2017 October – DUWA Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY

OCTOBER 12, 2017 MEETING MINUTES

 Taylor City Hall City Council Chambers

1.  Roll Call and Introductions

DUWA Chairman Rick Sollars called the meeting to order at 9:10 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, Lincoln Park, River Rouge, Riverview, Southgate, Taylor, Van Buren Township, and Wyandotte. Chairman Sollars announced that a quorum (at least 7 members) was present. The Mayor from Dearborn Heights joined the meeting in progress shortly after the Roll Call was taken.

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 Bill Matakas (Allen Park) to approve the Agenda as presented.  Motion passed unanimously

3.  Approval of Minutes from September 14, 2017 Board Meeting

Copies of the meeting minutes from the September 14, 2017 Board Meeting were distributed by email prior to the meeting (Attachment 2).  Motion by Jim Taylor (Van Buren Township) and seconded by Doug Drysdale (Riverview) to approve the September 14, 2017 Board meeting minutes.  Motion passed unanimously.

4.  System Manager Report on Activities to Date and Short Term Work Priorities

DUWA System Manager Vyto Kaunelis, of OHM Advisors, provided a report on recent activities. System Manager Kaunelis noted several meetings have occurred with DUWA stakeholders and that files have been received from Former DUWA System Manager and Secretary Dick Hinshon, of Hinshon Environmental Consulting [HEC]). System Manager Kaunelis and his team are reviewing HEC’s files to get up-to-speed and prioritize tasks that will hopefully facilitate a faster transfer of the system to DUWA from Wayne County (WC). Notable meetings were presented in chronological sequence, and included the following:

  • Employee Transfer Considerations w/ WC: Meeting with WC, Veolia, former System Manager Hinshon, System Manager Kaunelis, and DUWA Attorneys. Meeting intent was to discuss need to retain remaining WWTP staff at existing role when Veolia takes over operations. A limited number of staff require assistance by WC to allow future years of service at Veolia to roll into their vesting or pension requirements at WC.
  • System Manager Transition Kick Off Meeting: Meeting with former and current System Manager and other DUWA Consultants (Attorney and Financial), and Legal Committee representative. Meeting intent was to identify current system transfer issues and priorities.
  • Meeting with Select Mayors: Meeting with former and new System Manager, Chairman Rick Sollars (Taylor), Vice Chair Matakas (Allen Park), and Mayor Joseph Kuspa (Southgate). Meeting intent was to cause introductions and discuss expectations for the System Manager.
  • Review of WC’s ‘Transition Plan’: Meeting with representatives from WC’s Environmental Services group and System Manager. Meeting intent was to preliminarily discuss the ‘Transition Plan’; that is, the status and initial strategies of the transition. Key points included:

o   WC identified there is lack of personnel to help cause the transition to occur, and thus, WC would coordinate with their engineering consultant, HRC, for support. A follow-up meeting is scheduled for next week to further discuss the transition tasks, and assign task owners.

o   Southgate-Wyandotte facility is critical to DUWA system during wet weather flow events. As such, it is highly encouraged to share same operator at both facilities. DUWA suggests the Drainage District request a proposal from Veolia to operate the facility.

Future short-term activities include:

  • Meeting with DUWA Financial Team next week.
  • Meeting with WC to further discuss Transition Plan (as previously outlined).
  • Assign and coordinate tasks with WC to drive progress for transfer occurrence. System Manager will be developing a preliminary schedule that shows critical path to results.

DUWA Board members followed the System Manager’s updates with the following comments or questions:

  • John Zech (Southgate) desired for further understanding of WC employee transfer issues. System Manager Kaunelis addressed by stating details of each employee’s situation has not been shared with DUWA. DUWA and Veolia are urging WC to take action to address WC employee pension or vesting concerns to help retain remaining employees.
  • John Zech (Southgate) inquired if future activities include meeting with DUWA System Manager and Southgate and Wyandotte to discuss the need for request for proposal (RFP) to Veolia for operation of the system. System Manager Kaunelis referenced the Southgate-Wyandotte facility, while critical to DUWA, needs to be addressed by others via possibility a 1) shared standard operating procedures during wet weather flow or 2) operation by same Contract Operator/Veolia for ease of system operation. Final consideration of the right approach and development of RFP is independent of DUWA, and as such, needs to come from Southgate-Wyandotte.
  • John Zech (Southgate) inquired on status of NPDES permit. System Manager Kaunelis responded that two short term permit requires are:

o   Blending Study by December 2017: Blending Study is being completed by HRC, and WC is comfortable with progress. DUWA will be engaged in technical review and discussion for plan, and the study is on track for completion by December 2017.

o   Asset Management Plan development by April 2018: As future Contract Operator, it is desirable for Veolia to complete this task, but WC is responsible as permit holder. Coordination with WC and Veolia is necessary since Veolia will be required to implement. Final deliverable for plan anticipated to be limited to a Schedule for Completion.

  • Mayor Paletko (Dearborn Heights) inquired if other WC-owned facilities (Jackson Pump Station) necessitate coordination with DUWA. System Manager Kaunelis stated since WC is the current operator, they are required to develop transition plan, and that each of these facilitates may have varying timelines for transition by WC.
  • Mayor Sollars (Taylor) inquired on who is WC’s current Director of the Environmental Services Group (ESG). System Manager Kaunelis responded that Elmeka Steele is the Interim Director.
  • Mayor Matakas (Allen Park) inquired on role of Beverly Watts. System Manager Kaunelis referenced she is WC Department of Public Services Director, and Interim ESG Director Steele reports to Ms. Watts.
  • Jim Taylor (Van Buren Township) inquired on status of technical committee, and when the committee will be next engaged. System Manager Kaunelis referenced review of HRC’s Blending Study will require review by technical committee, and that he would follow-up with HRC on status of study next week and also collect anticipated future dates for presentation of the Study to the committee.

Patrick McCauley (DUWA Legal Committee) inquired on status or other considerations of possible SCADA system split. System Manager Kaunelis provided background of the existing centralized system, and referenced there is on-going discussion of what the system needs are for the non-DUWA systems and who should bear the cost of SCADA system segregation.

5.  Status Report on System Transfer

 DUWA Attorney Paul Bohn provided background and update on the Definitive Agreement (DA). The most recent version of the DA received by DUWA from WC was substantially different from previous versions. WC is the current holder of the DA for final resolution (provided from DUWA to WC on 9/4), and has not provided a date for finalization or further revision.

Attorney Bohn also provided background and update on WC-prepared Transition Plan. The Transition Plan presents with an extended critical path of 1 year, and the DUWA Consultants are attempting to refine and compress the schedule. WC’s Attorney (Steve Collins) is leading coordination on real property and other physical asset documentation needs. It is understood WC has a gap in title work or ownership documents, and this will impact the DA language as well as costs for the transition.

Mayor Dan Paletko (Dearborn Heights) inquired how the ownership proceeds from the DA to the Financial component. Attorney Bohn responded that revenue bonds will be used, so further understanding of predictability of revenue stream and title availability, clearance and insurability is necessary.

Kerry Morgan (Legal Counsel for Riverview) questioned proceeding with transfer without a cleared title. Attorney Bohn responded that the adequacy of available title information from WC is being considered on an on-going basis, and that special consideration is certainly being considered to have the confidence that the system is insurable from a title insurance perspective, and DUWA’s ability to rely on that documentation. DUWA Attorneys are actively working on addressing underwriter needs to show DUWA has control of the future assets. System Manager Kaunelis followed up with reference that there is no question on the real property definition at the treatment plan, but it is the linear assets that may not be fully documented. There are means to best understand ownership via record drawings or other documentation.

Matt Coppler (Lincoln Park) inquired on if WC has defined the final transition plan costs. Attorney Bohn responded that the current presented value is a seven-figure number. Beth Bialy (Technical Committee) provided reference that the DA will incorporate a reference to the final transition plan cost.  System Manager Kaunelis noted he is attempting to streamline the tasks required for transition, and thus many items that currently show cost may not be realized. The trimmed transition plan is anticipated to be provided to the Board in the next 2-3 Board meeting dates.

Attorney Bohn stated signature pages have been collected from all but two DUWA Member Communities for the approved Stipulated Financing Plan. Attorney Bohn will follow-up with Lincoln Park for a signed copy of the Resolution and Southgate for a signed copy of the Stipulated Financing Plan. WC’s Legal (Dickinson Wright) is reviewing Stipulated Financing Plan and confirming for approval.

Legal Committee (Ann Fillingham) provided Board members copies of updated IRS Reimbursement Resolution (Attachment 3). The Resolution is updated with 2017 dates for what was adopted last year, where the purchase price was based on bond issue by DUWA on a tax exempt basis. Since the IRS requires use of bond issue for reimbursement for any materials or other costs incurred in advance of the bond issuance, the Board had adopted a Reimbursement Resolution under the Federal Tax Code.  Ms. Fillingham recommended to the Board that this be adopted again for 2017 to simplify paperwork.

Chairman Sollars called for motion. Motion moved by Mayor Paletko (Dearborn Heights) and supported by Mayor Matakas (Allen Park). Immediately subsequent to supporting motion, John Zech (Southgate) noted page 81 of the resolution notes a different purchase price in current Resolution than the 2016 Resolution. Ms. Fillingham noted the monetary flux is due to minor refunding as SRF bonds move to Michigan Finance Authority. Ms. Fillingham noted the number considered last year may have been more fluid, and thus there is a different number being realized this year.

Mayor Paletko (Dearborn Heights) questioned if there is a time limit for bonds. Ms. Fillingham responded that there is a time limit, and our timeline will be based on tax-exempt basis bonds, and that the general rule is that construction should be completed within 3 years of issuance. It is expected that final closure would occur the same day as execution of the Definitive Agreement.

Chairman Sollars called for a vote. Motion passed unanimously.

6.  Treasurer’s Report

DUWA Treasurer Doug Drysdale presented the Treasurer’s Report which was included in the pre-meeting packet.  This included the status of Community payments (Attachment 4), the Authority’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 5).

He noted that three invoices have been received including a bill from Fausone Bohn in the amount of $14,686.81 for work performed in August (Attachment 6), a bill from Hinshon Environmental Consulting in the amount of $9,684.00 for work performed in September (Attachment 7), and two invoices from Plante & Moran. One invoice in the amount of $8,375.00 for Financial Forecast work performed from August 10 through September (Attachment 8) and a second invoice in the amount of $3,952.50.00 for work performed in July through August (Attachment 9).

Motion by Mayor Matakas (Allen Park) and seconded by John Zech (Southgate) to pay these invoices. Motion passed unanimously.

Mayor Paleko (Dearborn Heights) expressed gratitude to Treasurer Drysdale on a job well done as the functioning Treasurer.

System Manager Kaunelis noted this is the last month where an invoice would be received from HEC, and future work efforts that may necessitate Mr. Dick Hinshon’s involvement would be incorporated into OHM Advisors contract.

7.  Public Comment

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

8.  Other Business

DUWA Financial Consultant (Beth Baily) noted the Financial Forecast was completed, and is currently with DUWA Financial Advisor (Kari Blanchett, PFM Group) for review to confirm it meets requirements. The Financial Forecast is a 5-year analysis to show the Board how much revenue needs to be generated to deal with coverage ratios and other debits. Based on the findings, it is anticipated that DUWA will be looking at annual increases from 2-6% over the 5-year period. The intent of the rate is to have sufficient coverage ratio for the $3.5M payment that is due 5 years after the initial payment of ~$54M. Rate increases of 5% and under have been considered rate neutral, and thus, the findings of the Financial Forecast appear to be rate neutral.

Mayor Matakas (Allen Park) questioned where the $3.5M funds would be coming from. Ms. Baily noted the debt service requires a coverage ratio of 110% for scheduled debt services, and that the rate increases will generate an extra ~$900k annual, and that will be added to DUWA’s reserve, and then, once the 5-year milestone occurs, DUWA will pay the $3.5M with the reserve (existing reserves and the to-be-generated reserves) rather than paying with bonds. Mayor Matakas inquired whether this would impact the $54M bond. Ms. Baily stated this would not impact the $54M bond.

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

9.  Next Meeting Date

Chairman Rick Sollars reminded the Board that the next regularly scheduled DUWA Board meeting is November 9, 2017 (9:00 a.m. Taylor City Hall).

There being no other business, Chairman Rick Sollars announced that a motion to adjourn would be in order.  Motion by Bill Matakas (Allen Park), seconded by Doug Drysdale (Riverview) to adjourn the meeting.  Motion passed unanimously at 9:56 AM.

 

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala

DUWA System Manager

October 16, 2017 DRAFT

November 3, 2017 FINAL

Attachments

  1. Meeting Agenda
  2. September 14, 2017 Board Meeting Minutes
  3. Resolution of the Board of Commissioners of DUWA Regarding Declaration of Intent to Reimburse from proceeds of Revenue Bonds - 2017
  4. Status Report re: Payments from Communities dated September 7, 2017
  5. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
  6. Invoice for August 2017 work dated September 1, 2017 from Fausone Bohn
  7. Invoice for September 2017 work dated October 2, 2017 from HEC
  8. Invoice from August 10 through September 29 work dated September 29, 2017 from Plante & Moran for Financial Forecast
  9. Invoice from July 1 through September 29 work dated September 29, 2017 from Plante & Moran