2017 June – DUWA Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
JUNE 8, 2017 MEETING MINUTES

Taylor City Hall City Council Chambers

1. Roll Call and Introductions
In the absence of DUWA Chairman Rick Sollars, DUWA Vice Chairman Bill Matakas called the meeting to order at 9:06 AM, and asked for the roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 10 communities: Allen Park, Belleville, Brownstown Township, Ecorse, Lincoln Park, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. Vice Chairman Matakas announced that a quorum (at least 7 members) was present. The Dearborn Heights Representative subsequently joined the meeting during the discussion of Agenda Item 3. Non voting Representatives were in attendance from River Rouge and Riverview.

2. Approval of Agenda
Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by John Zech (Southgate) and seconded by Roberto Scappiticci (Romulus) to approve the Agenda as presented. Motion passed unanimously.

3. Approval of Minutes from May 11, 2017 Board Meeting
Copies of the meeting minutes from the May 11, 2017 Board Meeting were distributed by email prior to the meeting (Attachment 2). DUWA Secretary Dick Hinshon pointed out that a correction needs to be made on the last page to indicate that the motion to adjourn was made by Gail McLeod, not Bill Matakas. Motion by Kerreen Conley (Belleville) and seconded by John Zech (Southgate) to approve the May 11, 2017 Board meeting minutes with the change as proposed by Mr. Hinshon. Motion passed unanimously.

4. Update re: Sinkhole near Wick Road and Middlebelt Road
DUWA Secretary Dick Hinshon reported that the emergency repairs to the Goddard Interceptor near Wick Road and Middlebelt Road are nearly complete. He noted that an update on the County’s response to the sinkhole was distributed by email prior to the Board meeting, and pointed out that the email included details about the condition of the downstream pipe as well as photographs showing the extent of deterioration. Because of the significant corrosion evident in the downstream pipe, the County is preparing to amend the Purchase Order to include installation of a Cured-In-Place-Pipe liner (“CIPP”) which will stabilize the interceptor to prevent any further corrosion, and eliminate the potential for collapse of that section of pipe. In addition,the manholes will be sprayed to control future corrosion from Hydrogen Sulfide (H2S). The existing drop connections will be modified to minimize vaporization of H2S, and several old manholes and pipes in the area will be either bulkheaded or abandoned since they are no longer in use.

Mr. Hinshon indicated that this work will be initiated under the emergency Purchase Order so as to avoid the delay that would arise if the work were to be done as a new project under the County’s procurement process. The County has not yet received cost quotes from the contractor for the additional work, but it is expected that this will be received shortly. Mr. Hinshon will distribute the revised cost upon receipt to the DUWA Representatives. If the FY18 emergency sewer repair budget of $320,000 is exceeded, the remainder will be paid out of System Reserves. The amount to be covered from System Reserves is expected to be very small as compared to the cash on hand in the Reserve account.

Dan Paletko (Dearborn Heights) questioned whether there is potential for this problem to arise elsewhere in the System. Mr. Hinshon noted that the problem near Wick and Middlebelt is somewhat unique in that it was caused by excess H2S being released by a drop connection. Although historic “As Built” drawings for the entire System are somewhat suspect because of their age, no other similar drop connections are known to exist.

5. Status Report on System Transfer
DUWA Attorney Jim Fausone reported that he has not as yet received a response from Wayne County on the Definitve Agreement comments that were submitted by DUWA at the end of May. However, a meeting was held with County staff to discuss issues relating to the handling of current County employees and the recognition of labor unions. Veolia representatives attended the meeting with the County, and tentative agreement was reached on having Veolia recognize the unions so that this can be referenced in the Definitive Agreement without obligating DUWA to similarly recognize the unions. The meeting also covered the timetable for interacting with current employees as well as the proposal to modify existing pension eligibility requirements in order to incentivize several near-retirement age employees to continue to work at the wastewater treatment plant.

In addition to addressing employee related provisions, DUWA representatives reminded the County staff that a decision is still needed regarding the handling of several Drainage District facilities and CSO Basins that are not being transferred to DUWA under the Definitive Agreement. Also, DUWA has proposed that the unpaid operational costs from Wyandotte and Riverview be addressed by establishing an Escrow Account, and the County indicated that this would be an acceptable resolution.

Mr. Fausone noted that a revised Transaction Calendar dated June 1 (Attachment 3) was included in the pre-meeting packet. The new Calendar establishes November 15 as the target closing date for the Transfer, but is contingent on timely approval of the Stipulated Amendment to the Financing Plan and Final Judgment by all 13 Communities, as well as preparation of the numerous Exhibits and Schedules that will accompany the Definitive Agreement when it is finalized and circulated to the Communities for approval.
With regard to the Stipulated Amendment, Mr. Fausone noted that he transmitted the Amendment to the local attorneys with a cover letter dated May 12 (Attachment 4). The Stipulated Amendment (Attachment 5) includes several voluminous Exhibits which were omitted from the pre-meeting DUWA Board packets because of their size. Mr.Fausone noted that he has received the approved Stipulated Amendment from one Community (Wyandotte) and asked that the remaining12 Communities similarly approve the document by July 13. Once all of the Communities have approved the Amendment, it will be submitted to U.S. District Court Judge Sean Cox for approval.

6. Selection Committee Recommendation re: New System Manager
DUWA Secretary Dick Hinshon presented the Selection Committee’s recommendation for the new DUWA System Manager as set forth in the May 23, 2017 document which was included in the pre-meeting packet (Attachment 6). He noted that the Committee originally expected to hire a person to serve as the new System Manager, but the best application was received from two individuals (Kerreen Conley and Firooz Fath-Azam) who proposed to team up and handle the job responsibilities as partners. The Selection Committee believes this proposal to be in the best interest of the Authority given the experience, knowledge and capability of the two individuals. In particular, the Committee recognized that both persons have similarly served as System Managers (for both the Downriver and South Huron Valley Systems) and are fully knowledgeable on all aspects of the System including technical, financial, legal, and policy issues. Both have demonstrated the ability to communicate effectively, and have considerable experience working for a Board comprised of community representatives.

After interviewing the “Short List” candidates, the Committee agreed that the Conley/Fath-Azam team should be recommended as DUWA’s new System Manager even though their proposal asserts that the scope of work can be handled as a Part-Time job. It is recognized that both individuals intend to continue their current workloads and expect to undertake the DUWA System Manager job as an additional activity. Under their proposal, compensation would be based on a negotiated hourly rate, and the cumulative level of effort expected to be required would be approximately 1,500 – 1,600 hours/year.

The Selection Committee members identified several potentially significant issues including compensation, availability to perform the work, identification of primary point of contact and responsibility for assigning and completing various work items, possible conflicts of interest, contractual and insurance requirements, etc. However, after further discussions with the applicants, the Committee agreed that these concerns can be satisfactorily addressed as part of contract negotiations with Ms. Conley and Mr. Fath-Azam. As a result, the Committee is seeking concurrence from the DUWA Board to proceed to move forward with the negotiation of a Professional Services contract in order to retain the two individuals to serve as the new DUWA System Manager.

Several issues and concerns were raised by DUWA Board Members in response to the Selection Committee’s recommendation. Specific concerns included:

  • Compensation, particularly as to whether the cost of the Conley/Fath-Azam contract would exceed surpass what would be paid to a new DUWA employee;
  • Availability of Ms. Conley and Mr. Fath-Azam to work for DUWA while continuing to be employed by others;
  • Ability to complete all of the System Manager duties as a Part-Time work effort;
  • The potential for a Conflicts of Interest, particularly as it relates to hiring a System Manager who is currently serving as the Mayor of a DUWA Community (Belleville);
  • Appropriateness of entering into a Professional Services contract with a new LLC to be created by Ms. Conley/Mr. Fath-Azam when DUWA’s original announcement and advertisements listed the job as one which would be a DUWA employee.

Substantial discussion of these items ensued. Mr.Hinshon pointed out that the anticipated compensation assuming 1,500 – 1,600 hours per year at $150/hour would slightly exceed the cost of a new employee hired at $150,000 per year with an additional 40% of salary for Fringe Benefits. However, the extra cost is expected to be more than fully offset by eliminating the new Chief Financial Officer position, since those duties would be handled by the System Manager under the Conley/Fath-Azam proposal.

A motion to approve the Selection Committee recommendation as presented in the May 23 document from the pre-meeting packet was made by John Zech (Southgate) and supported by Roberto Scappiticci (Romulus). After further discussion, it was generally agreed that further examination may be warranted for both the conflict of interest and the procedural process associated with entering into a new Professional Services contract. As such both the Maker and Seconder of the motion agreed to amend their motion to bring the proposed Professional Services contract with the new Conley/Fat-Azam LLC back to the Board for consideration at the August 10, 2017 Board Meeting rather than the July 13 Board Meeting. A roll call vote on the revised motion passed 7 – 3 with Ecorse, Dearborn Heights and Lincoln Park voting No.

Motion by John Zech (Southgate) and supported by Roberto Scappiticci (Romulus) to have the DUWA Attorney work with the Legal Committee Chairman Patrick McCauley to schedule and convene a meeting of the Legal Committee for the purpose of discussing future Bylaws for the Authority and to provide input to the DUWA Attorney regarding the potential conflict of interest question and the procedural steps necessary to be undertaken prior to entering in to a new Professional Services contract with the Conley/Fath-Azam LLC. Motion passed by a vote of 9 – 1 with Ecorse voting No.

7. Update from Plante & Moran re: Analysis of DUWA Benefits Package Options
DUWA Financial Consultant Beth Bialy reported that Plante & Moran has completed the evaluation of employee benefit plan options that was authorized by the DUWA at the April Board meeting. The analysis is quite comprehensive since it addresses several different types of medical coverage plans as well as dental insurance coverage, vision insurance coverage, life insurance, disability plans, holiday time, sick leave, bereavement leave, and tuition reimbursement options. P & M has prepared a detailed presentation which identifies the benefits being offered by 7 other municipal organizations and 3 private firms. Ms. Bialy noted that it was decided to defer presenting the full report to the Board at this meeting since the Selection Committee’s recommendation for the new System Manaager does not require that the Board establish its benefit package at this time.

After discussion, the Board directed Plante & Moran to distribute the detailed report to the Finance Committee and convene a Finance Committee meeting to present and discuss the information. It was further suggested that an Executive Summary then be prepared and presented to the Board at the August Board Meeting.

8. Treasurer’s Report
DUWA Vice Chairman Bill Matakas noted that DUWA Treasurer Doug Drysdale was unable to attend the Board Meeting due to an unavoidable schedule conflict. He stated that the Treasurer’s Report was included in the pre-meeting packet which included the status of Community payments (Attachment 7), the Authority’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 8).

He noted that the Board pre-meeting packet contained an invoice from Hinshon Environmental Consulting and three invoices from Plante & Moran (Attachments 9, 10, 11 and 12). Motion by Kevin McNamara (Van Buren Township) and seconded by Roberto Scappaticci (Romulus) to pay the invoices submitted to DUWA. Motion passed unanimously.

9. Public Comment
No issues or concerns were raised as part of the Public Comment agenda item.

10. Other Business
DUWA Secretary Dick Hinshon indicated that Wayne County is proposing to amend the Hubbell Roth & Clark (HRC) “As Needed Services” Contract to extend the term by one year to November, 2018 and to add an additional $150,000 to the budget. The amendment is needed because HRC has almost fully utilized the existing authorization for expenses relating to managing the sinkhole emergency reponse and for supplying temporary staff to assist with operation of the wastewater treatment plant.

Mr. Hinshon expressed support for the amendment, in part because HRC will need to assist with preparation of the evaluation report on the alternatives to reduce the frequency of wet weather blending as required by the new NPDES Permit. He noted that DUWA does not need to take any action, but advised that the County is seeking concurrence from the Joint Management Committee (JMC) pursuant to the terms of the JMC’s Memorandum of Agreement with the County. Mr. Hinshon indicated that the proposed amendment is being circulated to the Technical and Finance Committees for review, after which he will ask the JMC Executive Committee to approve the amendment on behalf of the full JMC.

There were no additional items brought forth for consideration as “Other Business” items.

11. Next Meeting Date
Vice Chairman Matakas reminded the Board that the next regularly scheduled DUWA Board Meeting is July 13, 2017 (9:00 a.m. Taylor City Hall).

There being no other business, Vice Chairman Matakas announced that a motion to adjourn would be in order. Motion by John Zech (Southgate), seconded by Kevin McNamara (Van Buren Township) to adjourn the meeting. Motion passed unanimously at 10:50 AM.

Meeting Minutes Prepared by:
Richard Hinshon
DUWA Secretary
June 14, 2017

Attachments
1. Meeting Agenda
2. May 11, 2017 Board Meeting Minutes
3. Updated Transaction Calendar dated June 1, 2017
4. May 12, 2017 letter from Attorney J. Fausone transmitting final Stipulated Amendment
5. Final Stipulated Amendment to Financing Plan and Final Judgment
6. Selection Committee recommendation dated May 23, 2017 with System Manager application and supporting materials from K. Conley/F. Fath-Azam
7. Status Report re: Payments from Communities
8. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
9. Invoice for May 2017 work dated June 1, 2017 from HEC
10. Invoice for March 2017 work dated May 31, 2017 from Plante & Moran
11. Invoice for April 2017 work dated May 31, 2017, 2017 from Plante & Moran
12. Invoice for Benefits Package evaluation dated May 31, 2017 from Plante & Moran