale of equipmentSOUTH DAVIS SEWER DISTRICT Non Operating Revenue (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 $8,000,000 $9,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YearNon Operating RevenueSchedule 4 76 Source: District financial and accounting records, Davis County Auditor/Clerks officeSOUTH DAVIS SEWER DISTRICT Revenues by Source (Unaudited) Last Ten Fiscal Years $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Taxes $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Sewer User Fees $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Impact Fees $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Special Treatment FeesSchedule 5 77 Source: District financial and accounting records.

Note: 2017 and 2018 Miscellaneous non-operating revenue was reclassified to Other operating revenueSOUTH DAVIS SEWER DISTRICT Revenues by Source (Unaudited) Last Ten Fiscal Years 2021, $241,102.84 was received from ALPRO for NOV fine $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2013 2014

SEWER DISTRICT Revenues by Source (Unaudited) Last Ten Fiscal Years 2021, $241,102.84 was received from ALPRO for NOV fine $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Capital Contributions $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Interest Revenue $- $100,000 $200,000 $300,000 $400,000 $500,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Other Revenue $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Miscellaneous RevenueSchedule 6 78 Total Tax Collection in Levy for Percentage Subsequent Percentage Year Fiscal Year Amount of Levy Periods Amount of Levy 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 $ 2,289,978 $ 97.7% 2021 3,287,121 $ 3,151,084 $ 95.9% 86,346 $ 3,237,429 $ 98.5% 2022 4,379,851 $ 4,205,357 $ 96.0% 126,180 $ 4,331,537 $ 98.9%

97.7% 2021 3,287,121 $ 3,151,084 $ 95.9% 86,346 $ 3,237,429 $ 98.5% 2022 4,379,851 $ 4,205,357 $ 96.0% 126,180 $ 4,331,537 $ 98.9% Source: Utah State Tax Commission, Davis County Assessor's Office and Davis County Treasurer's Office. SOUTH DAVIS SEWER DISTRICT Schedule 7 Property Tax Levies and Collections (Unaudited) Last Ten Fiscal Years Collected in First Period Total Collections 79 Year Annual Annual Sewer Service Fee Sewer Service Fee Impact (Single Residential Home) (Single Mobile Home) Fee 2013 $60 $48 $1,596 2014 $60 $48 $1,596 2015 $60 $48 $1,596 2016 $60 $48 $1,596 2017 $60 $48 $1,596 2018 $120 $96 $1,596 2019 $120 $96 $1,596 2020 $120 $96 $1,596 2021 $186 $150 $1,596 2022 $228 $186 $2,453 Source: District financial and accounting records, Zions Public Finance, and Resolution 110-5.

Notes: 2022 impact fees increased from $1,596 to $2,253SOUTH DAVIS SEWER DISTRICT Sewer Service and Impact Fee Rates (Unaudited) Last Ten Fiscal Years 2022 sewer service rates increased annually from $186 to $228Schedule 8 80 81 SOUTH DAVIS SEWER DISTRICT Schedule 9 Major Wastewater Contributors For the Year Ending December 31, 2022 DISTRICT DISCHARGE CAR WASH / DEALERS 68,231,000 LARGE RETAILST ORES 65,008,000 MEDICAL CENTERS / RETIREMENT HOMES 45,437,000 RESAURANTS 44,828,000 HOTELS 19,328,000 HEATLH CLUBS / BOUNTIFUL REC. CENTER 18,919,000 DAVIS COUNTY CHURCHES 16,446,000 DAVIS COUNTY SCHOOLS 15,544,000 DRY CLEANERS / LAUNDRY 9,645,000 BOUNTIFUL CITY SOUTH DAVIS REC CENTER 13,729,000 LDS TEMPLE BOUNTIFUL UT 8,220,000 LAKEVIEW HOSPITAL 5,986,000 LIFE CARE CENTER OF BOUNTIFUL 5,086,000 QQ UTAH 3 LLC 5,023,000

/ LAUNDRY 9,645,000 BOUNTIFUL CITY SOUTH DAVIS REC CENTER 13,729,000 LDS TEMPLE BOUNTIFUL UT 8,220,000 LAKEVIEW HOSPITAL 5,986,000 LIFE CARE CENTER OF BOUNTIFUL 5,086,000 QQ UTAH 3 LLC 5,023,000 QQ UTAH 3 LLC 4,933,000 COMMON CENTS CAR WASH 4,437,000 MISTER CAR WASH - CAPTURIS 4,337,000 G&E HEALTHCARE REIT RENAISSANCE LLC 4,308,000 AVALON CARE CENTER 4,003,000 WHITE COIN LAUNDRY MAT 3,731,000 KRO-706-444 SMITH FOOD KING 3,652,000 BLUE HARBER SR L. HERITAGE PLACE INC 3,311,000 EOS FITNESS FINESS ALLIANCE 3,207,000 SLIM OLS0N SERVICE STATION 3,139,000 BOUNTIFUL CITY PARK 3,121,000 SO. DAVIS COMM HOSPITAL 2,840,000 PARK PLACE INVESTMENT LLC 2,641,000 CREEKSIDE SENIOR LIVING @BNT 2,480,000 CTR PARTNERSHIP LP 2,456,000 MANDARIN RESTAURANT 2,341,000 CHURCH OF JESUS CHRIST 2,122,000 IRA TIC 2, LLC 2,028,000 CENTERVILLE AIR PRODUCTS MFG CORP * 13,800,328 QQ UTAH LLC 6,817,000 IN & OUT BURGER 2,023,000 LEGACY CROSSING / MEGA PLEX 1,935,000 Schedule 9 is continued on the next page.

82 Schedule 9 NORTH SALT LAKE BIG WEST OIL REFINERY * 227,706,870 INNOPHOS LLC 21,397,000 BIG WEST OIL Other Buildings 11,194,000 DURA LINE CORP 6,286,000 SUN PONY EXPRESS RV 5,480,000 RICK JENSEN CAR WASH 5,258,000 CHEVRON PRODUCTS COMPANY * 5,211,349 QQ UTAH 3 LLC - CAR WASH 5,154,000 ZERO MANUFACTURING INC 4,773,295 COTTONTREE INN 4,182,000 ADVANCED DRAINAGE SYSTEMS INC 3,917,000 ALBERTSON'S DISTRICT CENTER 3,208,000 JJ BAKD -VIP CAR WASH 3,032,000 PILOT TRAVEL PLAZA 2,855,000 AMERICAN SPECIALTY GLASS 2,808,000 STERICYCLE INC 2,428,894 HOLIDAY OIL CO 2,394,000 OVERLAND LEASING LLC 2,357,000 PIONEER STORAGE 2,232,000 CHURCH OF JESUS - REGINAL 2,149,000 ADVANCED METAL FINISHING INC 2,122,000 HERM HUGHES & SON 2,086,000

,428,894 HOLIDAY OIL CO 2,394,000 OVERLAND LEASING LLC 2,357,000 PIONEER STORAGE 2,232,000 CHURCH OF JESUS - REGINAL 2,149,000 ADVANCED METAL FINISHING INC 2,122,000 HERM HUGHES & SON 2,086,000 SUPERCHILL PROPERTIES LLC 2,031,000 WEST BOUNTIFUL HOLLY FRONTIER WX REFINING * 389,619,530 COUNTY INN SUITES 2,450,000 CHUCK-A-RAMA BUFFET 2,143,000 COSTCO WAREHOUSE 1,885,000 WOODS CROSS HF SINCLAIR * 389,619,530 SILVER EAGLE REFINING -WX INC * 61,437,641 INTERMOUNTAIN HEALTH CARE INC 25,482,151 BENCHMARK REGIONAL HOSPITAL 5,826,000 CAT-OFFICE/ COWBOY ASPHALT * 5,753,397 INTOWN SUITES MANAGEMENT INC 5,265,000 MURDOCK CHEVROLET INC 3,951,000 D WOOD HOTEL - MOTEL 6 3,883,000 MANUEL FINE FOODS 3,322,000 WESTERN EMULSION INC 2,333,000 Source: District accounting & billing records 83 SOUTH DAVIS SEWER DISTRICT Schedule 10 Principle Rate Payers For the Year Ending December 31, 2022 NAME AMOUNT HF SINCLAIR WX REFINING LLC* $920,252.15 BIG WEST OIL LLC* $265,594.76 SILVER EAGLE REFINING -WX INC* $77,586.31 INTERMOUNTAIN HEALTH CARE INC $30,497.07 INNOPHOS LLC $27,680.36 CC8 BOUNTIFUL PROPERTY LLC $26,676.00 LAKEVIEW HOSPITAL $20,512.50 SOUTH DAVIS RECREATION CENTER $19,901.82 CHEVRON PRODUCTS COMPANY* $17,904.65 AIR PRODUCTS MFG CORP $16,548.67 COWBOY ASPHALT TERMINAL LLC* $16,022.51 BIG WEST OIL LLC - Other Buildings $15,124.53 CREEKSIDE SENIOR LIVING $15,048.00 SUN COMMUNITIES $14,136.00 LEGACY HOUSE OF BOUNTIFUL LLC $13,908.00 Source: District’s accounting and engineering records Note: * EPA Categorical Industries 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Net Revenues

LEGACY HOUSE OF BOUNTIFUL LLC $13,908.00 Source: District’s accounting and engineering records Note: * EPA Categorical Industries 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Net Revenues Operating Revenues 10,817,735$ 9,442,270$ 6,197,271$ 6,043,598$ 4,576,519$ 3,073,524$ 2,981,204$ 2,762,985$ 2,742,784$ 2,831,258$ Operating Expenses (excluding depreciation) (8,451,481) (7,255,661) (7,571,711) (6,863,930) (7,120,946) (6,691,513) (6,840,618) (5,935,569) (5,532,400) (5,407,450) General Property Tax 4,838,069 3,448,081 2,304,411 2,272,062 2,483,497 2,102,078 2,282,560 2,208,762 2,082,256 2,119,222 Impact Fees 353,562 778,076 903,643 624,221 604,760 589,843 592,322 4,572,029 868,201 1,029,824 Intergovernmental Contributions 804,000 800,000 800,700 933,285 1,040,344 924,746 900,827 785,000 600,000 550,000 Project Grant Revenue - - - - - - - - - 69,418 Misc. Revenue 95,982 100,110 58,856 - - - 119,065 140,865 113,190 175,989 Interest Income 273,562 50,435 186,855 184,810 306,480 342,773 178,050 94,186 75,657 81,659

,190 175,989 Interest Income 273,562 50,435 186,855 184,810 306,480 342,773 178,050 94,186 75,657 81,659 Total Net Revenues 8,731,429$ 7,363,311$ 2,880,025$ 3,194,046$ 1,890,654$ 341,451$ 213,410 $ 4,628,258$ 949,688$ 1,449,920$ Net Revenues Excluding Impact Fees Net Revenues 8,731,429$ 7,363,311$ 2,880,025$ 3,194,046$ 1,890,654$ 341,451$ 213,410 $ 4,628,258$ 949,688$ 1,449,920$ Impact Fees (273,562) (778,076) (903,643) (624,221) (604,760) (589,843) (592,322) (4,572,029) (868,201) (1,029,824) Net Revenues Excluding Impact Fees 8,457,867$ 6,585,235$ 1,976,382$ 2,569,825$ 1,285,894$ (248,392)$ (378,912) $ 56,229 $ 81,487 $ 420,096$ Aggregate Debt Service* 2,427,529$ 2,427,529$ 1,895,842$ 1,637,763$ 837,244 $ 451,461$ - $ - $ - $ - $ Ratio of Net Revenues to Aggregate Debt Service 3.60 3.03 1.52 1.95 2.26 0.76 Ratio of Net Revenues to Aggregate Debt Service 3.48 2.71 1.04 1.57 1.54 (0.55) (Excluding Impact Fees) Minimum Ratio 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 Source: District accounting and financial records.

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

1.25 1.25 1.25 Source: District accounting and financial records.

2019 issued 20-year revenue bonds to finance ABNR and Treatment Plant rehabilitation 2022 sewer service rate increase from $15.50 per month to $18.00 per monthSOUTH DAVIS SEWER DISTRICT Schedule of Revenue Bond Coverage Last Ten Fiscal Years (Unaudited) 2021 issued 20-year revenue bonds to finance Treatment Plant rehabilitation Bond payments are semi annual and due June 1st and December 1st. Average coupon rate is 4.179% 2019 sewer service rate increase from $10.00 per month to $15.50 per month 2018 sewer service rate increase from $5.00 per month to $10.00 per monthNotes: 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 finance the construction of the WRR project $21,195,000Schedule 11 84 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.

2013 94,257 12,359,390,968$ 5,380,923,009$ 2014 92,794 12,782,158,840$ 5,860,299,292$ 2015 90,719 13,441,720,000$ 6,065,092,075$ 2016 97,252 14,149,554,259$ 6,573,097,642$ 2017 20,748,437 $ 98,495 211$ 15,332,877,522$ 0.135% 7,504,784,496$ 0.276% 2018 20,783,161 $ 98,806 210$ 16,279,387,915$ 0.128% 8,181,058,833$ 0.254% 2019 32,286,003 $ 99,283 325$ 17,213,456,463$ 0.188% 8,685,244,151$ 0.372% 2020 31,492,910 $ 103,000 306$ 18,464,452,500$ 0.171% 10,312,949,442$ 0.305%

$ 0.254% 2019 32,286,003 $ 99,283 325$ 17,213,456,463$ 0.188% 8,685,244,151$ 0.372% 2020 31,492,910 $ 103,000 306$ 18,464,452,500$ 0.171% 10,312,949,442$ 0.305% 2021 40,058,320 $ 101,880 393$ 18,805,631,508$ 0.213% 11,531,394,043$ 0.347% Notes: Issued Series 2017A Taxable Revenue Bonds, $21,195,000 Source: Davis County Assessor/Auditors office, District financial and accounting records, Zions Trust Personal income informatiion was not available at the time of this schedule. U.S Census and Utah Workforce Services.

Issued Series 2021 Combined Utiility Revenue Bonds $10,000,000 Issued Series 2019 Revenue Bonds, $12,179,000SOUTH DAVIS SEWER DISTRICT Outstanding Debt Ratios (unaudited) Last Ten Fiscal YearsSchedule 12 85 Total Cash & % of ²Total % of Total Cash & % of Debt to Year Debt Investments Debt : Cash Capital Assets Debt : Asset Capital Assets Cash & Assets 2013 14,601,123$ 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% 2021 40,058,320$ 20,315,086$ 197.19% 129,333,579$ 30.97% 149,648,665$ 26.77%

71,184$ 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% 2021 40,058,320$ 20,315,086$ 197.19% 129,333,579$ 30.97% 149,648,665$ 26.77% 2022 38,853,967$ 19,787,702$ 196.35% 118,938,307$ 32.67% 138,726,009$ 28.01% 4 $ Source: District accounting 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..

Revenue bonds are net of unamortized discount Issued 20-year Series 2019 revenue bonds ($12,179,000) for ABNR project and plant rehabilitation Issued 20-year Series 2021 combined utility bonds ($10,000,000) for plant rehabilitationSOUTH DAVIS SEWER DISTRICT Debt to Asset Ratios (Unaudited) Last Ten Fiscal Years $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Total Debt to Total Cash & InvestmentsDebt Cash & Investments $- $50,000,000 $100,000,000 $150,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Total Debt to Capital Assets Debt Capital Assets $- $50,000,000 $100,000,000 $150,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Total Debt to Total Cash & Capital Assets Debt Total Cash & Capital AssetsSchedule 13 86 Debt Total % of Debt Service Year Service Expenses to Expenses 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% 2021 2,427,529$ 7,255,661$ 33.46%

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% 2021 2,427,529$ 7,255,661$ 33.46% 2022 3,070,371$ 8,744,269$ 35.11% Source: District financial and accounting records, Zions Bank Trust Department.

Notes: Issued 20-year series 2017 taxable revenue bonds ($21,195,000) for construction of the WRR project.

Issued 20-year series 2021 combined utility bonds ($10,000,000) for plant rehabilitationSOUTH 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 $8,000,000 $9,000,000US DollarsDebt Service to Total Expenses Debt Service Total ExpensesSchedule 14 87 Year Principle Interest Total Population Per Capita 2013 94,257 2014 95,200 2015 96,250 2016 97,252 2017 451,461$ 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$ 2021 1,380,000$ 1,047,529$ 2,427,529$ 104,800 23.16$ 2022 1,836,000$ 1,234,371$ 3,070,371$ 105,225 29.18$ Source: District financial and accounting records, Zions Bank Trust Department, and Stifel Financial Bond payments are semi-annual and due every June 1st and December 1stSOUTH DAVIS SEWER DISTRICT Schedule of Total Bond Debt Service (Unaudited) Last Ten Fiscal Years

t Department, and Stifel Financial Bond payments are semi-annual and due every June 1st and December 1stSOUTH DAVIS SEWER DISTRICT Schedule of Total Bond Debt Service (Unaudited) Last Ten Fiscal Years Notes: Issued Taxable Revenue Bonds May 17, 2017 for $21,195,000 to finance renewable energy project Issued Revenue Bonds December 3, 2019 for $12,179,000 to finance plant rehabilitation Issued Combined Utility Bonds December 21, 2021 for $10,000.000 to finance plant rehabilitation Schedule 15 88 Total Fiscal Per Capita Personal Unemployment Public School Year Population Births Deaths Income Income Rate Enrollment 2013 322,094 5,720 1,612 38,372.00$ 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 5,196 1,840 48,423.00$ 17,213,456,463$ 2.40% 72,897 2020 359,925 5,075 2,201 51,300.00$ 18,464,152,500$ 4.10% 70,643 2021 362,679 4,960 2,339 51,852.00$ 18,805,631,508$ 2.20% 72,540 Sources: Davis County Department of Community & Economic Development Davis County Health Department - Vital Statistics U.S Bureau of Economic Analysis Utah Department of Workforce Services - Labor Information Division Davis County School District Notes: This information represents all of Davis County. The DistrictSOUTH DAVIS SEWER DISTRICT Davis County Demographic and Economic Statistics (Unaudited) Last Ten Fiscal Years

ounty School District Notes: This information represents all of Davis County. The DistrictSOUTH DAVIS SEWER DISTRICT Davis County Demographic and Economic Statistics (Unaudited) Last Ten Fiscal Years 2022 per capita personal income and personal income information was not available at the time this was released takes in part of Davis County: Bountiful City, Centerville City, W Bountiful City, Woods Cross City, & North Salt Lake City.Schedule 16 89 Percentage of Percentage of Total County Total County Employment Employment Employer Rank 175,929 Rank 134,583 Hill Air Force Base 10,000 -14,999 1 8.5% 10,000 -14,999 1 Davis County School District 7,000 -9,999 2 5.7% 7,000 -9,999 2 7.4% Wal-mart Associates 3,000 -3,999 3 2.3% 1,000 -1,999 3 1.5% Kroger Group Cooperative 2,000 -2,999 4 1.7% 1,000 -1,999 4 1.5% Lifetime Products 2,000 -2,999 5 1.7% 1,000 -1,999 5 1.5% ATK Space Systems 1,000 -1,999 6 1.1% 1,000 -1,999 6 1.5% Progrexion Teleservices 1,000 -1,999 7 1.1% 1,000 -1,999 7 1.5% Lagoon Inc. 1,000 -1,999 8 1.1% 1,000 -1,999 8 1.5% ATK Launch Systems 1,000 -1,999 9 1.1% 1,000 -1,999 9 1.5% Northrop Grumman 1,000 -1,999 10 1.1% 1,000 -1,999 n/a Utility Trailer & Manufacturing n/a n/a n/a 500 -999 10 0.7% Totals 19,000-29,991 16.9% 15,500-26,990 18.6% Source: Utah Department of Workforce Services Note: Number of employees is based upon an annual average.

Smith's Food and Drug / Distribution Center changed to Kroger Group Cooperative 2022 2013 Employees EmployeesSOUTH DAVIS SEWER DISTRICT Davis County Principle Employers

s based upon an annual average.

Smith's Food and Drug / Distribution Center changed to Kroger Group Cooperative 2022 2013 Employees EmployeesSOUTH DAVIS SEWER DISTRICT Davis County Principle Employers Current Year (2022) and Nine Years AgoSchedule 17 90 Fiscal year 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 County direct rates County Basic Rate 0.000797 0.001004 0.001110 0.001143 0.001209 0.001924 0.001703 0.001795 0.001797 0.001935 General Obligation Debt Service 0.000000 0.000063 0.000071 0.000075 0.000062 0.000069 0.000076 0.000110 0.000114 0.000126 County Assess & Collect 0.000129 0.000161 0.000177 0.000182 0.000193 0.000207 0.000224 0.000236 0.000237 0.000112 State Assess & Collect 0.000015 0.000012 0.000012 0.000009 0.000009 0.000010 0.000011 0.000012 0.000013 0.000158 County Library 0.000229 0.000289 0.000319 0.000329 0.000349 0.000376 0.000342 0.000361 0.000361 0.000389 Flood Control 0.000143 0.000180 0.000199 0.000205 0.000217 n/a n/a n/a n/a n/a Health 0.000149 0.000188 0.000208 0.000214 0.000226 n/a n/a n/a n/a n/a Paramedic 0.000000 0.000000 0.000119 0.000123 0.000130 n/a n/a n/a n/a n/a Total direct rate 0.001462 0.001897 0.002215 0.002280 0.002395 0.002586 0.002356 0.002514 0.002522 0.002720 County school districts' rates Davis County School District 0.006424 0.007642 0.007670 0.007808 0.007701 0.007575 0.008125 0.008555 0.008259 0.00871 City Rates Bountiful 0.000889 0.000967 0.000789 0.000814 0.000880 0.000832 0.000890 0.000957 0.000946 0.001063 Centerville 0.001247 0.001197 0.001158 0.001192 0.001275 0.001354 0.000116 0.001088 0.001072 0.001141 Clearfield 0.001307 0.001437 0.001437 0.001437 0.001607 0.001745 0.001664 0.001800 0.001800 0.001800 Clinton 0.001491 0.001936 0.001608 0.001660 0.001794 0.001925 0.002082 0.002198 0.002253 0.001831

1 Clearfield 0.001307 0.001437 0.001437 0.001437 0.001607 0.001745 0.001664 0.001800 0.001800 0.001800 Clinton 0.001491 0.001936 0.001608 0.001660 0.001794 0.001925 0.002082 0.002198 0.002253 0.001831 Farmington 0.001182 0.001607 0.001491 0.001640 0.001765 0.001942 0.002132 0.002226 0.002127 0.002290 Fruit Heights 0.001600 0.001950 0.001950 0.001887 0.002027 0.002117 0.002295 0.002369 0.001863 0.002023 Kaysville 0.001281 0.001663 0.001589 0.001589 0.001589 0.001589 0.001717 0.001782 0.001826 0.000999 Layton 0.001263 0.001593 0.001645 0.001666 0.001521 0.001635 0.001842 0.001928 0.001896 0.002046 North Salt Lake 0.000934 0.001141 0.001233 0.001284 0.001355 0.001450 0.001475 0.001517 0.001541 0.001613 South Weber 0.001273 0.001522 0.001403 0.001441 0.000769 0.000815 0.000881 0.000941 0.000954 0.000993 Special Service Area 0.000614 0.000761 0.000901 0.001037 0.000913 0.000962 0.000980 0.000992 0.001003 0.000968 Sunset 0.001255 0.000858 0.000981 0.001587 0.001766 0.001950 0.002121 0.002290 0.002258 0.002357 Syracuse 0.001689 0.001653 0.001593 0.001512 0.001512 0.001573 0.001573 0.001639 0.001659 0.001787 West Bountiful 0.001199 0.001301 0.001363 0.001315 0.001449 0.001566 0.001684 0.001806 0.001788 0.001946 West Point 0.000699 0.000831 0.000910 0.000917 0.000917 0.000945 0.000984 0.001036 0.001036 0.001111 Woods Cross 0.001156 0.000811 0.000867 0.000891 0.000935 0.001003 0.000848 0.000927 0.000913 0.001007 Overlapping Rates Weber Basin Water 0.000167 0.000132 0.000146 0.000153 0.000164 0.000174 0.000187 0.000196 0.000199 0.000210 Mosquito Abatement 0.000096 0.000099 0.000110 0.000112 0.000119 0.000107 0.000116 0.000122 0.000124 0.000103 North Davis Sewer 0.000468 0.000682 0.000769 0.000800 0.000869 0.000949 0.001025 0.001025 0.001025 0.001025

North Davis Sewer 0.000468 0.000682 0.000769 0.000800 0.000869 0.000949 0.001025 0.001025 0.001025 0.001025 Bountiful Irrigation 1 0.000061 0.000078 0.000086 0.000089 0.000096 0.000103 0.000110 0.000120 0.000120 0.000128 South Davis Water 0.000125 0.000159 0.000183 0.000189 0.000202 0.000214 0.000234 0.000250 0.000246 0.000264 Central Davis Sewer 0.000115 0.000147 0.000161 0.000167 0.000178 0.000191 0.000208 0.000216 0.000217 0.000237 South Davis Sewer 0.000306 0.000296 0.000226 0.000234 0.000245 0.000264 0.000287 0.000303 0.000301 0.000324 Benchland Water 0.000219 0.000280 0.000315 0.000322 0.000346 0.000375 0.000411 0.000433 0.000430 0.000475 Hooper Water 0.000196 0.000246 0.000277 0.000294 0.000312 0.000345 0.000369 0.000387 0.000415 0.000446 Central Weber Sewer 0.000482 0.000503 0.000564 0.000607 0.000649 0.000709 0.000758 0.000802 0.000838 0.000866 South Davis Recreation 0.000153 0.000210 0.000218 0.000242 0.000257 0.000279 0.000306 0.000334 0.000338 0.000374 North Davis Fire 0.001235 0.001540 0.001175 0.001108 0.001205 0.001182 0.001182 0.001301 0.001379 0.001444 South Davis Metro Fire 0.000475 0.000585 0.000317 0.000328 0.000343 0.000368 0.000010 n/a n/a n/a Source: Utah State Tax Commission, Davis CountySOUTH DAVIS SEWER DISTRICT Direct and Overlapping Property Tax Schedule 18 Last Ten Fiscal Years 91 1 Bountiful Irrigation District 0.000061 2 Davis County Mosquito Abatement 0.000096 3 Central Davis Sewer District 0.000115 3 South Davis Water District 0.000125 4 Davis County Assess & Collect 0.000129 5 South Davis Recreation Center 0.000153 5 Weber Basin Water 0.000167 6 Hooper Water Improvement 0.000196

strict 0.000115 3 South Davis Water District 0.000125 4 Davis County Assess & Collect 0.000129 5 South Davis Recreation Center 0.000153 5 Weber Basin Water 0.000167 6 Hooper Water Improvement 0.000196 7 Benchland Water District 0.000219 7 Davis County Library 0.000229 8South Davis Sewer District 0.000306 9 North Davis Sewer District 0.000468 9 Central Weber Sewer District 0.000482 10 West Point City 0.000699 11 Bountiful City 0.000889 11 North Salt Lake City 0.000934 12 Davis County 0.001089 13 Woods Cross City 0.001156 13 Farmington City 0.001182 14 West Bountiful City 0.001199 15 North Davis Fire District 0.001235 15 Centerville City 0.001247 16 Sunset City 0.001255 17 Layton City 0.001263 17 Kaysville City 0.001281 18 Clearfield City 0.001307 19 Clinton City 0.001491 19 Fruit Heights City 0.001600 20 Syracuse City 0.001689 21 State Basic / Charter School Levy 0.001717 22 Davis School District 0.004707 Source: Davis County Treasurer's and Auditor's Office, Utah State Tax CommissionSOUTH DAVIS SEWER DISTRICT Davis County Tax Factors (Unaudited) For the Year Ending December 31, 2022Schedule 19 92 Percentage of Percentage of Total County Total County Taxable Taxable Assessed Value Taxable Taxable Assessed Value Assessed Value Rank $41,308,975,067 Assessed Value Rank $16,453,943,817 Chevron U.S. Inc, Chevron Pipeline & California Oil 838,397,648$ 1 2.03% 439,606,362$ 1 2.67% Woods Cross Refining Comp - LLC 312,920,124$ 2 0.76% 199,266,649$ 3 1.21% Freeport Center Associates 283,160,135$ 3 0.69% 189,443,140$ 4 1.15% Pacificorp 263,021,357$ 4 0.64% 204,294,170$ 2 1.24% Questar Gas 214,747,638$ 5 0.52% 81,028,343$ 7 0.49% Big West Oil LLC 208,328,190$ 6 0.50% 78,909,882$ 8 0.48%

4 1.15% Pacificorp 263,021,357$ 4 0.64% 204,294,170$ 2 1.24% Questar Gas 214,747,638$ 5 0.52% 81,028,343$ 7 0.49% Big West Oil LLC 208,328,190$ 6 0.50% 78,909,882$ 8 0.48% Station Park Centercal LLC 187,844,809$ 7 0.45% n/a n/a n/a Woods Cross Operating - LLC 151,371,605$ 8 0.37% n/a n/a n/a Lifetime Products 145,727,203$ 9 0.35% n/a n/a n/a Union Pacific Railroad Co. 110,676,689$ 10 0.27% n/a n/a n/a ATK Aerospace n/a n/a n/a 112,953,186$ 5 0.69% Layton Hills Mall CMBS LLC n/a n/a n/a 103,831,259$ 6 0.63% Wal-Mart Real Estate Business Trust n/a n/a n/a 74,925,239$ 9 0.46% Smith's Food King Properties n/a n/a n/a 73,605,994$ 10 0.45% Totals 2,716,195,398$ 6.58% 1,401,910,642$ 6.80% Notes: 2022 Certified Tax Rate = 0.000310. Year end property values for the District were: Real Property $9,463,649,711, Personal Property, $1,802,454,705 & Centrally Assessed $273,683,950 Total adjusted 2022 property values were $14,373,662,696 Source: Davis County Clerk/Auditor's Office.Taxpayers2022 2013SOUTH DAVIS SEWER DISTRICT Principle Property Tax Payers (Unaudited) For the Current Year 2022 and Nine Years PriorSchedule 20 93 Collection Treatment Maintenance Biosolids Lab Employee Level Level Level Level Level 1Bohman, Curtis D. Grade 4 2Bradshaw, Mike C. Grade 4 Grade 1 3Kelson R. Davis Grade 3 4Dlugas, Jason D. Grade 4 Grade 1 5Fleming, Shane E. Grade 4 6Galli, Skyjay T. Grade 3 7Hash, Connad L. Grade 1 8Katter, Brandon M. Grade 1 Grade 3 9King, Corry J. Grade 4 10Larsen, Nathan L. Grade 1 11Marsing, Marty G. Grade 4 12Marsing, Mason D. Grade 4 13Maxwell, Brent M. Grade 1 Grade 4 14Munden, Timothy E. Grade 4 15Myers, Matthew J. Grade 4 Grade 4 Grade 2 16Nemcek, Eric S. Grade 4 17Nemcek, Tyler P. Grade 1

G. Grade 4 12Marsing, Mason D. Grade 4 13Maxwell, Brent M. Grade 1 Grade 4 14Munden, Timothy E. Grade 4 15Myers, Matthew J. Grade 4 Grade 4 Grade 2 16Nemcek, Eric S. Grade 4 17Nemcek, Tyler P. Grade 1 18Perkins, Jeffrey K. Grade 4 19Powell, Jedd C. Grade 4 Grade 1 Grade 1 20Rice, Brandon S. Grade 4 21Scott, Jacob U. Grade 4 Grade 4 22Smedley, Sterling D. Grade 1 23Trimming, Carl K. Grade 4 24Weimer, Jonathan D. Grade 2 Source: District employment records and State of Utah, Division of Water Quality records.

Notes: In accordance with Section 19-5-104 of the Utah Code, wastewater operators, both in collection 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, 2022Schedule 21 94 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2022 Jan 0.6499 0.5074 0.5073 0.7460 1.1806 1.7291 2.9109 2.2007 0.4678 0.4678 0.3847 Feb 0.6120 0.5070 0.5184 0.7796 1.2007 1.8649 2.9778 2.1034 0.4483 0.4483 0.4676 Mar 0.5739 0.5023 0.5294 0.8224 1.2217 2.0302 2.9971 1.6624 0.4252 0.4252 0.5210 Apr 0.5295 0.4992 0.5475 0.8517 1.2651 2.2008 2.9759 1.4406 0.4217 0.4217 0.6139 May 0.4902 0.4879 0.5559 0.8997 1.2858 2.3517 2.8984 1.1939 0.4029 0.4029 0.7922 Jun 0.5046 0.4799 0.5610 0.9093 1.3431 2.5007 2.8983 0.9480 0.3675 0.3675 1.1090 Jul 0.5115 0.4693 0.5791 0.9429 1.4084 2.5801 2.8663 0.7425 0.3602 0.3602 1.6200 Aug 0.4962 0.4699 0.6098 0.9968 1.4782 2.5836 2.7262 0.5534 0.3283 0.3283 2.1828 Sep 0.5126 0.4767 0.6368 1.0597 1.5280 2.5979 2.6014 0.5300 0.3187 0.3187 2.4449 Oct 0.5143 0.4850 0.6593 1.0982 1.5621 2.6486 2.5360 0.5190 0.3313 0.3313 2.8222

836 2.7262 0.5534 0.3283 0.3283 2.1828 Sep 0.5126 0.4767 0.6368 1.0597 1.5280 2.5979 2.6014 0.5300 0.3187 0.3187 2.4449 Oct 0.5143 0.4850 0.6593 1.0982 1.5621 2.6486 2.5360 0.5190 0.3313 0.3313 2.8222 Nov 0.5150 0.5071 0.6824 1.1231 1.6053 2.7387 2.3976 0.5186 0.3415 0.3415 3.3227 Dec 0.5103 0.5077 0.7244 1.1457 1.6340 2.8036 2.2849 0.4895 0.3698 0.3698 3.8006 Avg0.5350 0.4916 0.5926 0.9479 1.3928 2.3858 2.7559 1.0752 0.3819 0.3819 1.6735 Source: Utah State Treasurer's Office Notes: Interest calculated based on the 365 day rate Last Ten Fiscal Years Public Treasurer Investment Fund (PTIF) Interest Rates (Unaudited) SOUTH DAVIS SEWER DISTRICT 0.00000.50001.00001.50002.00002.50003.0000Rate YearPTIF AVG. INTEREST RATESSchedule 22 95 Fiscal Treatment Collection Engineering/ Industrial Water Resource Year Plants System Maintenance Administration Pretreatment Research Recovery Total 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 8 37 2021 10 9 4 9 1 1 7 41 2022 7 8 4 8 1 1 8 37 Average 7.7 7.9 2.8 6.7 1 1 3.1 30.2 Notes: Full time employees are scheduled to work 2,080 hours per year (Including vacation, and sick leave).

2017, two treatment plant operators were hired for the ABNR project 2020 added one employee to accounting department2019 Wasatch Resource Recovery became operational2018 one employee was transferred from Collection System to Engineering (EIT) SOUTH DAVIS SEWER DISTRICT Full-Time Equivalent Employees by Function/Department (Unaudited) Last Ten Fiscal Years Source: District employment recordsFunction/DepartmentSchedule 23 96 2013 37,005 2014 37,587 2015 37,762 2016 41,589 2017 42,136 2018 42,410

unction/Department (Unaudited) Last Ten Fiscal Years Source: District employment recordsFunction/DepartmentSchedule 23 96 2013 37,005 2014 37,587 2015 37,762 2016 41,589 2017 42,136 2018 42,410 2019 42,588 2020 42,878 2021 43,491 2022 46,296 The District has approximately 28,233 customer accounts as of 12/31/22 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 24 97 S OUTH DAVIS SEWER DISTRICT HISTORICAL COST ACCUMULATED DEPRECIATION Balances Balances Balances Depreciation Asset Balances Acct # Description 12/31/21 Additions Disposals Transfers Adjust 12/31/22 Acct # 12/31/21 Expense Deposal Transfers 12/31/22 182000 0.01 Building & Facilities 2,710,250 $ 2,710,250 $ 182100 0.01 (104,814)$ (104,814) $ 182000 0.02 Building & Facilities 21,597,044 21,597,044 182100 0.02 (8,611,803) (83,358) $ (8,695,161) 182000 0.11 Building & Facilities 22,231,175 22,231,175 182100 0.11 184000 0.02 Improvements Other Than Bldgs 28,893 28,893 184000 0.02 184000 0.11 Improvements Other Than Bldgs 6,537,517 6,537,517 186100 0.01 (947) $ (947) 188000 0.04 Construction in Progress 6,972,119 5,430,817$ 12,402,936 188000 0.04 189000 0.01 Outfall/Sewer Lines 46,769,348 2,093,844 48,863,192 189110 0.01 (3,666,415) (3,666,415)

5,430,817$ 12,402,936 188000 0.04 189000 0.01 Outfall/Sewer Lines 46,769,348 2,093,844 48,863,192 189110 0.01 (3,666,415) (3,666,415) 189000 0.02 Outfall/Sewer Lines 5,748,121 5,748,121 189110 0.02 (1,290,560) (1,290,560) 189000 0.04 Outfall/Sewer Lines - 189110 0.04 189200 0.01 Operation & Sup Equip. 719,472 99,670 819,142 189210 0.01 (362,115) (28,023) $ (390,138) 189200 0.02 Operation & Sup Equip. 567,672 140,400 708,072 189210 0.02 (247,654) (153,174) $ 10,000 $ (390,828) 189200 0.11 Operation & Sup Equip. 6,985,855 6,985,855 189210 0.11 (184,533) (184,533) 189300 0.01 Tools & Test Equip. 440,120 440,120 189310 0.01 (417,216) (3,423) $ 22,780 $ (397,859) 189300 0.02 Tools & Test Equip. 387,698 387,698 189310 0.02 (246,822) (1,570) $ (248,391) 189300 0.03 Tools & Test Equip. 108,736 108,736 189310 0.03 (108,736) (108,736) 189300 0.05 Tools & Test Equip. 247,531 247,531 189310 0.05 (203,349) (203,349) 189400 0.01 Mobile Equipment 2,226,709 308,861 2,535,570 189410 0.01 (1,271,798) (77,909) $ (1,349,707)

10 0.05 (203,349) (203,349) 189400 0.01 Mobile Equipment 2,226,709 308,861 2,535,570 189410 0.01 (1,271,798) (77,909) $ (1,349,707) 189400 0.02 Mobile Equipment 1,191,126 274,506 1,465,632 189410 0.02 (694,109) (43,587) $ 38,022 $ (699,674) 189400 0.03 Mobile Equipment 22,437 22,437 189410 0.03 (22,437) (22,437) 189500 0.01 Office Furn. & Equip. 388,211 388,211 189510 0.01 (278,864) (21,581) $ (300,445) 189500 0.02 Office Furn. & Equip. 378,130 378,130 189510 0.02 (312,095) (8,843) $ (320,938) 189500 0.03 Office Furn. & Equip. 4,850 4,850 189510 0.03 (4,850) (4,850) 189600 0.01 Land & Right-Of-Ways 421,633 421,633 189600 0.02 Land & Right-Of-Ways 2,648,935 2,648,935 129,333,579$ 8,348,098$ - $ - $ -$ 137,681,677$ (18,028,168)$ (422,414)$ 70,802$ - $ (18,379,780)$ Net Investment in Capital Assets Summary (Unaudited) For the Year Ended December 31, 2022 Source: District capital asset records Notes: Building & Facilities, and Outfall/Sewer Lines are not depreciated per GASBS 34" Modified Approach" to capital assetsSchedule 25 98 Indust. Capital Collections Plants Pretreat. Expansion Asset Description Tag# (.01) (.02) (.03) (.04) Total CONSTRUCTION WORK IN PROGRESS (188000) South Plant Rehab 906 5129 4,958,492 $ 4,958,492 $

Capital Collections Plants Pretreat. Expansion Asset Description Tag# (.01) (.02) (.03) (.04) Total CONSTRUCTION WORK IN PROGRESS (188000) South Plant Rehab 906 5129 4,958,492 $ 4,958,492 $ South Plant Rehab 906 5129 218,128 218,128 North Plant Rehab 905 5130 254,198 254,198 SUBTOTAL - $ - $ - $ 5,430,817$ 5,430,817$ Salamon Trunkline 6079 9,496 $ Deeded Subvisions 6080 2,084,348 2,084,348 $ SUBTOTAL 2,093,844 $ - $ - $ - $ 2,084,348$ OPERATION & SUPPORT EQUIPMENT (189200) SpeedyLight UV LED system 5940 99,670 $ 99,670 $ Horizontal End Sucftions Chopper Pump 2074 86,150 $ 86,150 150W Cummings Portable Generator 2072 54,250 54,250 SUBTOTAL 99,670 $ 140,400$ - $ - $ 240,070$ TOOLS AND TEST EQUIPMENT (189300) -0SUBTOTAL - $ - $ - $ - $ - $ MOBILE EQUIPMENT (189400) 2021 GapVax Jet Washer Model 1510 3579 308,861 $ 308,861 $ 2012 60' Snorel Boom Lift 3585 38,000 $ 38,000 1989 Tadano 33 Ton Crane 3583 31,056 31,056 2013 Volvo Dump Truck 3580 75,000 75,000 John Deere 7610 Tractor 3581 58,200 58,200 20' Tilt Deck Trailer 3584 11,600 11,600 Solids Spreader 2021 3582 60,650 60,650 SUBTOTAL 308,861 $ 274,506 $ - $ - $ 583,367 $ GRAND TOTAL 2,502,375 $ 414,906 $ - $ 5,430,817$ 8,348,098 $

274,506 $ - $ - $ 583,367 $ GRAND TOTAL 2,502,375 $ 414,906 $ - $ 5,430,817$ 8,348,098 $ Source: District capital asset records & accounts payable records 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, 2022Schedule 26 99 Industrial Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $ - $ - $ - $ - $ CONSTRUCTION WORK IN PROGRESS (188000) SUBTOTAL - $ - $ - $ - $ - $ OUTFALL/SEWER LINES (189000) SUBTOTAL - $ - $ - $ - $ - $ (2) 9000 Gal Water Tanks 5908 10,000 $ OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL - $ 10,000 $ - $ - $ 10,000 $ Bear Engine Analizer 4028 22,780 $ TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL - $ 22,780 $ - $ - $ 22,780 $ MOBILE EQUIPMENT (189400) 1975 Michigan 175B Loader 3085 19,189 $ 19,189 $ 1980 Grove Crane 7,5 Ton 3054 12,150 12,150 Trailer 3007 4,933 4,933 Trailer 3056 1,750 1,750 SUBTOTAL - $ 38,022 $ - $ - $ 38,022 $ OFFICE FURNITURE & EQUIPMENT (189500) SUBTOTAL -0- - $ - $ - $ - $ LAND & RIGHT OF WAYS (188600) SUBTOTAL -0- - $ - $ - $ - $ GRAND TOTAL - $ 70,802 $ -$ -$ 70,802 $ Source: District capital asset recordsSOUTH DAVIS SEWER DISTRICT Schedule 27 Notes: Building & facilities, and outfall/sewer lines are not depreciated per GASBS34" Modified Approach" to capital assetsNet Investment in Capital Assets Disposals (Unaudited)

DISTRICT Schedule 27 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, 2022 100 Net Investment in Capital Asset Transfers (Unaudited) For the Year Ended December 31, 2022 Indust. Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $ - $ - $ - $ - $ CONSTRUCTION WORK IN PROGRESS (188000) SUBTOTAL - $ - $ - $ - $ - $ OUTFALL/SEWER LINES (189000) SUBTOTAL - $ - $ - $ - $ - $ OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL - $ - $ - $ - $ - $ TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL - $ - $ - $ - $ - $ MOBILE EQUIPMENT (189400) SUBTOTAL - $ - $ - $ - $ - $ OFFICE FURNITURE & EQUIPMENT (189500) - $ - $ - $ - $ - $ SUBTOTAL LAND & RIGHT OF WAYS (188000) SUBTOTAL - $ - $ - $ - $ - $ GRAND TOTAL Source: District capital asset records Notes: Building & facilities, and outfall/sewer Lines are not depreciated per GASBS34" Modified Approach" to capital assetsSOUTH DAVIS SEWER DISTRICT Schedule 28 101 Indust. Capital Collections Plants Pretreat. Expansion Asset Description ID # (.01) (.02) (.03) (.04) Total BUILDINGS AND FACILITIES (182000) SUBTOTAL - $ - $ - $ - $ - $ CONSTRUCTION WORK IN PROGRESS (188000) South Plant Rehab 906 5129 4,958,492 $ 4,958,492 $ South Plant Rehab 906 5129 218,128 218,128 North Plant Rehab 905 5128 254,198 254,198 SUBTOTAL - $ - $ - $ 5,430,817 $ 5,430,817 $ OUTFALL/SEWER LINES (189000) SUBTOTAL - $ - $ - $ - $ - $ OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL - $ - $ - $ - $ - $ TOOLS AND TEST EQUIPMENT (189300)

$ 5,430,817 $ 5,430,817 $ OUTFALL/SEWER LINES (189000) SUBTOTAL - $ - $ - $ - $ - $ OPERATION & SUPPORT EQUIPMENT (189200) SUBTOTAL - $ - $ - $ - $ - $ TOOLS AND TEST EQUIPMENT (189300) SUBTOTAL - $ - $ - $ - $ - $ MOBILE EQUIPMENT (189400) SUBTOTAL - $ - $ - $ - $ - $ OFFICE FURNITURE & EQUIPMENT (189500) SUBTOTAL - $ - $ - $ - $ - $ LAND & RIGHT OF WAYS (188000) SUBTOTAL -0- -0- -0- -0- -0GRAND TOTAL - $ - $ - $ 5,430,817$ 5,430,817 $ Source: District capital 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, 2022Schedule 29 102 Collection Treatment Capital Debt Total Year System O & M Plants O & M Expenses Service Expenses 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 $ 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 $ 2021 2,141,413 $ 4,156,265 $ 1,158,733 $ 2,427,529$ 9,883,940 $ 2022 1,723,160 $ 4,121,295 $ 2,937,597 $ 3,070,371$ 11,852,423 $

1,895,843$ 8,794,911 $ 2021 2,141,413 $ 4,156,265 $ 1,158,733 $ 2,427,529$ 9,883,940 $ 2022 1,723,160 $ 4,121,295 $ 2,937,597 $ 3,070,371$ 11,852,423 $ Source: District accounting records, Zions Bank,Trust Department.

Notes: 2017 issued 20-year taxable revenue bonds ($21,195,000) for construction of the WRR project.

Total 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 facility and WFWQC expenses 2019 issued 20-year revenue bonds ($12,179,000) for construction of the ABNR project and plant rehabilitation 2021 issued 15-year combined utility revenue bonds ($10,000,000) for construction and plant rehabilitationSchedule 30 103 Source: District accounting and financial records, Zions Bank 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Collection 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Treatment 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Captial Expenses $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Debt Service $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Total ExpensesSchedule 31 104

016 2017 2018 2019 2020 2021 2022Debt Service $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Total ExpensesSchedule 31 104 Carrier Policy No. Coverage Policy Period Philadelphia PHPK1754717 General Liability ($3,000,000) 1/1/22 to 1/1/23 Olympus Insurance Agency Bodily Injury Personal Injury Property Damage Public Officials Errors/Omissions Philadelphia PHUB8612738 Excess Liability ($10,000,000) 1/1/22 to 1/1/23 Olympus Insurance Agency Philadelphia PHPK1754717 Property ($52,030,580) 1/1/22 to 1/1/23 Olympus Insurance Agency Philadelphia PHPK1754717 *Fidelity Bond ($750,000) 1/1/22 to 1/1/23 Olympus Insurance Agency Treasurer Philadelphia PHPK1754717 Crime ($50,000) 1/1/22 to 1/1/23 Olympus Insurance Agency Employees Computer Fraud Employee Dishonesty Worker Compensation Fund 1494897 Workers Compensation 1/1/22 to 1/1/23 Liability ($1,000,000) Source: Olympus Insurance Agency, WCF of Utah and District recordsSOUTH DAVIS SEWER DISTRICT Summary of Insurance Coverage (Unaudited) For the Year Ended December 31, 2022 Notes: In accordance with Utah Code 51-7-15 and Rule 4 of the Utah Money Management Council, the insurance bonds are calculated from the previous years budget (2020 amended budget). Settled claims have not exceeded commercial excess coverage in any of the past three years.Schedule 32 105 COMPLIANCE SECTION Salt Lake City Office 801.533.0409 215 S State Street #850 Salt Lake City, UT 84111 squire.com Orem Office 801.225.6900 1329 South 800 East Orem, UT 84097 Squire is a dba registered to Squire & Company, PC, a certified public accounting firm -106-Independent Auditor’s Report on In ternal Control over Financial

225.6900 1329 South 800 East Orem, UT 84097 Squire is a dba registered to Squire & Company, PC, a certified public accounting firm -106-Independent Auditor’s Report on In ternal Control over Financial Reporting and on Compliance and Other Matte rs 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 auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of South Davis Sewer District as of and for the year ended December 31, 2022, and the related notes to the financial statements, and have issued our re port thereon dated August 14, 2023.

Internal Control over Financial Reporting In planning and performing our audit of the financ ial statements, we considered South Davis Sewer District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for th e purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of South Davis Sewer 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 oper ation of a control does not allow management or employees, in the normal course of performing their assigned func tions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a

w management or employees, in the normal course of performing their assigned func tions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combinati on of deficiencies, in internal control that is less severe than a material weakness , yet important enough to merit attention by those charged with governance.

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

Audit adjustments – Certain balance sheet acc ounts had not been reconciled with supporting documents at year end. As a result, numerous ad justments to correct the balances were required.

Adjustments were necessary in a variety of areas including accounts receivable, investment in WRR, LLC, capital assets, accounts payable/accr ued expenses, long-term debt, net position balances, revenues, and expenditures/expenses. We recommend the District identify procedures to ensure the balances reported are consistent with accounting principles generally accepted in the

sition balances, revenues, and expenditures/expenses. We recommend the District identify procedures to ensure the balances reported are consistent with accounting principles generally accepted in the United States of America. These procedures shoul d include preparing detailed reconciliations of all material accounts and then performing a review of the final trial balance to ensure that all significant journal entries are posted.

-107-Management’s response – We appreciate the comments and will implement procedures as appropriate to ensure the financial statemen ts are presented in accordance with accounting principles generally accepted in the United States of America.

Compliance and Other Matters As part of obtaining reasonable assurance about whethe r the District’s financial statements are free from material misstatement, we performed tests of its co mpliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opi nion on compliance with those provisions was not an objective of our audit, and accordingly, we do no t express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’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 District’s internal control and

District’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 District’s internal control and compliance. Accordingly, this communicati on is not suitable for any other purpose.

Orem, Utah August 14, 2 023 Salt Lake City Office 801.533.0409 215 S State Street #850 Salt Lake City, UT 84111 squire.com Orem Office 801.225.6900 1329 South 800 East Orem, UT 84097 Squire is a dba registered to Squire & Company, PC, a certified public accounting firm -108Independent Auditor’s Report on Compliance and Report on Internal Control over Compliance Required by the State Compliance Audit Guide Board of Trustees South Davis Sewer District Report on Compliance Opinion We have audited South Davis Sewer District’s compliance with the follo wing applicable state compliance requirements described in the State Compliance Audit Guide , issued by the Office of the State Auditor, for the year ended December 31, 2022.

Budgetary Compliance Fund Balance Fraud Risk Assessment Utah Retirement Systems In our opinion, South Davis Sewer District complied, in all material respects, with the state compliance requirements referred to above for the year ended December 31, 2022. Basis for Opinion We conducted our audit of compliance in accordance w ith auditing standards ge nerally accepted in the United States of America; the standards app licable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States; and the State Compliance Audit Guide, issued by the Office of the Utah State Auditor. Our responsibilities under those standards and

tandards , issued by the Comptroller General of the United States; and the State Compliance Audit Guide, issued by the Office of the Utah State Auditor. Our responsibilities under those standards and the State Compliance Audit Guide are further described in the Au ditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance. Our audit does not provide a legal determination of the District’s complian ce with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with th e state compliance require ments referred to above.

-109- Auditor’s Responsibilities fo r the Audit of Compliance Our objectives are to obtain reasonable assurance a bout whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the District’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefor e is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards , and the State Compliance Audit Guide will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overri de of internal control. Noncompliance with the

om fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overri de of internal control. Noncompliance with the compliance requirements referred to a bove is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would in fluence the judgment made by a reasonable user of the report on compliance about the District’s co mpliance with the requirements of the State Compliance Audit Guide as a whole In performing an audit in accordance with GAAS, Government Auditing Standards , and the State Compliance Audit Guide, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.

 Identify and assess the risks of material noncom pliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the District’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.

 Obtain an understanding of the District’s intern al control over compliance relevant to the audit in order to design audit procedures that are a ppropriate in the circumstances and to test and report on internal control over compliance in accordance with the State Compliance Audit Guide, but not for the purpose of expressing an opi nion on the effectiveness of the District’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charge d with governance regarding, among other matters,

eness of the District’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charge d with governance regarding, among other matters, the planned scope and timing of th e audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the d esign or operation of a control over compliance does not allow management or employ ees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a state compliance requirement on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal cont rol 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 co ntrol 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 mate rial weakness in internal control over compliance, yet important enough to merit attenti on by those charged with governance.

-110- Our consideration of internal control over comp liance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Complian ce section above and was not designed to identify all deficiencies in internal control over complian ce that might be material weaknesses or significant

or’s Responsibilities for the Audit of Complian ce section above and was not designed to identify all deficiencies in internal control over complian ce that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitati ons, during our audit we did not identify any deficiencies in internal control over comp liance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expr essing an opinion on the effectiveness of internal control over compliance. Accordi ngly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the re sults of that testing based on the requirements of the State Compliance Audit Guide. Accordingly, this report is not suitable for any other purpose.

Orem, Utah August 14, 2023 SOUTH DAVIS SEWER DISTRICT South Treatment Plant North Salt Lake, Utah