2018 August – Special Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
AUGUST 23, 2018 SPECIAL MEETING MINUTES

Taylor City Hall City Council Chambers

1. Roll Call and Introductions
DUWA Chairman Rick Sollars (Taylor) called the meeting to order at 9:10 AM and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 8 communities: Belleville, Brownstown, Lincoln Park, Taylor, Allen Park, Riverview, 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 Doug Drysdale (Riverview) and seconded by Rick Rutherford (Belleville) to approve the Agenda as presented. Motion passed unanimously.

3. Approval of Minutes from August 9, 2018 Board Meeting
Copies of the meeting minutes from the August 9, 2018 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 Board meeting minutes. Motion passed unanimously.

4. Legal Update

a. Future FOIA Officer Appointment Discussion

Mr. Jim Fausone, DUWA’s attorney, informed the Board that FOIA requests will be submitted to DUWA under their system ownership. As such, the Board needs to consider appointment of a future FOIA Officer. DUWA’s pending Administrative Procedures Manual includes the State’s mandated provisions for the FOIA process, and as part of that, an appointment is necessary. Action to appointment a FOIA Officer will be brought back to the Board at a later date.

b. AON Update on Insurance

Mr. Fausone informed the Board that a Request for Proposal for insurance carriers is out. The DUWA Professionals are in the process of answering questions to the insurance market. A recommendation by AON for the future carrier will be brought forward at the next Board meeting. Ultimately, insurance will be put into place at close of transfer for an effective date of September 28, 2018.

Relating to costs for the policies, Mr. Fausone has been working with DUWA’s Financial Team on costing. Costs are within range of projections, which were roughly $300k-$500k.

c. Treasurer Discussion

Under this agenda item, Mr. Fausone provided follow-up comment on conflict that may exist between DUWA’s Accountant also being a Board member. A like-matter was reviewed and discussed by the Board last year as part of the System Manager selection process. A member of a proposed System Manager team was also a Board member. The outcome of the review and discussion was that there was a grey area in that a conservative approach would suggest ‘no’, and a liberal approach would suggest ‘yes.’ This interpretation remains today for the Accountant and Board member positions.

Mr. Fausone then provided comment on conflict that may exist between DUWA’s Treasurer being a Board member and also DUWA’s Accountant. DUWA’s Bylaws provide provisions that the Board has a fiduciary duty, and the Treasurer does not need to be a member of the Board. Based on discussions between Mr. Fausone and Ms. Beth Bailey, DUWA’s Financial Consultant, there was conclusion that the best management practice would be to have separation of Treasurer and Accountant.

Mr. Doug Drysdale (Riverview) is DUWA’s proposed Accountant and current Treasurer. Based on discussions with Mr. Drysdale, Mr. Fausone and Ms. Bailey understand Mr. Drysdale is prepared to stepdown from acting as Treasurer if DUWA secures his company (DNS Financial Services) as DUWA’s Accountant. Mr. Drysdale confirmed this. Should this change take effect, the Board will need to act to retain a new Treasurer. It was noted that the Bylaws allow the Treasurer to be someone other than a Board member.

Without other comment to the Legal Updates, Veolia updated the Board on their transition activities. Ms. Carol Symes provided the following updates:

• Veolia secured a Project Manager, Jeanette Best and Assistant Project Manager, Karl Stein. Both Ms. Best and Mr. Stein provided a summary of their experience to the Board.
• Veolia is working with Wayne County on the Employee Transition Agreement. One of the activity items included providing ‘Assurance Letters’ to state that Veolia accepts the previously agreed upon terms of both Wayne County and the unions.
• Several key salary hires have occurred, including an Industrial Pretreatment Program Manager, Accountant, and SCADA manager.
• Offer letters were distributed to current DWTF hourly staff. Overall, Veolia has received 38 Acknowledgement Letter, with four (4) still pending. Three (3) had previously declined. If all 38 accept, then Veolia will have 42 out of their 48 full time equivalents (FTEs) assigned.
• Veolia is actively working on transferring key vendors from DWTF to Veolia.
• Several corporate subject matter experts, including environmental, safety, and process control persons have recently visited the site to assess needs to bring processes up to Veolia’s standards.

Mr. Kerry Morgan, attorney for Riverview, asked Ms. Symes if any items of note were identified by the subject matter experts. Ms. Symes suggested there were not any new items. Mr. Vyto Kaunelis, System Manager, provided an update on the roof leak that is the cause of the on-going electrical repair work at the Influent Pump Station. It was noted that Wayne County is pending approval for a change order related to the electrical repair work, which will be brought to their Commission in September. The cause of the leak has not yet been resolved, but will be reviewed soon.

Mr. Morgan also requested clarity on Mr. Drysdale’s voting rights. Mr. Fausone comment that Mr. Drysdale would need to abstain from voting on Accounting services contracts during the duration of his contract. The pending contract duration is for 1 year. Upon contract completion, the Board can consider extending the contract or opening up to other proposers.

5. Overview of Public Offering Statement
Ms. Ann Fillingham, of Dykema, and DUWA’s Bond Counsel presented the Board with an overview of the Public Offering Statement (POS). The draft POS was provided in the pre-meeting packet (Attachment 3). Ms. Fillingham reminded the Board that they have a fiduciary responsibility to DUWA, which means they need to act with due care in review of the POS. To assist with this understanding, Ms. Fillingham provided a memo outlining the Board’s role in the bond transaction (Attachment 4).

Ms. Fillingham requested the Board provide review comments or questions within one weeks’ time. Mr. Fausone acknowledged to the Board that the DUWA Professionals expect the Board to have a good understanding of the history of the system and how it works, and that is a key area for the Board to review and provide feedback.

Ms. Fillingham provided note that on page 26 of the POS, the Financial Plan anticipates a 4% annual rate increase; and, as such, the increase is expected to occur. Thus, if the Board finds issue with this or other presented items, then they need to be communicated immediately.

Vice Chairman Bill Matakas (Allen Park) asked Ms. Fillingham about the process for review of the POS. Ms. Fillingham noted the typical process is to talk with S&P’s analysis to make sure they have a chance to ask questions ahead of preparing their report, and typically, once a report has been prepared, they will provide a 3 hour window (for DUWA) to review the report for factual inaccuracies. Ms. Fillingham noted this is typical, but is provided by S&P as a courtesy, and there is no way to predict when the draft report will be released.

Ms. Bailey asked Ms. Fillingham for comment on the timing for the bond market and consideration of WC’s financial calendar year end. Ms. Fillingham noted the process is not behind schedule, but there isn’t much leeway for any milestones to lag in the process.

6. Request for Approval of Administrative Procedures Manual

Mr. Fausone informed the Board that the Administrative Procedures Manual in the pre-meeting packet (Attachment 5) is the same as the draft manual provided at the last Board meeting, other than incorporation of comments on 1) addition of holding a performance review for the System Manager annually and 2) increase dollar amount for obsolete equipment to $2k.

Additional edits may be necessary in the future, and it was recommended that the Board develop a subcommittee to review and provide recommendations to edit the document. The preliminary timing for the subcommittee to meet is February 2019, which is 6 months after system transfer. An item that was communicated to Mr. Fausone before today’s Board meeting will stay pending as part of the subcommittee’s discussion. The item is the request for adding an ‘Employees and Texting’ section under the 10.07 Email policy.

Motion by Jim Taylor (Van Buren Township) and seconded by Rick Rutherford (Belleville) to approve the Administrative Procedures Manual. Motion passed unanimously.

7. Request for Approval of Financial Contracts or Other Actions

a. Accounting Services Contract

Mr. Fausone informed the Board a negotiated contract for accounting services with DNS Financial Services was developed, and insurance items were worked through by the parties. The contract is for 1 year of service at a rate of $100 per hour, with a cap of 460 hours over the year, unless otherwise approved by the Board. The contract was provided in the pre-meeting packet (Attachment 6).

Mr. Matt Coppler (Lincoln Park) noted he appreciates Mr. Drysdale involvement on the Board, and has confidence in his accounting abilities, but does not agree with authorizing a Board member as a paid service provider, and therefore, would not vote in favor of the contract.

Motion by Bill Turner (Brownstown) and seconded by Vice Chairman Matakas (Allen Park) to approve DNS Financial Services as DUWA’s Accountant per the contract terms. Allen Park, Belleville, Brownstown, Taylor, Van Buren Township, and Wyandotte voted in favor of the contract. Lincoln Park voted against the contract. Riverview abstained from the vote. There was discussion on if there was sufficient approval for the contract given Lincoln Park’s ‘no’ vote and Riverview abstaining from the vote. The consensus was the contract was approved because a majority of the attending communities voted in favor of the contract.

b. Assignment of Accountant as MDEQ Authorized SRF Contact

Mr. Fausone informed the Board a request for assigning an agent as DUWA’s SRF contact to the MDEQ would be requested at a later date. The recommendation is anticipated to be DUWA’s Accountant.

c. Transfer of Escrow Funds

Mr. Fausone provided an informational update on the status of the escrow funds. The transfer is moving to US Bank. The transfer has occurred for Wyandotte. Riverview’s transfer is pending signature.

d. Verification Agent Contract

Ms. Fillingham defined that the Verification Agent is a third party that reviews the Under Writer and Financial Advisor’s work about sufficiency of escrow to call the bonds. The Verification Agent provides professional opinion that the funds are correct.

PFM, DUWA’s Financial Advisor, recommends authorization of Mr. Robert Thomas as the Verification Agent due to competency and low bid. The letter of recommendation was provided in the pre-meeting packet (Attachment 7).

Motion by Vice Chairman Matakas (Allen Park) and seconded by Doug Drysdale (Riverview) to approve Mr. Thomas as the Verification Agent. Motion passed unanimously.

e. First of America Title Search & Policy Contract

Mr. Fausone notified the Board that this contract is not ready for consideration, and will be carried forward for the September 13 Board meeting.

8. Request for Approval of Ancillary Contracts or other Assignments

a. Identification of contracts/assignments

Mr. Fausone noted thirteen (13) ancillary contracts are currently anticipated for Board action as part of the system transfer. The contracts were noted in a summary listing provided in the pre-meeting packet (Attachment 8).

A main contract is a Shared Services Agreement between Wayne County and DUWA, which covers such activities as resource sharing for SCADA, on-going construction, financial assistance associated with historical processes, wet-weather assistance, etc. The desire is to bring the Shared Service Agreement to the Board as part of the September 13 Board meeting.

b. Nuisance Payment Agreement with City of Wyandotte

Mr. Fausone notified the Board that Wayne County historically paid Wyandotte a $33k fee due to the plant being located in their community. There was no written agreement to memorialize Wayne County’s payment to Wyandotte. A formal agreement has been prepared for DUWA to enter into with Wyandotte. The agreement was provided in the pre-meeting packet (Attachment 9).

Chairman Sollars asked how the original value of the agreement was developed. Mr. Todd Drysdale (Wyandotte) noted that the fee was derived from having to displace residence to accommodate the plant’s physical location and also based on general nuisances. The original fee was developed based on review of taxable parcels and other losses. The fee was derived 25 years ago or more, and an increase in the fee hasn’t been realized by Wyandotte.

Motion by Vice Chairman Matakas (Allen Park) and seconded by Doug Drysdale (Riverview) to approve the annual nuisance payment by DUWA to Wyandotte. The contract would be authorized by the Chairman upon request by general counsel. Motion passed unanimously, with Mr. Todd Drysdale (Wyandotte) abstaining from the vote.

c. Re-assignments of Wayne County Contracts

i. Weiss Headworks Contract

Mr. Fausone reported that the request is for assignment of a contract between Wayne County and Weiss, the general contractor for the current SRF project. The construction project is nearing its final stages, and is being used as the mechanism to assist with the Influent Pump Station’s electrical repairs and the Low Lift pump rework. The contract was provided in the pre-meeting packet (Attachment 10).

Motion by Vice Chairman Matakas (Allen Park) and seconded by Jim Taylor (Van Buren Township) to approve of the assignment of the Weiss Headworks contract to DUWA. The contract would be authorized by the Chairman upon request by general counsel. Motion passed unanimously.

ii. HNTB Headworks Contract

Mr. Fausone reported that the request is for assignment of contracts between Wayne County and HNTB, the Engineer for the current SRF project. The contract was provided in the pre-meeting packet (Attachment 11).

Motion by Rick Rutherford (Belleville) and seconded by Vice Chairman Matakas (Allen Park) to approve of the assignment of the HNTB Headworks contract to DUWA. The contract would be authorized by the Chairman upon request by general counsel. Motion passed unanimously.

iii. Emergency Operations Plan

Mr. Fausone reported Wayne County has this plan currently in place, and it is necessary for DUWA to resume the plan. The assignment was provided in the pre-meeting packet (Attachment 12).

Motion by Jim Taylor (Van Buren Township) and seconded by Todd Drysdale (Wyandotte) to approve of the Emergency Operations Plan assignment. The assignment would be executed by the Chairman upon request by general counsel. Motion passed unanimously.

iv. SWRDDD Outfall Usage Agreement

Mr. Fausone reported the use of SWRDDD’s Outfall Usage Agreement needs to be reassigned to DUWA. The assignment was provided in the pre-meeting packet (Attachment 13).

Motion by Doug Drysdale (Riverview) and seconded by Vice Chairman Matakas (Allen Park) to approve of the SWRDDD Outfall Usage Assignment. The assignment would be executed by the Chairman upon request by general counsel. Motion passed unanimously.

v. Emergency Flow Restriction ECPAD

Mr. Fausone reported the request is for reassignment of the flow contract from Wayne County and the Drainage District to DUWA and the Drainage Districts. The assignment was provided in the pre-meeting packet (Attachment 14).

Motion by Doug Drysdale (Riverview) and seconded by Jim Taylor (Van Buren Township) to approve of the Emergency Flow Restriction assignment with ECPAD. The assignment would be executed by the Chairman upon request by general counsel. Motion passed unanimously.

9. Other Business
Mr. Fausone requested the Board consider scheduling another Special meeting to assist with contract approvals, if needed. There was dialogue on timing of the meeting. The meeting will be scheduled for Friday, September 21 at 9 am at Taylor City Hall.

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

10. Next Meeting Date
Chairman Sollars reminded the Board that the next meeting would be the Special Board Meeting on September 13, 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 Vice Chairman Matakas (Allen Park), seconded by Jim Taylor (Van Buren Township) to adjourn the meeting. Motion passed unanimously at 10:37 AM.

 

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala
DUWA System Managers
September 4, 2018

Attachments
1. Meeting Agenda
2. August 9, 2018 DUWA Special Board Meeting Minutes
3. DRAFT Public Offering Statement, not dated
4. The Role of the Board Members in DUWA Bond Transaction memo, by Dykema, dated August 23, 2018
5. Administrative Procedures Manual, adopted August 23, 2018
6. Accounting Services Agreement between DUWA and DNS Financial Services, LLC
7. PFM’s Recommendation of Verification Agent, dated August 16, 2018
8. Listing of ‘Ancillary of DUWA Contracts/Assignments’, updated August 16, 2018
9. Nuisance Payment Agreement between DUWA and City of Wyandotte
10. Assignment of Weiss Contract
11. Assignment of HNTB Michigan Inc. Contract
12. Assignment of Emergency Operations Plan
13. Assignment of SWRD Drainage District Outfall Usage Agreement
14. Assignment of Emergency Flow Restriction Reimbursement Agreement with ECPAD