2018 August – Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
AUGUST 9, 2018 MEETING MINUTES

Taylor City Hall City Council Chambers

1. Roll Call and Introductions
DUWA Chairman Rick Sollars (Taylor) called the meeting to order at 9:02 AM and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 11 communities: Belleville, Brownstown, Ecorse, Lincoln Park, Taylor, Allen Park, Riverview, Romulus, Southgate, Van Buren Township and Wyandotte. A quorum (at least 7 members) was present.

2. Approval of Agenda
Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by Gail McLeod (Allen Park) and seconded by Doug Drysdale (Riverview) to approve the Agenda as presented. Motion passed unanimously.

3. Approval of Minutes from July 26, 2018 Special Board Meeting
Copies of the meeting minutes from the July 26, 2018 Special Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Doug Drysdale (Riverview) and seconded by Jim Taylor (Van Buren Township) to approve the Board meeting minutes. Motion passed unanimously.

4. Report on System Issues

a. System Manager Update

System Manager Vyto Kaunelis, of OHM Advisors, provided a status update to the Board related to the following technical items:

• Weekly meetings have initiated with Wayne County and Veolia to address transfer details, and to make sure expectations are aligned.
• Riverdrive Interceptor – Alkali Sewer Repair: A community coordination meeting was held last Tuesday (August 7). Sewer inspection work is tentatively planned for August 27, 2018.
• Influent Pump Station (IPS) Electrical Power Failure Update: Temporary facilities are in place. Various investigations continue at Downriver Wastewater Treatment Facility (DWTF) with Wayne County and their as-needed engineer (HRC) to determine the best way to make permanent repairs, including investigations on the roof leakage issues.
• DUWA’s 5-Year (short-term) Capital Improvement Plan: A meeting was held on July 26, 2018 with DUWA, Wayne County, HRC, and Veolia to discuss what capital improvements may be needed within the next 5 years. This information was used to assist in our financial projections. The discussions included improved influent sampling (required to get better handle on the true influent loads for Veolia contract), bio-solids long-term solution, electrical system upgrades (other than IPS emergency work), blending reduction requirements, and building condition improvements (e.g. roofs and stone facades). The bio-solids disposal is the largest issue, but is highly dependent upon the duration that the current landfilling process remains acceptable. Discussions with the landfills, through the current disposal contractor, will be pursued to get the best projections. The current budget allows for $5 million over the next 5 years (in addition to the two emergency projects), which appears to be reasonable based on the discussions.
• Lincoln Park Contract Exceedances: Next step was for OHM Advisors to meet with Wayne County and Applied Sciences Inc to clarify modeling approach and other assumptions. Due to transition resource needs, Wayne County has asked DUWA to postpone this discussion.
• Upper Trenton Channel Dredging Project (Engineer: Jacobs): Work includes dewatering of Detroit River sediments. Construction anticipated in CY2020-2021; Jacobs is finishing the design in next few months. The anticipated discharge volume is 6.5 MGD (max). A permit would be required by early CY2019. A conference call meeting was held on July 31, 2018 with Jacobs to understand project and timeline considerations. Jacobs is considering two discharge options: direct discharge to the river or indirect discharge via DWTF. The direct discharge option would save the project the cost of discharge to DWTF. Mr. Kaunelis followed up with MDEQ and MDEQ anticipate a response in about two weeks to Jacob on the limits for direct discharge. The System Managers will hold off further work until DUWA receives an initial indication if the direct discharge approach is deemed feasible by Jacobs before spending significant efforts to develop a draft Industrial Pretreatment Program (IPP) discharge permit for the indirect discharge option.
• Southgate Wyandotte Relief Drain Drainage District (SWRDDD) and Ecorse Creek Pollution Abatement Drain No. 1 (ECPAD) Operation and Maintenance (O&M): Wayne County has requested proposal from Veolia to perform future O&M work. Discussions about scope of work were held and Veolia is preparing the proposals. If Veolia completes the O&M work at SWRDDD and ECPAD, their involvement as DUWA’s and their facility operator significantly reduces the scope of Supervisory Control and Data Acquisition (SCADA) system changes required upon system transfer to DUWA. The Board was reminded of the centralized SCADA system that is currently in place at the DWTF.
• Shared Services Agreement with Wayne County:

o DUWA is continuing to work with Wayne County and Veolia on technical aspects of continuation of SCADA services for remote facilities, until separation of SCADA. It was noted that separation needs of the SCADA system may be dependent upon definition of transition plan (interim operators and future ownerships).
o DUWA is working to define ‘construction completion’ support tasks for Wayne County to support DUWA until completion.
o The Shared Services Agreement will also likely include general support tasks, such as financial and technical support.

• IPP Application by DUWA: Legal and technical issues were addressed and formal application was submitted. DUWA is awaiting MDEQ’s formal approval upon completion of the 30-day Sewer Use Regulation (SUR) public notice period. The SUR public notice will be posted soon. The SUR public notice and another public notice for the approved IPP will include a cost for publishing.

b. Legal Update, including

Prior to proceeding with the legal update, Jim Fausone, of Fausone Bohn and DUWA’s Attorney, invited Carol Symes, Vice President of Structuring Development with Veolia, to update the Board on staffing discussions. Ms. Symes commented that Veolia is onsite at the DWTF, and has been for the last several weeks. Veolia has brought their subject matter experts, including Asset Management, Human Resources (HR), and SCADA to the site for reviews and discussions. Offer letters have been submitted to existing Wayne County DWTF salary employees, and they have received verbal acceptance from several; Veolia is hopeful all salary employees choose to come onboard. HR held a team meeting with existing DWTF staff last week, and is conducting one-on-one interviews this week. Offer letters for non-salary employees will go out next week, and these employees will have 10-days to consider and accept the offer or choose to stay with Wayne County.

Mr. Fausone noted that there are ongoing discussions regarding American Federation of State, County and Municipal Employees (AFSCME) and a new Community Benefits Agreement (CBA). DUWA members may hear more about this in the coming month, as County Commissioners are being asked to approve of a transition agreement between the Unions and Wayne County. Mr. Fausone noted that this approval does not influence the Definitive Transfer Agreement (DTA).

i. Title Insurance Analysis Informational Memo

Mr. Fausone reminded the Board the transfer of title is not a standard real estate deal for the DTWF, as land ownership is not neat and clear. An informational memo (Attachment 3) was provided to the Board to provide points for what DUWA would receive with title insurance and without. DUWA’s legal committee has reviewed this information and provided recommendation that some title insurance is recommended as it will provide DUWA with the ability to use the insured value as a legal defense fund, if ever required. The Board requested Mr. Fausone bring forward a formal proposal for title insurance at the next Board meeting.

The proposal would realize a two-part scope and expense: search and commitment functions. The search function would come with a one-time fee of approximately $10k. The commitment function would be at DUWA’s discretion – a $5M limit was recommended to the Board; the $5M commitment would come at an expense of approximately $6k to DUWA. The total cost is estimated at $16,000. The anticipated provider of title insurance was First America, who is one of two of the largest firms that provide this service.

ii. Downriver Wastewater Treatment Facility Easement Informational Memo

Mr. Fausone communicated an informational memo was prepared for the system’s easements (Attachment 4). The real estate transaction does not carry all the legal easements and placements for the system, but the general sentiment is there is strong ground to assume an uninterrupted transition as the system, as the system has been around for a long time without claim. Additionally, the DTA requires cooperation by Wayne County should an event come up in the future. Ancillary Agreements will be constructed to address easements associated with the transfer.

No action was required by the Board for this Agenda item.

iii. Summary of DUWA’s Ancillary Contracts/Assignments

Mr. Fausone noted there are several ancillary contracts or other assignments that the Board will be asked to take action on in the future. A listing of the ancillary contracts was provided in the pre-meeting packet (Attachment 5). Mr. Fausone noted that several of the items required coordination with the Drainage Districts rather than Wayne County (Items 2, 3, 4, 8, 10, and 11 from Attachment 5). SWRDDD is now working with Craig Hupp as their attorney, and Mr. Fausone believes that these tasks will be completed expeditiously with Mr. Hupp’s representation.

iv. (DRAFT) Administrative Procedures Manual

Mr. Fausone provided the Board a copy of the current draft of the Administrative Procedures Manual (Attachment 6). The current version of the Manual has been vetted through the Legal Committee and their comments have been incorporated. Mr. Fausone requested the Board members review the draft Manual and provide a copy to community staff that may provide constructive feedback on items DUWA should consider. Special area of attention may include purchasing and procurement, FOIA officers, and disposal of equipment after useful life.

The manual will be a living document and can be modified by the Board on an ongoing basis. The manual will assist the System Managers on how to proceed with several tasks after system transfer. A final version of the Manual is anticipated to be brought forward to the Board in 2 to 4 weeks for approval.

Jim Taylor (Van Buren Township) provided comment on cell phone issuances (have authorize by Officer rather than Board member), equipment disposal cost thresholds (consider increasing), and adding a policy statement associated with Board engagement and performance reviews of System Operators or Managers. The Legal team will consider these items in the next version. Additionally, the Technical Committee was requested to be engaged on review of these items, especially as it relates to equipment cost thresholds.

c. Update on Accounting Services RFP Activity

Beth Bialy, of Plante Moran, and DUWA’s Financial Consultant, updated the Board on the responses received for the closed RFP associated with accounting services. Two proposals were received by the Evaluation Committee: UHY (of Farmington Hills, MI) and DNS Financial Services (of Riverview, MI and also Doug Drysdale’s LLC [DUWA Treasurer]). The Evaluation Committee included the System Managers (Vyto Kaunelis and Lambrina Tercala of OHM Advisors), Ms. Bialy, and Mr. Fausone.

The Committee evaluated the proposals based on the RFP’s qualifying criteria and work scope. After deliberation by the group, the Committee recommended DNS for the Board’s consideration as the future accountant. Key drivers for the recommendation of DNS included the following:

• Mr. Drysdale is already integrated with DUWA, and can quickly coordinate with the DUWA Professionals since we are late along the system transfer process.
• Mr. Drysdale is an ongoing member with the JMC and DUWA
• Mr. Drysdale is very familiar with the system, as he has been servicing DUWA as the Treasurer and the accounting duties are an extension of his current tasks.
• Mr. Drysdale has 15 years of financial experience and holds positions as Financial Director and City Manager.
• The pricing between the two proposers were mostly inline. Based on the proposed hours, the pricing for UHY was ~$76k/yr and then ~$46k/yr plus $28k for software (one-time cost w/ nominal fee going forward) for DNS. An advantage to DNS’s proposal is that the purchased software could be transferred to other accountants into the future, and the proposed software also provides an auditable trail (unlike Quick Books which was an option proposed by UHY).

Conflicts of interest were discussed by the Board associated with UHY and DNS and their relations to the Board or local communities. UHY is currently River Rouge’s auditor, and thus a conflict exists associated with acting as DUWA’s accountant. There was also concern on legal considerations associated with DNS holding both the Treasurer and Accountant position. Mr. Fausone will provide legal conflict review and provide a formal communication on the Treasurer-Accountant matter at the next Board meeting. However, if the Board has concern on a broader conflict issue for sharing the same Treasurer and Accountant, then the members need to communicate such.

DNS also offered that his company’s team will include a second team member (his wife) that will be responsible for the day-to-day tasks, and he will oversee their work. Thus capacity issues are not anticipated to be of a primary concern given his existing commitments at Riverview and with DUWA.

Other Board dialogue focused on the type of accounting software that is best for DUWA going forward (preference to BS&A, which was proposed on by DNS), DUWA’s financial and rate calendar years (December year end, with Rate Year being July 1 to June 30), and PFM’s considerations for not proposing (PFM audits several of the local communities financials; seeks to preserve ability to audit the DUWA’s financials in the future).

Chairman Sollars requested a motion for the DUWA Professionals to enter into direct contract negotiations with DNS Financial Services. Motion by Dustin Lent (Southgate), seconded by Jim Taylor (Van Buren Township). Motion passed unanimously, with Doug Drysdale (Riverview) abstaining from the vote.

d. Review and Approval of Debt and Investment Policies

Ms. Ann Fillingham, of Dykema, and DUWA’s Bond Counsel presented the Board with two separate financial policies: Debt (Attachment 7) and Investment (Attachment 8) policies. The intent of the Debt policy is to provide guidance to market participants on how the bond is structured, the type of debts, refinancing, how DUWA reissues bonds, and how DUWA uses their financial professionals. The intent of the Investment policy is to provide written evidence on how the Board desires to reduce credit or interest rate investments or other ordinary funds of DUWA, how DUWA defines standards of care, and how DUWA assures safekeeping of investments. Like the Administrative policies under Agenda Item 4(b)(iv), these policies are living documents that aren’t hard wired like adopted parameters in the MBO. Changes to these policies can be communicated and adopted by the Board going forward.

Without question or comment from the Board, Chairman Sollars called for a motion to approve of the Debt and Investment policies. Motion by Doug Drysdale (Riverview), seconded by Gail McLeod (Allen Park). Motion passed unanimously.

e. Review and Approval of Master Bond Ordinance parameters, including Bond Authorizing Resolution and Series Ordinance

Ms. Fillingham provided an update on the Master Bond Ordinance (MBO) process. The MBO, which sets the general framework for the issuance of bonds, was approved by the Board in late 2017. The Notice of Intent was approved in Spring 2018, and a public notice was subsequently posted in April 2018. The next formal step in the process, which requires formal action by the Board, is to authorize acquisitions of the bond for cash payment of transfer and SRF liabilities. This is provided in the Bond Authorizing Resolution and Series Ordinance (Attachment 9). Ms. Fillingham stepped through the major subsections of the Ordinance to provide an overview to the Board.

After providing the overview, the Board and audience members discussed the nuances of the MBO process and the Ordinance. One of the items included a request by Jim Taylor (Van Buren Township) to receive the Public Offering Statement (POS), which will be reviewed with the Board at the August 23 Special Board Meeting, within 1 week of the Special Board Meeting. Mr. Fillingham commented that is important to provide the Board an as accurate and complete version of the POS as possible and the POS will see revisions up until the Special Board meeting. However, understanding the Board’s interest in receiving the document, and given the amount of detail in the POS, the DUWA Professionals will release the draft version of the POS to the Board as part of the Special Board Meeting pre-meeting packet. If updates are released after the issuance of the pre-meeting packet, they will be communicated to the Board at the Special Meeting.

Chairman Sollars called for a motion to approve of the Bond Authorizing Resolution and Series Ordinance. Motion by Jim Taylor (Van Buren Township), seconded by Roberto Scappaticci (Romulus). Motion passed unanimously

5. Treasurer’s Report
DUWA Treasurer Doug Drysdale (Riverview) presented the Treasurer’s Report that was included in the pre-meeting packet. This included the status of Community payments (Attachment 10), the DUWA’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 11). Mr. Drysdale noted that the $500k transfer from Wayne County was recently received by DUWA, and this was important timing, as the first payment would be due to Veolia in the next few weeks for their transition services.

Treasurer Drysdale (Riverview) noted that seven (7) invoices have been received from DUWA Professionals or other Consultants. A Treasurer’s Invoice Register Report was provided to summarize the invoices (Attachment 12):

• Aon Risk Services Central, Inc. in the amount of $5,000.00 (Attachment 13)
• BTG Solutions in the amount of $300.00 (Attachment 14)
• Environmental Consulting & Technology in the amount of $1,402.00 (Attachment 15)
• Fausone Bohn in the amount of $37,486.85 (Attachment 16)
• Firooz Fath-Azam in the amount of $4,025.00 (Attachment 17)
• OHM Advisors in the amount of $27,314.75 (Attachment 18)
• Plante Moran in the amount of $13,090.00 (Attachment 19)

Motion by Dustin Lent (Southgate) and seconded by Rick Rutherford (Belleville) to pay the invoices. Motion passed unanimously.

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

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

8. Next Meeting Date
Chairman Sollars reminded the Board that the next meeting would be the Special Board Meeting on August 23, 2018 (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 10:37 AM.

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala
DUWA System Managers
August 11, 2018

Attachments
1. Meeting Agenda
2. July 26, 2018 DUWA Special Board Meeting Minutes
3. Title Insurance Analysis Informational Memo
4. Downriver Wastewater Treatment Facility Easement Informational Memo
5. Summary of DUWA’s Ancillary Contracts/Assignments
6. DRAFT Administrative Procedures Manual
7. Debt Management Policy
8. Investment Policy
9. Bond Authorizing Resolution and Series Ordinance
10. Status Report re: Payments from Communities dated July 31, 2018
11. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
12. Treasurer’s Invoice Register Report
13. Invoice from Aon Risk Services Central, Inc, dated July 2, 2018
14. Invoice from BTG Solutions, dated July 23, 2018.
15. Invoice from Environmental Consulting & Technology, dated July 25, 2018
16. Invoice from Fausone Bohn, dated July 1, 2018
17. Invoice from Firooz Fath-Azam, dated July 30, 2018
18. Invoice from OHM Advisors, dated July 10, 2018
19. Invoice from Plante Moran, dated July 21, 2018