DOCUMENTS SUPPORTING THE PRESENTATION

BY MR. ALBERT F. APPLETON



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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 DOCUMENTS SUPPORTING THE PRESENTATION BY MR. ALBERT F. APPLETON

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 NEW YORK CITY DEPARTMENT OF ENVIRONMENTAL PROTECTION Strategic Business Plan OVERVIEW AND INTRODUCTION Over the last three years, the New York City Department of Environmental Protection has faced three interlocking challenges. First, to meet a critical series of environmental threats without being forced to spend billions of additional dollars on capital facilities. Second, to end the escalation of water and sewer rates and provide relief to ratepayers, especially those in the hardest hit affordable housing sector. Third, to improve day-to-day service delivery while dealing with significant resource and staffing constraints. To meet these challenges, the Department has undertaken a series of major new initiatives including watershed protection, refocusing water policy on water conservation, comprehensive harbor wide planning, city-wide leak detection and water main flushing programs, an unprecedented program of capital construction, and a modernizing of its billing and customer service information systems, while aggressively amassing major cost savings. Now, it is time to integrate and finalize these initiatives as future water system policy and, above all, to set priorities to insure these initiatives can be attained within the resource constraint of affordable water rates. This plan does so. The measures in this plan combined with past savings make possible a two-year water and sewer rate freeze and a limit in rate growth for at least three years thereafter to an inflation-indexed cap, currently projected to be 5.5% annually. In addition this plan enables the City to propose individual payment caps and other rate relief measures for rate payers with high bills, including a rebate program for toilet retrofits. This is not a typical strategic plan. First, it was put together by operating managers, not planners. Second, it was an exercise done in full partnership with the City's financial agencies. Third, it is action oriented. Fourth, and most crucially, it is resource driven. That is why the emphasis is not only on the strategic, but on the business component. It is a blueprint for future structural balance between DEP goals of premier service and affordable rates. The features of the plan can be briefly summarized. The greatest threat to long term affordable rates is growth in capital program debt service. The biggest needs of the system are for better operating and maintenance programs, for pollution prevention and water conservation and for better response to customer service needs, all of which save money and reduce capital needs. Thus the plan is based on shifting resources to these programs

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 through lowering debt service (with a priority on measures that obtain the same capital construction for less money, i.e., by accelerating construction now to obtain low recession bids) and continuing to improve the productivity of existing programs. The plan also formalizes DEP's commitment to continue to pursue productivity through collaborative strategies: internally through better management and partnership with the DEP workforce; inter-governmentally with other City agencies; externally with our stakeholders: customers, neighborhoods, housing groups, and the environmental, business and construction communities. Their assistance has been crucial to the many successful changes in DEP policies and programs over the last three years. In closing, this plan needs to be seen as on on-going effort, a work in progress. The commitment to attaining both premier service and affordable rates through good business planning will remain a constant of DEP's future, but the details of the plan itself will continually evolve as they are refined in implementation, for a strategic business plan is only successful as a guide to successful action.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 BACKGROUND The New York City Department of Environmental Protection (DEP) is responsible for water supply, sewage collection and treatment, and overall environmental protection. Its history dates back to 1842, when water flowed for the first time from upstate reservoirs into New York City. Today, the agency is a complex enterprise with multiple bureaus, a large capital construction program, approximately 6,300 employees, and responsibilities that impact the health and well-being of every New York City resident. Since the election of Mayor David N. Dinkins, and his subsequent appointment in 1990 of Albert F. Appleton as DEP Commissioner, the Department has gone through a major evolution, adding to its traditional engineering role new environmental and customer service capabilities, and a philosophy of integrated resource management. Strategies to focus on planning, avoiding and reducing costs, and protecting and better operating the water and sewer systems have been implemented, along with streamlining DEP's management structures. In late 1992, DEP began to craft a strategic business plan to comprehensively address the long-term service needs and resource limits of the water system. That initial planning process has been completed and the resultant plan, which will structure and prioritize DEP's operations and resource use in the years ahead, is summarized in this document. THE PROCESS A successful strategic planning process requires: A common understanding, internally and externally, of the principles guiding the agency. A shared vision of DEP's ultimate goals and values. An acceptance throughout DEP of the urgent need to implement the plan. To establish this foundation, DEP conducted a series of workshops. Participants included selected DEP senior management personnel and representatives of key oversight agencies such as the New York City Office of Management and Budget, the New York City Office of Operations, and the Deputy Mayor's Office for Planning. The participation of the oversight agencies enabled DEP managers to integrate their views into broader City perspectives. The accounting and consulting firm of Ernst & Young was engaged to assist in the research and analysis effort, to provide an external perspective, to design the

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 strategic planning process, to facilitate a series of senior management workshops, and to aid DEP in establishing the financial planning tools needed for the plan's successful implementation. DEP MISSION STATEMENT An organization's mission is the fundamental, unique purpose that sets it apart from other organizations and identifies its scope of operations. Its three basic components are: The central vision or purpose of the organization The needs of the key parties who have a stake in the operations of the organization The shared values or beliefs of the members of its members DEP's mission is : To be the premier environmental services agency in the nation, protecting public health and promoting regional prosperity and well-being by: delivering pure drinking water; providing superior wastewater management; protecting and enhancing the region's land, air, and waters; and earning a reputation for integrity, efficiency, affordability, and service. DEP's mission presents a visionary view of long-term excellence. DEP'S GOALS AND STRATEGIES The strategic business plan includes eight goals which, when met, will represent achievement of DEP's mission. These goals, and some of the pivotal strategies to achieve them, are described in this section. Water Supply To maintain superior drinking water quality and meet the current and future water demand through water conservation, watershed protection, and effective system management, without expanding the present reservoir system.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 New York City is known for the excellent quality of its drinking water. To maintain this reputation and to assure that its customers receive a dependable supply of pure drinking water, DEP must adopt cost-effective strategies to ensure adequate water supply, and maintain and improve drinking water quality. The two strategies key to accomplishing this are to: Continue to refine and implement a long-term, cost-effective, comprehensive water conservation plan with a consequent commitment of resources, in partnership with all DEP customers Aggressively implement DEP's watershed protection and filtration avoidance program Both strategies are being successfully implemented. Water Environment To obtain the best uses of the region's waters and adjacent natural resources through effective and innovative wastewater collection, treatment, and management, and resource protection and restoration. New York City has an excellent sewage collection and treatment system. However, to finish the clean-up of the City's harbors and estuaries, obtain the best use of our waterways, and to enhance the overall environmental quality of the region, DEP must take the lead in continuing to improve the quality of the region's waters and the operation of the wastewater treatment plants and the sewer system. Here the critical strategy is to: Convert current water quality plans, consent orders, and State Pollution Discharge Elimination System (SPDES) requirements into comprehensive basin-wide water quality strategies The largest single component of the capital budget is over four billion dollars in the next ten years for harbor-oriented water quality facilities. Comprehensive water quality planning emphasizing pollution prevention and natural resource protection could provide for significantly greater environmental improvement at costs significantly below currently planned expenditures. Completing such a plan and obtaining public agreement on it is the most important planning task DEP faces in the next several years. Environmental Health To identify, evaluate, and eliminate environmental threats to regional health, prosperity, qunlity of life, and natural resources.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 DEP's responsibilities extend beyond operating the water and sewage systems to include protecting the residents of New York City and the region from environmental damage caused by air pollution, toxic waste, asbestos, lead, noise, natural resource destruction, and other sources of environmental harm. DEP's environmental health responsibilities give the agency a unique ability to develop across-the-board approaches to environmental protection and service delivery. To fulfill its mandate in these areas, DEP 's key strategic initiatives are: Monitor and implement regulatory programs to insure all federal air standards are met. Identify and remediate or preserve threatened or degraded sites using current and available scientific risk assessment-based data. Promote waste reduction and pollution prevention activities. Initiatives currently underway include DEP's programs in pollution prevention, green communities, wetlands protection, coordinated environmental enforcement, and small business assistance. Infrastructure To optimize the dependability and useful life of DEP's infrastructure by effectively using the proper mix and amount of capital, operational, and maintenance resources. DEP operates a large, complex and structurally intensive network of water supply and sewage collection and treatment systems that every day must successfully bring water into 810,000 buildings and then remove sewage from them. Here the crucial strategy is to: Determine and implement a cost-effective preventive maintenance and repair strategy, including the analysis of capital/maintenance/service-delivery tradeoffs This strategy will redirect DEP resources into maintenance and operational programs that will improve service reliability while reducing long-term costs. DEP has already implemented programs of systematic leak detection, catch basin cleaning and main flushing and valve maintenance.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Customer Service To provide superior customer service as measured by industry standards and customer-defined requirements DEP must strive to be a customer service organization with a sensitivity and responsiveness to customer needs that is unsurpassed. The agency must continually work towards improving day-to-day service, to quickly and effectively respond to inquiries and complaints, to process customer bills on a timely basis, and to make our processes more customer friendly. Here the main strategy is to: Develop and adequately support modern management information systems for rapid information exchange within DEP and with the public Above all, this means that DEP must meet its June 30, 1994, date for completing the installation of a modern Customer Information and Billing System, and hire and train the personnel needed to manage the program successfully. To date, this effort is on schedule. Human Resources To have an organization which encourages its people to meet and surpass our goals; whose composition reflects the diversity of the City; and which provides leadership, information, resources, and support services that afford people the opportunity to succeed, grow and advance. DEP's employees are the keys to DEP's success and to achieving DEP's mission and goals. DEP must assure that all employees share values of integrity, efficiency, affordability, and service, and perceive DEP as a partner in the achievement of their work and career goals. DEP must ensure that its staff is well trained, that they have adequate working conditions, and that they are empowered to participate and contribute to DEP's success. The key to attaining this objective is effective internal service delivery, as measured by DEP efforts to improve its facilities, communicate with its employees, and obtain for them the tools of their trade. DEP's customer service strategy must be internal as well as external, as reflected in all the strategies to pursue this goal: Refine organizational responsibilities and each unit's role in achieving DEP's mission Implement a program to address compensation issues in a manner that is fair and promotes productivity and performance

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Provide a safe and secure workplace and environment Create a comprehensive communication program throughout the organization which includes regularly scheduled strategic planning meetings and a horizontal and vertical transfer of information Develop and implement intra- and inter-bureau training and rotation programs Establish diversity as a criteria in recruitment, selection, and promotion, and develop and implement appropriate internship and apprentice programs Develop a program to recognize, mentor, and appropriately train the “next generation of management” Finances and Productivity To manage DEP resources and programs to carry out DEP's mission and achieve all its goals while maintaining water and sewer rates and other fees which are affordable, predictable, fair, and competitive. DEP must operate in a fiscally responsible manner that controls costs, enhances revenue collections, improves budgeting and forecasting, and maintains a balance between revenues and expenditures to maintain structural balance between affordable rates and having the resources needed to meet service and environmental goals. Here the key strategies are to: Review operations regularly to identify and implement productivity and other cost-effective measures to keep rates affordable and predictable Maximize revenue collection within the established rate structure DEP, with the assistance of its financial oversights and the Water Authority staff, has now had two years of successful cost savings and has been able to implement a number of ongoing cost-saving measures. As a result the City has been able to propose a two-year water and sewer rate freeze and an ongoing inflation-linked rate cap thereafter, currently estimated at 5.5% annually, and a series of other rate relief and customer service enhancements. Reliable revenue management is a key to future strategic business plan success. If DEP fails to collect the revenue due to it, paying customers will be unfairly penalized and future rates will whipsaw back and forth. Here again, successful implementation of the Customer Information and Billing System and new billing policies is crucial to successful water and sewer rate management.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Public Leadership/Responsibility To be an innovative agency which builds public appreciation and care for the environment, which is trusted to protect people from environmental harm, and which is nationally recognized as a leader in environmental policies. Implicit in DEP's mission to be the premier environmental services agency in the nation is the responsibility to provide infrastructure and environmental leadership at the local, state, and national levels. Earning this leadership position will enable DEP to favorably influence environmental legislation and to gain the public trust and support needed to meet its mandated responsibilities and to preserve and protect the environment of New York City and the region. The strategies central to achieving this goal are to: Actively involve impacted communities and interests in formulating and implementing DEP programs and policies Develop networks of legislative, business, and professional organizations, environmental and advocacy groups, and outside experts to help guide DEP policy and programs Leadership in the nineties is a collaborative art. The distant bureaucrat, the all-knowing government technical expert are creatures of the past. Today the first task of public leadership is to forge consensus and partnership that mobilizes all the resources of the City, public and private, to make the decisions on which the future of the water system and the City's environment rest. SUMMARY DEP's strategies are supplemented by detailed implementation plans which specify the necessary tasks, timetables, and responsible DEP bureaus. Strategic planning will enable DEP to successfully meet the challenges that the future will bring. This initial plan is just the first step in an ongoing strategic business planning and implementation process that will guide DEP activities, facilitate communication within DEP and with the oversight agencies, improve employee and system performance, and enable DEP to fulfill its mission as the premier environmental services agency in the nation, providing unmatched service to the residents of New York City and its region at an affordable cost.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Reduce operating expenses wherever possible. Here again, the unique nature of the DEP budget needs a targeted effort. Nearly half of the operating and maintenance (O&M) budget is for non-personnel costs, an area where cost savings opportunities are far more significant and have far less impact on DEP services than personnel reduction. This targeting strategy has been successful. To date, the Department has identified over $25 million in permanent annual savings in the sludge program and other OTPS costs without any impact on service. Continue productivity improvements. The third major cost saving element in the DEP strategic business plan is continued improvement in DEP productivity. DEP has long been concerned with productivity. In recent years the department has: eliminated over 300 administrative positions; broad-banded many of its major titles; held its management staff to 5% of the agency total; doubled the number of daily meter readings per employee; exceeded the projected performance of its sludge dewatering plants by over 20%; instituted apprenticeship programs for street laboring forces; reduced the size of catch basin, leak detection and other repair crews by designing specialized equipment to perform many of their tasks; and streamlined the administration of the capital construction program. This effort is continuing with a series of new productivity programs planned for FY 1994. Central to the Department's productivity success has been the constructive and on-going dialogue DEP has been able to have with its employees and the unions representing them. The department is a strong supporter of DEP's labor-management Quality of Work Life program. DEP intends to expand this current dialogue to include gainsharing and other mutual approaches to continuing productivity and improvement.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Affordable future rates require expenditures now in programs that will lower future costs. These programs include continuing the Department 's new investments in watershed protection, water conservation, upgrading customer information and billing systems and preventive maintenance of infrastructure. Through these initiatives, DEP will move toward maximizing the productivity of all the resources for which it is responsible. Only by doing so can it provide the services necessary to meet its mission and goals within the income constraints that are necessary to keep rates constant for the next two years and limit their growth in the future.

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 DEP NEW YORK CITY DEPARTMENT OF ENVIRNMENT PROTECTION Strategic Business Plan April 1993 Devid N. Dinkins Albert F. Appleton Mayor Commissioner

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 Figure 2

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995

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THE CHALLENGE OF PROVIDING FUTURE INFRASTRUCTURE IN AN ENVIRONMENT OF LIMITED RESOURCES, NEW TECHNOLOGIES, AND CHANGING SOCIAL PARADIGMS: PROCEEDINGS OF A COLLOQUIUM MARCH 24, 1995 This page in the original is blank.