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2019Annual ReportWater Conservation Efforts Impact Us All.Water Conservation “Drop Savers”Student Poster ContestConducted in partnership with the Florida Section of theAmerican Water Works Association, the water conservationposter contest was held with local schools to promote waterconservation in their daily routines.WINNERS, from left to right: Suri Rodrigues, Spring Creek Elementary fourth-gradestudent, Division 3 Ashley Lopez-Sanchez, Spring Creek Elementary secondgrade student, Division 2 Maribel Mendoza, Bonita Springs High School ninth-gradestudent, Division 5CAPITAL CREDITS 3.26 Million inCapital Credits RetiredCapital credits for 35,000 membersduring 2006 and 2013 were retired,totaling 3,263,733.WHAT’S NEWS No rate increases forninth year in a rowS Replaced biosolids dryer andfurnace at the East WaterReclamation FacilityS West Water Reclamation Facilityconcrete structures restorationS Operations Service CenterexpansionAllocationAt the end of the year, utility revenue may exceed expenses. Thisexcess revenue is called the net margin and is allocated to membersas capital credits. The allocation is based on a member’s servicepayments for that year as a percentage of all utility revenue.RetirementRetirement is the process of paying out capital credits to members.

MESSAGE FROM PRESIDENTBrian FarrarI’m proud to report that BSU has had another strong year. Excellent customer service, award-winning operationsand solid financial performance all indicate the position we’re in. We continue to hold the line on rates for ourmembers – something that continues to be an important focus for the board.The board approved the second-ever capital credit retirement in the utility’s history. 3.26 million in capitalcredits were retired for 35,000 members during 2016 and 2013. This is an important initiative that we intendto continue in future years to bring capital credit retirements current.We’re also in the process of refinancing the utility’s Series 2010 revenue bonds. Once the refinancing is completein 2020, we’ll be able to realize significant savings over the remaining term of the bond – approximately 10million.The Board of Directors represents members’ interests – your interests – in this utility. As we move into the nextdecade, I am fully confident that this utility will continue to deliver high-quality water and wastewater servicethat our members expect and appreciate.It’s been a privilege to serve as your board president for the past year.Thank you.FROM EXECUTIVE DIRECTORJohn R. JenkinsThe South Florida Water Management District is the state agency responsible for safeguarding and restoringSouth Florida's water resources and ecosystems, protecting our communities from flooding, and meeting theregion's water needs. A few years ago, the District updated its Lower West Coast Water Supply Plan.The plan tells us that South Florida is particularly vulnerable to the effects of potential changes in climate andsea level because of its location, hydrology, coastal population and other factors. Sea level rise may push saltwaterfarther inland and threaten the water quality in our surficial aquifer system. This is an important water sourcefor many utilities, including BSU. At the same time, warmer air temperatures and changes in rainfall patterns mayincrease irrigation demand by both agricultural and urban users.Simply put, we can expect increasing pressure on our water supply. Our ability and willingness to respond, onboth the supply side by BSU and on the demand side by our customers, will determine the ultimate impact onour quality of life. For example, as much as 50% of potable water use can be attributed to lawn and ornamentalirrigation. Increased use of xeriscape and landscape design requiring little irrigation offers a ready solution.Each of us can and should act to protect our precious water resource.The 2019-2020Board of DirectorsStanding, left to right: Vice President Vicent Marchesani,Secretary Paul Attwood, Ben Nelson, Frank Liles,President Brian FarrarSeated, left to right: Robert Bachman, James Strecansky,Treasurer Mike Malloy, Robert SharkeyTHANK YOU to James Strecansky and Robert Sharkey for their yearsof Board Service. They will be missed.James served on the Board for 12 years, with terms as president and vice president.JamesRobert served on the Board for 11 years and recently served as secretary.Strecansky2RobertSharkey

AWARDING EXCELLENCEBSU received two awards for outstanding accomplishmentsfrom the Florida Water Environment Association.Our wastewater treatment team received the 2019 Earle B. çPhelps Award in the secondary wastewater treatment plantscategory, which recognizes wastewater treatment facilities thathave maintained the highest removal of major pollution-causingconstituents prior to discharging treated effluent for irrigationreuse.ç East Water Reclamation Facility LeadOperator Jake Hepokoski receivedthe prestigious 2019 Leroy H. ScottAward for exceptional contribution toFWEA operators and did the best jobof managing a plant.BSU was awarded the 2018 Safety Award for Utility of the çYear from the Florida Water and Pollution Control OperatorsAssociation for its outstanding safety record.BSU by the Numbers 29,950 Members served by 130 employees 66,000 Phone calls received by Customer Service 30,000 Service ordersè Lisa Karnow, Customer Service20192018Total Water Production3.64 billion gallons3.68 billion gallonsAverage Daily Water Production9.97 million gallons10.08 million gallons(March 27) 13.97 million gallons(Oct. 24) 13.3 million gallons1.7 billion gallons1.65 billion gallons4.67 million gallons4.53 million gallons(Jan. 22) 6.84 million gallons(March 10) 6.17 million gallonsPeak Day Water ProductionWastewater EffluentAverage Daily Wastewater EffluentPeak Day Wastewater Effluent Flow3

FINANCIAL Report Steven Richards, CPA Director of FinanceThe following pages summarize the financial position, results of operations, changes in members’ equityand cash flows for Bonita Springs Utilities, Inc. for the years ended December 31, 2019 and 2018.The utility’s total assets increased 3.9 million (1.1%) to 370.6 million from 2018 to 2019. The utility’s total liabilities decreased 4.2 million (4.9%) to 82.4 million, mainly due to the regularly scheduled principal payments on revenue bonds. Members’equity increased 2.9% to 288.2 million as a result of the net margin totaling 1.5 million, 9.8 million of capital contributions and 3.3 million of capital credit retirements.The utility’s operating revenues increased approximately 675,000 (1.7%) from 2018 to 2019. Total operating expensesincreased 1.7 million (4.4%) from 2018 to 2019, due in part to increased chemical cost and usage, increased labor costs, and anincrease in depreciation expense totaling approximately 775,000 due to the completion of several large construction projects.The net margin totaled 1.5 million for 2019, as compared to the 1.8 million net margin in 2018. This change was due to a decreasein the operating margin totaling approximately 983,000, an increase in debt expense of approximately 117,000 and an increasein other income totaling approximately 800,000, due in part to increased earnings on the utility’s investment portfolio.Pursuant to Internal Revenue Code requirements, the utility continued its capital credit retirement program during 2019.Capital credits retired totaled 3.3 million. These credits were allocated to members for qualifying years 2006 and 2013.Current members received a credit on their account, while former members have payment made available to them by check.In 2019, the Company entered into an agreement to refinance its Series 2010 revenue bonds. The bonds will be refinancedin August 2020, reducing the interest rate to 2.04% while saving the utility approximately 10 million in cash over the remainingterm of the bond.With its strong financial position, strong debt service coverage and solid credit ratings (Standard & Poor’s/AA, Moody’s/Aa3),the utility remains well-positioned to continue the same high level of service our members expect.The summary financial statement balances presented in this annual report are in agreement with the financial statementsaudited by Nichols, Cauley & Associates, LLC, Certified Public Accountants, which are contained in the utility’s 2019 audit report.The complete audit report, including Notes to Financial Statements and Supplemental Information, is available upon request.BalanceSheetsDecember 31, 2019and 2018ASSETS20192018Utility Plant, Property, and Equipment, at CostNet of Accumulated Depreciation 279,809,370 280,640,785Restricted Cash and InvestmentsCash and Cash Equivalents6,302,3186,176,348Total Restricted Cash and Investments6,302,318 6,176,348Current AssetsCash and Cash Equivalents29,091,264 23,583,645Investments40,792,071 40,598,467Accounts Receivable, Net2,271,3122,376,433Unbilled Accounts Receivable1,467,1581,284,794Material and Supplies Inventory563,497536,761Prepaid Expenses404,561509,543Prepaid Bond Issuance Costs43,919Interest Receivable172,199197,687Special Service Charges Receivable - Current606,300594,125Other Receivables14,00616,421Total Current Assets75,426,287 69,697,876Other AssetsUtility Deposits25,20524,947Capital Deposits64,444450,781Special Service Charges Receivable - Noncurrent8,942,187 9,728,500Total Other Assets9,031,836 10,204,228Total Assets 370,569,811 366,719,2374

MEMBERS’ EQUITY AND LIABILITIES20192018Members' EquityMembers' Investment Certificates 4,205,271 4,205,271Contributed Capital145,512,804 135,671,974Retained Earnings138,495,764 140,272,474BalanceSheetsDecember 31, 2019and 2018Total Members' Equity288,213,839 280,149,719Long-Term LiabilitiesRevenue Bonds, Series 201046,102,285 48,645,306Revenue Bond, Series 2012B5,384,7687,115,961Revenue Bond, Series 20146,443,1607,980,193Deferred Special Service Charge Income - Noncurrent8,942,1879,728,500Injection Well Retirement Obligation466,327377,278Total Long-Term Liabilities67,338,727 73,847,238Current Liabilities Payable FromRestricted AssetsAccrued Bond Interest407,910431,675Long-Term Liabilities - Current Portion5,700,000 4,825,000Total Payments Payable from Restricted Assets6,107,910Current LiabilitiesAccounts Payable2,215,401Retainage Payable442,812Members' Capital Credit Payable1,759,455Customer Deposits2,897,642Other Current Liabilities987,725Deferred Special Service Charge Income - 54,469808,854594,125Total Current Liabilities8,909,335 7,465,605Total Liabilities82,355,972 86,569,518Total Members' Equity and Liabilities 370,569,811 366,719,2375