DOWNRIVER UTILITY WASTEWATER AUTHORITY

NOVEMBER 9, 2017 MEETING MINUTES 

Taylor City Hall City Council Chambers

 1.  Roll Call and Introductions

DUWA Chairman Rick Sollars called the meeting to order at 9:05 AM, and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 10 communities: Allen Park, Bellville, Brownstown Township, Lincoln Park, River Rouge, Riverview, Romulus, Southgate, Taylor, and Van Buren Township. Chairman Sollars announced that a quorum (at least 7 members) was present. The representative from Dearborn Heights joined the meeting in progress shortly after 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 Doug Drysdale (Riverview) to approve the Agenda as presented.  Motion passed unanimously.

3.  Approval of Minutes from October 12, 2017 Board Meeting

Copies of the meeting minutes from the October 12, 2017 Board Meeting were distributed by email prior to the meeting (Attachment 2).  Motion by Bill Matakas (Allen Park) and seconded by Jim Taylor (Van Buren Township) to approve the October 12, 2017 Board meeting minutes.  Motion passed unanimously.

4.  Report on System Transfer Issues

DUWA System Manager, Vyto Kaunelis, of OHM Advisors, provided a report on coordination efforts with Wayne County related to the Transition Plan. Mr. Kaunelis reported momentum for completing the transaction is building. Key discussion points communicated to the Board included the following:

• Development of a Veolia-Wayne County agreement to assist in avoiding disincentives for high-seniority employees to transfer to Veolia is progressing.
• Last week, a meeting was held at the wastewater treatment facility (WTF) related to the NPDES Blending Report. This meeting presented an opportunity to see a few Wayne County WTF employees. The employees are anxious to hear about the transition and are pleased that DUWA is pushing to have a meeting to provide updated Veolia transition information.
• DUWA Consultants have met with Wayne County several times in recent weeks to coordinate on Transition Plan tasks. No difficulties are perceived for successful transition. The next Technical Transition meeting is this afternoon.
• Wayne County has provided final contractor costs for the sinkhole; other minor costs may be realized. Total project costs are anticipated to be less than $500K.
• Wayne County requested input related to a contract amendment with ASI for flow metering. The flow metering work is an important task to continue for monitoring the system’s performance. Input was sought from the Technical Committee and there were no objections. It was noted that although the not-to-exceed fee amount for CY 208 is $612K, the actual costs for the past three years has been under $400K.
• OHM Advisors is working with DUWA Legal to finalize their System Manager contract. Adjustments are proposed and are being worked through the DUWA Legal Committee.
• OHM Advisors is working with the MDEQ to understand the scope of the Industrial Pretreatment Program (IPP) transition tasks.

Next, Mr. Kaunelis provided a status update on Wayne County’s draft completion of the NPDES Blending Report. Key discussion points included the following items:

• A final Blending Report is due to the MDEQ by December 1, 2017 per the current NPDES requirements. This work is being completed by Wayne County since they are the current permit holder.
• A draft report was prepared by HRC/ASI and provided on October 31. The draft report was reviewed with Wayne County, DUWA System Manager, HRC, and ASI at a November 2 meeting. A significant number of comments were made at the meeting. A second draft will be prepared and provided by November 10.
• A DUWA Technical Committee meeting is scheduled for November 20. The draft Blending Report will be sent out as soon as it is received.  Wayne County is open to input. 
•  Per the draft Blending Report, favorable short-term options appear to be available at modest cost. Cost estimates were not available in the draft report, but no major capital construction was recommended.
•  It is anticipated that MDEQ will continue to place pressure on the DSDS system to further reduce the need to blend with future permit cycles. Thus, it is important to also look at DUWA’s longer-term options.
• The draft Blending Report indicates some communities are exceeding their flow limits. This will be a difficult issue for DUWA to address as we take over operational control.

Subsequent to the NPDES Blending Report status update, Mr. Kaunelis provided clarification that the recommendations from the Blending Report are meant to reduce the amount of blending events that occur in the system. Currently, the system experiences approximately eight blending events per year. The MDEQ would like the system to reduce the blending events down to four to six per year.

DUWA Attorney Jim Fausone, of Fausone Bohn, LLP, provided background and update on the DA, judgement levies, and Wayne County employee transition plan. Key discussion points included the following items:

• Definitive Agreement (DA): DUWA and Wayne County met yesterday to exchange an updated draft of the DA. The DA will include several schedules (currently projected as 28) to best communicate items such as insurance needs, litigation claims, and other legally substantial items. DUWA Legal provided indication of ‘gaps’ in schedules to Wayne County on November 6. Wayne County is currently responding to the gaps and is also generating dollar values to items such as insurance. Wayne County’s General Counsel is increasing pressure to Wayne County Legal to complete the DA; Wayne County is increasing their attention to the issue. A revised draft of the DA is due from Wayne County to DUWA next week.  Once a negotiated, final DA with (as many as possible) schedules is generated, the DA will be provided to DUWA Legal Committee for review. The DUWA Attorneys plan to meet with the DUWA Chairman to discuss the finalization schedule and also coordinate on items of interest to the DUWA communities. The currently projected schedule was communicated as follows:

o   December 2017: Seek DUWA Board approval for distribution of the DA to each community for review and consideration.

o   July 2018: Currently projected transfer day in DA is July 1, 2018. Thus, seeking to receive Wayne County Executive Commissioner signature by beginning of June. These dates would require DUWA Community signatures of the DA by March 1, 2018.

o   October 2018: Contingent upon approval delays, the DA has language which allows for transfer of system up until October 1, 2018.

• Judgement Levies: The judgement levies will stay in place at Wayne County; the DUWA communities stipulated to that order to allow this to occur. The judgement levies were recently provided to Judge Cox.
• Employee Transition Plan: Wayne County and AFSCME are anticipated to enter into a memorandum of understanding for how the existing group of Wayne County DSDS employees will be treated. DUWA requested that AFSCME be a bargaining unit. Thus, Veolia will be permitted to interview and hire the employees if they are positioned to be hirable (i.e., passed drug and skill testing reviews or other necessary items). An early December meeting is anticipated with Veolia, Wayne County, and AFSCME to finalize the approach and plan.

Mr. Fausone closed with noting there will be several meeting requests for the Legal Committee over the next month. Patrick McCauley (Legal Committee Member) will coordinate for DA review meeting as well as a Master Bond Ordinance review meeting.

DUWA Secretary Matt Coppler (Lincoln Park) inquired on updates for the transaction costs. Mr. Fausone responded that the original estimate was approximately $3M, and that the Technical Committee has been working on required tasks with associated costs for transfer. Mr. Fausone noted System Manager Kaunelis has worked on limiting transition tasks to critical items, which has helped push down costs. Wayne County is due to provide DUWA a final transition cost tomorrow, November 10; Mr. Fausone anticipates the cost should be substantially lower.

Dan Paletko (Dearborn Heights) asked for an update on the resolutions for ancillary facilities that discharge into the WRF (i.e., Jackson Street pump station, community basins, etc).  Mr. Fausone responded that the committees are working with the Drainage Districts, and also working with Wayne County to formalize operational protocols.  System Manager Kaunelis added Wayne County initially desired for DUWA to take over the other facilities, but now recognizes DUWA does not wish to take them over. Wayne County is working on their approach for future operation of the facilities, and it is anticipated they will request quotes from existing vendors or possibly issue a request for proposals. It is understood Wayne County desires to get out of the business of operating wastewater facilities, but they will retain responsibilities of the Drain Code and follow its requirements.

Mayor Paletko provided comment that the communities’ may consider 2018 elections as being an influencer in timeline to finalize the DA, especially if the transition is not due to occur until October 2018.

Jim Taylor (Van Buren Township) inquired on status update for title searches. DUWA Attorney Fausone responded that DUWA has a better understanding of the lack of available information, and that void of proper deed documents, the DA will have language to address the legal aspects for an ongoing post closure liability by Wayne County.  This is especially anticipated to be the case for the interceptor lines. Mr. Fausone referenced that deed information provided by Wayne County to-date (via Citrix) is being reviewed by his team for accuracy. John Zech (Southgate) inquired on if indemnification for future claims was necessary giving the lack of documentation. Mr. Fausone responded that indemnification would not be necessary for the assets since the costs would be realized by the DSDS communities regardless if the claim was with Wayne County or DUWA. Mr. Fausone did note this was the case only for uninsured events.

Mr. Zech later asked how an event like the Romulus sinkhole would be treated with regard to insurance. Mr. Fausone responded that over the next 3-4 months DUWA will recommend to the Board a scope for insurance requirements since DUWA will be transitioning from an advising authority to an operating authority. Mr. Fausone noted Wayne County has an insurance package for operating, and DUWA will want similar, if not better, coverage. Mr. Zech followed that this type of detail is important for community communication when DA approval is sought. Ms. Fausone agreed, and further stated that the community’s need to be reminded of why DUWA desires to be an operating authority; this is because the communities know the system will be better off under their local control.

DUWA Financial Advisors, Kari Blanchett of PFM Financial Advisors reported on the completion of the credit assessment efforts. Ms. Blanchett referenced the primary intent of the assessment is to receive indication of the anticipated investment grade rating. A credit rating is not received until DUWA is ready to sell bonds.  The credit assessment was received on October 31, and indicated the assessment suggests DUWA will receive a ‘low investment grade rating’. There are opportunities for DUWA enhance its credit profile which would increase the likelihood of receiving a higher rating including a Rate Stabilization Fund (or similar) or change in bond coverage ratio for Junior lien (SRF) bond (from 1.0 times to 1.10 times). A 1-page flyer was provided to DUWA communities, which summarizes the assessment update (Attachment 3).

Ms. Blanchett also provided the following considerations that were communicated to or by the assessing agency, S&P Global Ratings:

• S&P expressed concern for legal provisions for collection of monies should one or more local community not pay their bill.   Counsel and PFM had conversations with rating agency regarding the legal mechanisms available to the Authority to enforce local communities to pay their bills.
• S&P was provided information to demonstrate revenue sharing available to be intercepted should a local unit not pay its bill, but indicated some of the local units revenue sharing is already pledged to other debt.
• The amount of cash the System currently has on hand will be attractive to investors, but the rating agency and investors are concerned about long-term revenue generation (cash flow in) and expenditures (cash flow out).
• S&P requests to review each local unit’s sewer enterprise funds.  Since the majority of the local units have consolidated enterprise funds, Ms. Blanchett indicated each community with consolidated funds will need to provide an informal break down of the funds for sewer. Ms. Blanchett provided clarification that an audit report is not necessary for fulfilling the request.
• Credit assessment rating was partly impacted by the lack of history with DUWA operating the system. It was noted that having a System Manager in place was a key factor to obtaining an investment grade rating assessment.

Mr. Fausone communicated that Wayne County will be made aware of the credit assessment results in upcoming meetings.

Discussion then focused on the 5-year Financial Forecast. Ms. Beth Bialy provided an update to the group with reference of rate neutrality. DUWA Secretary Matt Coppler (Lincoln Park) requested a copy of the 5-year projections, which will be provided.

Ms. Bialy noted the projections used Veolia’s rates with escalators on costs and debts, due to the (financially) perceived deferred maintenance at the WRF. Mark Sanderson, with Veolia, followed by saying the Condition Assessment of the WRF was completed nearly 2 years ago, and that DUWA may consider updating the assessment before closing. System Manager Kaunelis agreed reviewing and updating the assessment makes sense.

Secretary Coppler (Lincoln Park), Van Buren Township, and Chairman Sollars (Taylor) all commented that the DUWA voting representatives need a clear, shared message to communicate to their community. It is anticipated that standard presentation materials will be developed and presented to each community.

5.  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 one invoice had been received from Fausone Bohn in the amount of $8,960.60 for work performed in September (Attachment 6).

Motion by Vice Chairman Matakas (Allen Park) and seconded by Roberto Scappaticci (Romulus) to pay the invoice. Motion passed unanimously.

6.  Approval of Proposed 2018 Meeting Schedule

Chairman Sollars presented the proposed 2018 DUWA Board meeting dates (Attachment 7).

Motion by Doug Drysdale (Riverview) and seconded by John Zech (Southgate) to approve of the meeting dates. Motion passed unanimously.

7.  Public Comment

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

8.  Other Business

There were no 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 December 14, 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 Jim Taylor (Van Buren Township), seconded by Doug Drysdale (Riverview) to adjourn the meeting.  Motion passed unanimously at 10:28 AM.

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala

DUWA System Manager

November 14, 2017

Attachments

1. Meeting Agenda
2. October 12, 2017 Board Meeting Minutes
3. Update on DUWA’s Credit Assessment
4. Status Report re: Payments from Communities dated November 3, 2017
5. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
6. Invoice for September 2017 work, dated October 1, 2017, from Fausone Bohn
7. Approved 2018 DUWA Meeting Schedule