2017 May – DUWA Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
MAY 11, 2017 MEETING MINUTES

Taylor City Hall City Council Chambers

1. Roll Call and Introductions
DUWA Chairman Rick Sollars called the meeting to order at 9:09 AM, and asked for the roll call to be taken. Voting representatives were in attendance from 11 communities: Allen Park, Belleville, Ecorse, Lincoln Park, River Rouge, Riverview, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. Chairman Sollars announced that a quorum (at least 7 members) was present. There were no representatives in attendance from Brownstown Township or Dearborn Heights at the meeting. Chairman Sollars noted that Ecorse City Manager Tim Sadowski was attending his first DUWA Board Meeting in his capacity as the City’s new Representative to the Authority, and the other Community Representatives were asked to introduce themselves.

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 Michael Bowdler (River Rouge) to approve the Agenda as presented. Motion passed unanimously.

3. Approval of Minutes from April 13, 2017 Board Meeting
Copies of the meeting minutes from the April 13, 2017 Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Jim Taylor (Van Buren Township) and seconded by Kerreen Conley (Belleville) to approve the April 13, 2017 Board meeting minutes as presented. Motion passed unanimously.

4. Update re: Sinkhole near Wick Road and Middlebelt Road
DUWA Secretary Dick Hinshon described the Sinkhole which was discovered on April 27 near the intersection of Wick and Middlebelt Roads by Metro Airport. The sinkhole, which is approximately 10’ diameter, has apparently developed because of a collapse of the underlying Downriver System Goddard Interceptor pipe. That pipe was installed as part of the 1962 System Expansion, and is a 24” diameter concrete pipe approximately 25’ below ground.

Initial investigation indicates that the pipe may have completely collapsed since the on-site emergency response contractor (Inland Waters) was unable to pass a camera through the pipe to assess its condition. Romulus has previously experienced a similar sinkhole problem on a local sewer in this area, and it is suspected (but not yet proven) that the collapse is attributable to a build up of Hydrogen Sulfide gas (H2S). H2S is corrosive and may have caused enough structural deterioration to the concrete pipe to create the problem.

Wayne County responded quickly to the sinkhole, and has already installed temporary emergency bypass pumping so that the sanitary sewage can continue to be conveyed around the collapsed interceptor pipe and transported downstream to the wastewater plant for
treatment. Fortunately, no sewage bypass occurred as a result of the sinkhole, and with the emergency bypass pumping now in place, none is expected to occur. The service area upstream of the sinkhole is located entirely in Romulus, and the location of the collapse is such that it is not expected to adversely impact on any buildings or structures, nor is it likely to affect the nearby roadways.

Wayne County is in the process of issuing an emergency Purchase Order to authorize excavation of the collapsed pipe and installation of replacement pipe. At this time it is unclear as to the length of pipe that is structurally deteriorated, so the total cost of the removal and replacement is not yet known. The scope of work for the Purchase Order will also include cleaning and televising of the downstream pipe to determine if there is any additional corrosion or deterioration which will need to be addressed. It is anticipated that excavation of the site will begin during the week of May 15.

The cost of the emergency response to the sinkhole if being paid out of the FY17 budget for sewer inspection and repair which totals $320,000. If the cost of the work exceeds that budget, it may be necessary to utilize some of the System’s reserves to cover the additional expenses. Mr. Hinshon noted that the Insurance Carrier for the System has been put on notice as to the problem, and coverage for the sinkhole may be sought if the amount exceeds the deductible for the policy.

5. Status Update on System Transfer
DUWA Attorney Jim Fausone noted that the long awaited draft “Definitive Agreement” dated April 12, 2017 was included as part of the DUWA Board pre-meeting informational packet (Attachment 3). However, the document provided by the County does not include many Schedules and Exhibits, and those items are essential in order to respond to the draft Agreement. Mr. Fausone indicated that some preliminary comments are being prepared in conjunction with reviews by local attorneys and DUWA consultants, and those preliminary comments will be transmitted to the County by the end of May. It is hoped that the County will provide the missing Schedules and Exhibits by that time so that a comprehensive review of the draft Agreement can then be completed. Development of the final Definitive Agreement is a critical item on the proposed Transaction Calendar, and further delay could impact the ability to close the deal by the October 1, 2017 target date.

Mr. Fausone reported that the County has provided the missing Exhibits to accompany the proposed Stipulated Amendment to the Financing Plan and Final Judgment, and the document will now be circulated to the local Attorneys with a request for approval from each of the 13 Communities. Mr. Fausone noted that the request for Community approval will go out with a draft Resolution Of Approval. He is hopeful that the Community approval process can be completed in 8 weeks so the matter can then be presented to US District Court Judge Sean Cox for approval. Judge Cox is likely to hold a Hearing on the matter since the case has been dormant for many years. Mr. Fausone noted that representatives from the State of Michigan have been contacted regarding the proposed Stipulated Amendment, and the state has indicated that it does not object to its entry.

DUWA Bond Counsel Ann Fillingham and DUWA Financial Advisor Kari Blanchett briefed the Board on their recent meeting with State Treasury Department officials. The meeting was held to inform the state about the proposed future Revenue Bond sale by the Authority
and to seek concurrence for transfer of the SRF debt currently held by Wayne County for the System.

Ms. Fillingham noted that the response from the state officials was positive, and substantial progress was made in developing the strategy for moving forward with the bond sale. Ms. Fillingham indicated that a draft “DUWA Master Bond Ordinance” is being prepared, and presented a one page summary of the document (Attachment 4) for Board consideration. The draft Bond Ordinance is patterned after the ordinance which was developed by GLWA since DUWA intends to use the same statutory authority as GLWA. It is anticipated that the Master Bond Ordinance will be presented to DUWA for formal approval at an upcoming monthly Board Meeting. Since the bond sale is being prepared as a Revenue Bond under the auspices of the Authority, the individual Communities will not need to approve the Ordinance. Similarly, the issuance of new Revenue Bond debt by the Authority will not constrain or limit individual Communities’ debt limits or current financing situation. It was noted that Act 233, 1955 and the Authority’s approved Articles of Incorporation authorize DUWA to issue such debt.

DUWA Secretary Dick Hinshon announced that he has obtained bound copies of the recently approved Service Agreement, and copies have been given out to each Community. The new Service Agreement is slated to take effect in conjunction with the System Transfer. Printed copies are also being provided to DUWA Consultants and Wayne County. In addition, an electronic version of the new Service Agreement is posted on the DUWA Web Site.

6. FY18 Downriver System Rate Package
DUWA Financial Committee Chair Beth Bialy presented Wayne County’s proposed FY18 Rate Package for the Downriver System (Attachment 5). She noted that the Finance Committee met with County Representatives on May 1 to discuss the rates, and a copy of the meeting summary is included as Attachment 6. She pointed out that the proposed rates include a continuation of the $500,000 line item for DUWA’s transition costs as well as an additional $500,000 to cover the Allen Park Reimbursement Plan approved by DUWA at the April Board Meeting. Despite these budget items, the a 0% rate increase is being recommended over the current FY17 rates. In part this is due to the smaller budget for wages and benefits in FY18 because of the large number of staff vacancies and the hiring of entry level staff to replace departing senior staff members. In addition, many of the small capital improvements identified for FY17 have not been completed, so the funds targeted for those items are being carried over to FY18, further reducing the revenue requirement for this year.
She noted that the Rate Package assumes a constant flow volume for the year as compared to FY17. The FY18 rates show an increase in the Debt Service charges largely due to the cost of the most recent SRF funded capital improvements for which payments are now scheduled to begin. Ms. Bialy noted that the Finance Committee has requested a few additional informational items from the County, but overall the Committee is supportive of the new Rate Package and recommends that it be approved and placed into effect.

After discussion, the Board expressed support for the FY18 Rate Package. Motion by John Zech (Southgate) supported by Doug Drysdale (Riverview) to concur with the proposed FY18 Rate Package and request that the rates be approved by the County Commission and placed into effect. Motion passed unanimously.

7. Committee Report re: New System Manager
DUWA Secretary Dick Hinshon reported that 12 applications have been received for the System Manager position, and the Selection Committee will be meeting after the Board Meeting concludes to discuss the applications and identify the “Short List” of candidates to be interviewed by the Committee. If the interview process can be completed this month, Mr. Hinshon indicated that the Committee’s recommendation may be included as an action item as part of the next DUWA Board Meeting on June 8. If the Committee needs additional time to complete the interview and selection process, the recommendation may be presented at the July Board Meeting. Mr. Hinshon indicated that having the System Manager on board prior to the effective date of the System Transfer will be beneficial since it will provide an opportunity for the new Manager to participate in the negotiation of the Transfer and the development of the 20 year Operating Agreement with Veolia.

Beth Bialy summarized the status of Plante & Moran’s evaluation of various employee benefit options which was initiated in response to the Board’s request from the April Board Meeting. She noted that much of the data collection work has been completed although a few of the organizations have not as yet responded to the firm’s information request. She anticipated that a report will be finalized later this month or in early June so that the Board can consider the report before it decides on the benefits to be offered to new employees.

8. Treasurer’s Report
DUWA Treasurer Drysdale gave the Treasurer’s Report and presented several documents which were included in the Board’s pre-meeting packet. He reviewed the status of payments received from the Communities (Attachment 7), and summarized the Authority’s Revenue/Expenditure report and the updated DUWA Balance Sheet Report (Attachment 8).

He noted that the Board pre-meeting packet contained invoices from Fausone, Bohn, Hinshon Environmental Consulting and the Michigan Municipal League (Attachments 9, 10, 11 and 12). Motion by Roberto Scappaticci (Romulus) and seconded by Gail McLeod (Allen Park) 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
There were no “Other Business” items raised for consideration.

11. Next Meeting Date
Chairman Sollars reminded the Board that the next regularly scheduled DUWA Board Meeting is June 8, 2017 (9:00 a.m. Taylor City Hall).

There being no other business, Chairman Sollars announced that a motion to adjourn would be in order. Motion by Gail McLeod (Allen Park), seconded by Doug Drysdale (Riverview) to adjourn the meeting. Motion passed unanimously at 10:23 AM.

Meeting Minutes Prepared by:
Richard Hinshon
DUWA Secretary
May 22, 2017

Attachments
1. Meeting Agenda
2. February 9, 2017 Board Meeting Minutes
3. Draft Definitive Transfer Agreement dated 4/12/17
4. One page Executive Summary of DUWA Master Bond Ordinance
5. Proposed FY18 Downriver System Rate Package
6. Summary of May 1, 2017 Dowriver Finance Committee Meeting
7. Status Report re: Payments from Communities
8. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
9. Invoice dated April 1, 2017 from Fausone Bohn
10. Invoice dated May 1, 2017 from Fausone Bohn
11. Invoice dated May 3, 2017 from Hinshon Environmental Consulting
12. Invoice dated April 11, 2017 from Michigan Municipal League