2018 July 26 – Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
July 26, 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 12, 2018 Board Meeting
Copies of the meeting minutes from the July 12, 2018 Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Jim Taylor (Van Buren Township) and seconded by Roberto Scappaticci (Romulus) to approve the Board meeting minutes. Motion passed unanimously.

4. Notice of Request for Proposal for Accounting Services
DUWA’s Financial Consultant Beth Bialy, of Plante Moran, reported on the July 23, 2018 Request for Proposal (RFP) for accounting services (Attachment 3). The RFP is available on DUWA’s website and was also distributed to DUWA’s Finance Committee members, retired financial candidates, and a private company. Ms. Bialy reviewed the timetable for the RFP, which requires an August 3, 2018 proposal due date, with candidate selection expected in early September. Candidate selection will include consideration of the person or agency’s qualifications, work history, past positions held, familiarity with rate setting, and previous experience working with a Board.

The DUWA Professionals would like to advance the candidate selection process, as schedule permits. This is because the future candidate has several tasks to engage on, especially with Wayne County’s financial personnel. It would be best to engage the candidate as soon as possible, especially pre-transition. A Special Meeting of the Board for August 23 may be ideal for assisting with the procurement timeline.

Ms. Bialy also noted Wayne County’s Financial staff have verbally committed to being available to DUWA’s Financial staff subsequent to the transition, as they are very familiar with the system and can help DUWA’s accountant with the remaining (limited) duration of the existing SRF construction project.

5. Veolia’s 20-Year Agreement
Prior to the Board commencing discussion on the Agreement, the DUWA Professionals completed an overview of follow-up information in the pre-meeting package as well as additional information provided at the meeting:

• Jim Fausone, DUWA Attorney, noted that the PowerPoint presented at the July 12, 2018 meeting was included in the pre-meeting package (Attachment 4).
• Lambrina Tercala, DUWA System Manager, provided an overview of the System Manager’s July 19, 2018 ‘Support Documents for Veolia 20-Yr Agreement’ memo included in the pre-meeting package (Attachment 5).
• Carol Symes, of Veolia Water North America (Veolia) presented a 1-page summary sheet for Veolia’s cost plus clauses in the contract (Attachment 6).
• Vyto Kaunelis, System Manager, discussed the term of the contract. To provide historical reference, Mr. Kaunelis reached out to DUWA’s former Secretary, Dick Hinshon. DUWA’s Contract Operator RFP had a 5-year term initially, and as part of the interview process, the candidates said that based on the system’s size and complexity, a 5-year term is very short and that a longer term was/is more applicable. A longer, 20-year term was then proposed. While there was no formal Board vote, communication related to the shift in term duration to 20-yrs was included in Board meeting discussions and also captured in meeting minutes (April and May 2016). During these communications, Board members did not bring forward issues on the term duration. The current contract term discussions have related to price implications, and it is understood that the longer the term, the better the savings, and if the term was shortened, the pricing would require updating as well. Thus, the 20-year term has remained as it provides the greatest cost savings as well as stability for the system.

a. Board Discussion

Doug Drysdale (Riverview) opened the dialogue with appreciation that the DUWA Professionals and Veolia attempted to address Kerry Morgan’s (Riverview Attorney) concerns noted in his July 20, 2018 email to recipients of the Board’s pre-meeting packet. However, Mr. Drysdale feels the Cost Plus Clauses aren’t a right fit, especially as it relates to future vehicle rentals, interim emergency work that may be realized (until DUWA is more aware of the system’s needs and increased preventative maintenance is achieved w/ Veolia’s engagement), and increase in utility/chemical/sludge prices.

Mr. Fausone commented that a markup is typical for a private agency, as the cost is transferred through their accounting books; that is, it handles Veolia’s administrative and other overhead costs, and the cost of capital to manage the money.

Jim Taylor (Van Buren Township) and Dustin Lent (Southgate) provided separate references that scope changes would go through the System Manager prior to authorizing Veolia (or other company) to proceed. Examples cited included DUWA directly leasing vehicles or having as-needed contractors for emergency work and also capital improvement projects. The System Manager would bring the matters to the Board for the Board to approve of these transactions prior to Veolia or others proceeding with the work. Mr. Fausone noted that the specifics of the purchasing terms or procurement processes would be further addressed in the forthcoming Policy and Procedures manual.

Ms. Bialy provided reference to the Board that Veolia’s contract appears to carry an approximate 8.5% cost and profit component, and thus, 10% markup for the Cost Plus Clauses is relatively consistent with their current pricing.

b. Request for Approval/Board Action

Chairman Sollars announced a motion to vote on the Veolia 20-Yr Agreement. Motion by Dustin Lent (Southgate), seconded by Gail McLeod (Allen Park). Motion unanimously passed with understanding by Ecorse that they do not plan to vote in favor of the agreement.

Secretary Matt Coppler (Lincoln Park) completed a roll call for the vote for each member community. The vote requires supermajority approval. The vote passed in favor of the Agreement with 83.6% approval. All present communities voted in favor of the agreement other than Ecorse and Riverview. Dearborn Heights and River Rouge were absent for the vote. The vote results are provided in Attachment 7.

6. Other Business

Mr. Fausone notified the Board that the Wayne County Commissioners – Committee of the Whole recommended approval of the Definitive Transfer Agreement, and that the Commissioners would take up voting for approval later today. Bill Turner (Brownstown Township) requested the DUWA Board be notified of the results of the Commissioners’ vote. The DUWA Professionals will fulfill that request once they receive the news; there is no plan for a DUWA Board member or Professional to attend the Commissioners’ meeting.

In consideration of the transition period, and the many activities that require Board update and approval, Mr. Fausone requested the Board permit a Special Board meeting for August 23. This allows for a Board meeting every other week until the transfer date of Thursday, September 27. The Board was receptive to this request, and will plan on holding space for the meeting. If Board action is found to not be necessary for the Special Meeting, then the meeting will be cancelled. The need for the meeting will be further explored at the August 9 Board meeting.

Mr. Mark Sanderson, of Veolia, addressed the Board and thanked them for their confidence in Veolia and approval the Agreement. Mr. Sanderson stated the Agreement required a lot of hard work from DUWA’s Professionals, including the current technical and legal teams, and also Mr. Hinshon and Ms. Bialy since the start of the process. Veolia looks forward to earning continued confidence with the Board members.

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

7. Next Meeting Date
Chairman Sollars reminded the Board that the next meeting would be the Board Meeting on August 9, 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 Dustin Lent (Southgate) to adjourn the meeting. Motion passed unanimously at 9:55 AM.

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala
DUWA System Manager
August 2, 2018

Attachments
1. Meeting Agenda
2. July 12, 2018 DUWA Board Meeting Minutes
3. July 23, 2018 Request for Proposal for Accounting Services
4. July 12, 2018 Overview of Veolia’s O&M Contract PowerPoint Presentation
5. System Manager’s (OHM Advisors) ‘Support Documents for Veolia 20-Yr Agreement’ memo, dated July 19, 2018
6. Veolia’s (1-page) Summary of Cost Plus Causes
7. Roll Call Vote Results for Veolia’s 20-Yr Agreement