Just as any other business must maintain the ability to adapt to the needs of its' customers, we at the District cannot simply rest on past accomplishments to meet the new challenges confronting the business of running a water and sewer utility. New development, both of the residential and commercial variety, continues to occur throughout our service area. This growth puts increasing capacity demands on the water and sewer systems. One of the keys to this is that, while we develop plans to meet the need for increased system capacity, we must, in my view, continue to maintain the approach that "growth pays for growth. Without this, existing ratepayers are unfairly forced to subsidize, through rate increases, the cost of system expansion needed to serve new customers.

We are encouraged by progress being made towards the ultimate completion of the Second Supply Pipeline. Once completed, we should have a reliable long-term source of water to meet the increasing demand requirements of future growth. In addition to developing water delivery infrastructure, I strongly believe that water purveyors in this area need to continue developing new sources of water storage. Experience tells us that the challenge facing the water business is not so much the overall quantity of usable water. It is much more a problem of when the water is available. Through increased water storage capacity, we can take water at times when it is available, typically in the winter and spring, and hold it in storage facilities, such as reservoirs or underground aquifers, for use when it is less available and more in demand, typically the summer months.

I am also glad to see that we are moving forward with a program to procure and install emergency generators. These generators will serve to insure uninterrupted service and prevent damage to property and the environment from overflows of the sewer system that can occur as a result of power failures.

I would like to wish each of you the best in 2001 and extend my thanks for the privilege of serving you as a commissioner of the Lakehaven Utility District.

A new legislative season is upon us once again. Buoyed by the success of the "Aquifer Storage and Recovery Bill" last session, the District has developed a legislative agenda for this year targeting a number of important issues relating to the operation of the water and sewer utility. While many of these legislative items may turn out to be multi-session projects, the Board and staff are developing a legislative program that will address some, or all, of the following issues and areas of concern (not in order of priority):

1. Assumption of special purpose districts- continue efforts to make ratepayer approval a condition precedent to the assumption of all, or a part of, a special purpose water/sewer district's jurisdiction.
2. Rates and charges- define the establishment of local facilities contribution areas to promote equal sharing of future local facilities costs to be borne by developers.
3. Reclaimed water- develop new language to add to RCW Chapter 90.46 to enhance the opportunity to develop and use reclaimed water.
4. Water rights- participate with impacted utilities and others to secure statutory water law modifications to enhance water rights issues related to the Second Supply Pipeline Project
5. SEPA- pursue expansion of SEPA exemptions for certain utility construction activities.
6. Surplus real property- change the requirement to have appraisal made by three disinterested and licensed brokers or appraisers to one.
7. Public work- clarify/expand the conditions under which public works projects may be performed by in-house labor.
8. Aquifer storage and recovery- consider any modifications/additions to last year's bill.
9. Public Works Trust Fund- work with other interested groups to prevent budgetary appropriation of monies allocated to the Public Works Trust Fund.
10. Customer Assistance Program- develop legislation to expand the methods of charitable fund raising applicable to the customer assistance fund.
11. Engineering Consultant Selection- change the process for selecting engineering consultants to allow for the establishment of a two year roster.

We will keep you updated on the status of our legislative program as the legislative season progresses.

Lakehaven Utility District will soon begin a water treatment program to meet new regulations of the Federal Safe Drinking Water Act and to improve the overall quality of our public drinking water supply. Corrosion control treatment will be implemented to help reduce leaching of copper ions from the metal plumbing that is commonly found in homes and businesses. Treatment will also include disinfecting our water supply to safeguard against the potential of bacteriological contaminants. In addition, we will be adding a sequestering agent to the water to prevent the formation of stains and mineral deposits caused by the oxidation of naturally occurring iron and manganese minerals that are common in our groundwater. Future water treatment will be used for both wholesale water purchased from Tacoma and groundwater pumped from Lakehaven wells. It is the District's goal to implement our water treatment program for the entire distribution system during the year 2001. Water treatment equipment is currently being installed at all of the District's well sites.

Do you know where your T & P relief valve is located? This photograph suggests a typical location near the top of your water heater. It's a very important feature of your plumbing system's hot water supply. There have been rare occasions where a component of a water heater has malfunctioned, allowing the water within it to become super-heated and allowing pressure to build up beyond the ability of the water heater to withstand it. A properly functioning T & P relief valve is designed to relieve this excess pressure. If the valve doesn't operate properly, the water heater could fail catastrophically, resulting in property damage and possible injury to building occupants.

Installation of a T & P relief valve has been a requirement of plumbing codes for many years. However, there have been calls within the industry to require periodic inspection of these devices, by the local building officials, to ensure their proper functioning; however, this has not yet come to pass. We, therefore, suggest that the customer take a few minutes to inspect his/her own T & P relief valve. The District has information available that provides guidelines for an inspection. Give us a call and we'll be happy to provide the information. Other questions regarding plumbing system requirements in general can be directed to your local building officials.

Although not mandated by statute, the Board of Commissioners of Lakehaven Utility District has charged management with the preparation of an annual budget document showing the planned expenditures for the coming year, as well as the sources of revenue to pay for them. A budget provides a framework for financial planning, control and evaluation of the District's performance. It is the detailed roadmap that shows how the elected body and their agents plan to use the limited financial resources at their disposal to fulfill the District's mission during the upcoming year. The 2001-2002 Biennial Budget extends this roadmap a step further, and shows the anticipated results of operations for two complete fiscal years.

At the November 2, 2000 Board meeting, the Lakehaven Utility District Board of Commissioners approved a $31.0 million expenditure budget. This is a 7.4 percent decrease from last year's budget of $33.5 million. Most of that decrease comes as a result of an 18.7% cut in the planned level of capital expenditures. Many of the large, expensive projects such as the OASIS project and various water main relocations have been deferred until 2002 and later. Operations and Maintenance spending is expected to increase by $483,000 next year which is a 3.5% increase.

2001 we are anticipating $20.6 million in revenue. Existing water and sewer rates account for about $19.4 million of Lakehaven's revenue. In the Fall of 1999, the Board of Commissioners approved an 8 percent rate increase as a result of the utility rate study performed that summer. This increase was calculated to cover our needs for the following three years. Unless the escalating cost of electricity, a large component of the cost of operating the water and sewer systems, drives revenue requirements beyond the level that current rates can absorb, ratepayers should not see any significant changes to their utility bills in 2001 or 2002. The same holds true for the dramatic increases in the cost of purchasing additional water from Tacoma. As always, the Board is committed to keeping rates as low as sound financial planning will allow.