2018 September – Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
SEPTEMBER 13, 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 9:10 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, Dearborn Heights, Ecorse, Taylor, Allen Park, Riverview, Romulus, Southgate, Van Buren Township and Wyandotte. A quorum (at least 7 members) was present.

System Manager Lambrina Tercala (OHM Advisors) note that 83.010% of the weighted vote of the Authority was in attendance.

2. Approval of Agenda

Copies of the Agenda were made available prior to the meeting (Attachment 1). DUWA Attorney, Jim Fausone (Fausone Bohn), requested the addition of Agenda Item ‘4.c.ix Motion to Sell Bonds’ to the Agenda. Motion by Doug Drysdale (Riverview) and seconded by Rick Rutherford (Belleville) to approve the amended Agenda. Motion passed unanimously.

3. Approval of Minutes from August 23, 2018 Special Board Meeting
Copies of the meeting minutes from the August 23, 2018 Special Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Jim Taylor (Van Buren Township) and seconded by Rick Rutherford (Belleville) to approve the Board meeting minutes. Motion passed unanimously.

4. Report of System Issues

a. System Manager Update, including

In consideration of the lengthy agenda, System Manager Vyto Kaunelis (OHM Advisors) provided the following brief updates:

• Electrical Bus Duct Failure at Influent Pumping Station: Per HRC, projected cost is $1.6M.
• System Transition: We have approached final stages of the transition, and all parties are working well together. There is an understanding that some items will continue post-closure, and the teams have developed or are currently developing mechanisms to allow this coordination.

b. Contract Operator Update

Ms. Peg Becker, Vice President of Operations for Veolia Water of North America, provided an update of Veolia’s transfer efforts. Ms. Becker agreed with Mr. Kaunelis’s assessment of the transition, and that the transfer has proceeded as Veolia has expected.

Mr. Fausone requested Veolia provide a ‘Day 1’ report to the Board at the Special Board meeting on September 21, 2018. Ms. Becker agreed to provide.

c. Legal Update, including

i. OHM Advisors’ Not-To-Exceed Contract Adjustment

Mr. Fausone reminded the Board they entered into a one-year agreement with OHM Advisors, as their System Manager, for a not-to-exceed fee of 225,000 in September 2017. A request for authorization OHM as System Manager beyond Year 1 is provided under Agenda Item 6.a. The request as part of Agenda Item 4.c.i. is to extend the not-to-exceed fee for an additional $25,000 to accommodate the increased level of effort it has taken to cause the system transfer in their role as System Manager.

Motion by Roberto Scappaticci (Romulus) and seconded by Jim Taylor (Van Buren Township) to approve the contract amendment for the not-to-exceed fee. Motion passed unanimously.

ii. PFM & Dykema Fee Update

Mr. Fausone presented a fee update memo (Attachment 3) which discussed the professional fees for DUWA’s Bond Counsel (Dykema) and Municipal Advisor (PFM). A motion was requested to pay the fees to Dykema and PFM. Payment for these fees would be held until closing.

Motion by Mayor Paletko (Dearborn Heights) and seconded by Vice Chair Gail McLeod (Allen Park) to approve the payments to Dykema and PFM. Motion passed unanimously.

Mr. Fausone also provided an estimate for the ‘Cost of Closure’ to the Board (Attachment 4). The estimate was provided for informational only, and will be updated as the transition progresses.

iii. Pending Budget & Stub Rate Package

Mr. Fausone advised the Board that a request to adopt a stub budget from October through December 2018 will be presented at the September 21 Special Board meeting. DUWA’s Financial Consultant Beth Bialy (Plante Moran) corrected the request by stating a stub budget request is not accurate, and the request will be for a budget modification.

DNS Financial Services, DUWA’s Accountant, will amend the budget, since DUWA’s business type will change from system ‘advisor’ to ‘owner.’ The amendment will be based on financial projects and exclude debt payments.

iv. Bond Pricing Status, including Bond Insurance and Surety Analysis

DUWA’s Bond Counsel, Ann Fillingham, of Dykema, provided the Board with an update on the current stage in the bonding process.

Ms. Fillingham provided the Board with two hard copies of the Preliminary Official Statement, dated September 7, 2018, for their record keeping.

Ms. Fillingham provided the Board with draft documents associated with the Sale Order Agreement (Attachment 5) and Bond Purchase Agreement (Attachment 6). These documents were provided for informational purposes only.

Mr. Fausone presented PFM’s analysis on the purchase of bond insurance, which may save the Authority of approximately $372,000. A memo related to this topic was provided in the pre-meeting package (Attachment 7). A request for motion to approve of the purchase of bond insurance was given to the Board.

Motion by Vice Chair Gail McLeod (Allen Park) and seconded by Mayor Paletko (Dearborn Heights) to approve the purchase of bond insurance. Motion passed unanimously.

v. Final Closing Memorandum

Mr. Fausone presented the Final Closing memo that was provided in the pre-meeting package (Attachment 8). Mr. Fausone provided attention to pages 9-10, which relate to the Accounts Payable/Transaction Expenses/Escrow Accounts. Pending changes are anticipated to the memo, along with addressing General Counsel’s comments. Mr. Fausone requested the Board allow the Chairman or System Manager to execute the Closing Memo at the recommendation of the General Counsel. This action would occur before the closing date of September 27, 2018.

Motion by Jim Taylor (Van Buren Township) and Dustin Lent (Southgate) to allow the Chair or System Manager to execute the Closing Memo once approved by General Counsel. Motion passed unanimously.

vi. Nuisance Payment Agreement (Final, For Files)

Mr. Fausone presented the final Nuisance Payment Agreement (Attachment 9) to the Board, which captures in writing the on-going payment practice by Wayne County to Wyandotte. The first payment will be on October 1. Limited changes are required before finalizing the agreement. Mr. Fausone requested the Board authorize the Chairman or the System Manager to authorize the Agreement upon recommendation of General Counsel.

Motion by Rick Rutherford (Belleville) and Gail McLeod (Allen Park) to approve of execution of the Nuisance Payment Agreement upon finalization by the Chair or System Manager. Motion passed unanimously, with Wyandotte abstaining from the vote.

vii. Title Search and Commitment

Mr. Fausone reminded the Board the property transaction will be by quit claim deed. Mr. Fausone reminded the Board that First America Title has been engaged for title search and commitment considerations. The Title Insurance memo (Attachment 10) was reviewed. Mr. Fausone requested the Board authorize payment to First America Title per the memo.

Motion by Mayor Paletko (Dearborn Heights) and seconded by Roberto Scappaticci (Romulus). Motion passed unanimously.

viii. Insurance Policies by AON

Mr. Fausone updated the Board on Aon’s progress with receiving quotes. Mr. Fausone noted a recommendation for coverage will be provided at the September 21, 2018 Special Board meeting.

ix. Motion to Sell Bonds

As part of Agenda Item 4.c.iv, Mr. Fausone presented the current bond pricing status. Mr. Fausone requested a motion to approve of the bond sale, once insured to execute.

Motion by Roberto Scappaticci (Romulus) and seconded by Jim Taylor (Van Buren Township). A role call was taken, and all in attendance approved of the motion, and thus, 83.010% of the Board’s weight approved. With a super majority approval, the motion passed.

5. Request for Approval of Financial Contracts or Other Actions

a. Ratify Accounting Services Contract

Mr. Fausone noted the Board took action to engage DNS Financial Services at the last Board meeting. Based on further review of the Articles of Incorporation, and gaining insight from General Counsel on the history of the authorization, it is now understood that a super majority vote requires 66% approval of the entire weight of the Board rather than only those communities present. As such, the Accounting Services contract requires ratification. A memo providing this understanding was provided in the pre-meeting package (Attachment 11). Mr. Fausone asked for a motion to ratify the vote with an effective date of September 13, 2018.

Motion by Dustin Lent (Southgate) and seconded by Roberto Scappaticci (Romulus) to approve of DNS Financial Services as the Authority’s Accountant. A role call was taken, and all in attendance approved of the motion. Riverview abstained from the vote. Supermajority approval of 79.916% was achieved. The motion passed.

b. Purchase of Accounting Software

As part of DNS Financial Services’ contract, the Authority is responsible for purchase of a software package with a fee of $25,090. Mr. Fausone requested the Board authorize DNS Financial Services or the System Manager to purchase the software for the Authority. DNS Financial Services is owned by Doug Drysdale (Riverview).

Motion by Vice Chair Gail McLeod (Allen Park) and seconded by Dustin Lent (Southgate) to approve the purchase of accounting software. Motion passed unanimously.

It was also noted to the Board that the purchase is a one-time purchase, with a nominal maintenance fee expected on an annual basis. Per Doug Drysdale (Riverview), the annual cost is approximately $525 and is expected to change with category development index, which normally ranges from 1-2%.

c. Assignment of Accountant as MDEQ Authorized SRF Contact

With the ratification of DNS Financial Services as DUWA’s accountant, Mr. Fausone requested the Board assign DNS Financial Services as MDEQ’s Authorized SRF Contact. A memo providing this reference was provided in the pre-meeting package (Attachment 12). As Authorized SRF Contact, DNS Financial Services will execute SRF records on behalf of the Authority.

Motion by Mayor Paletko (Dearborn Heights) and seconded by Roberto Scappaticci (Romulus) to provide Doug Drysdale of DNS Financial Services as the Authority’s authorized SRF contact. Motion passed unanimously.

d. Treasurer – Resignation of Existing and Appointment of New

With DNS Financial Services contract being ratified, Mr. Fausone reminded the Board that Doug Drysdale (owner of DNS; current DUWA Treasurer; Riverview) would be stepping down as Treasurer per the recommendation of Mr. Fausone and Ms. Bialy at the last Board meeting, and as accepted by Mr. Drysdale. A memo providing detail on this issue was provided in the pre-meeting package (Attachment 13).

The Board seeks to assign a new Treasurer. Mr. Fausone reminded the Board the Treasurer does not need to be a Board member, and thus, should consider reaching out to their Financial Directors to take on this role.

Mr. Dysdale will resign upon appointment of new Treasurer.

e. Transfer of Escrow Funds Status

Mr. Fausone provided verbal update to the Board that the community funds that needed to be moved into escrow have moved into US Bank’s escrow.

f. US Bank Money Market Decision & Authorized Parties Update

Ms. Fillingham recommended there be a standing authorization to allow the bond funds be put in US Bank money markets to allow the ability to make (nominal) interest. A motion was made to allow the authorized signer the discretion to put bond funds in a money market. If approved, this discretion would be included in the closing documents.

Motion by Todd Drysdale (Wyandotte) and seconded by Doug Drysdale (Riverview) to allow the authorized parties to put the funds in money markets. Motion passed unanimously.

A second request was made to expand the list of Authorized parties that can perform this activity – the currently authorized person is the Chairman. Mr. Fausone noted this is a good position for the future Treasurer. Approval of additional authorized parties was deferred until the next Board meeting.

6. Request for Approval of Technical Contracts

a. OHM Advisors’ System Manager Contract

Mr. Fausone presented the Board with OHM Advisor’s contract (Attachment 14) for future System Manager services. The contract includes a termination without cause notice. The contract does not hold a term length; termination of the contract can be taken by the Authority at any time by giving notice of desire to terminate and termination for cause and without cause. The scope of services is included in Exhibit A. The hourly rates for the key personnel, who are System Managers Vyto Kaunelis and Lambrina Tercala, are included in Exhibit B. A general rate schedule is also included for other personnel that may be of assistance.

Mr. Fausone noted the level of effort by OHM has been tremendous, and they have been a benefit to the Authority. System Manger Kaunelis said it has been great working with the Board and their Professionals, and OHM looks forward to continuing with the work.

Mr. Fausone requested a motion to approve of the Contract. Motion by Dustin Lent (Southgate) and Rick Rutherford (Belleville) to approve of the System Manager contract. Before a roll call vote, Jim Taylor (Van Buren Township) asked how OHM’s rates will be addressed moving forward. Mr. Fausone noted the contract requires OHM present rate adjustments to the Board on an annual basis, and the Board has the option to discuss before approval. Additional conversation by the Board and meeting attendees included the benefit of a fixed term over an open-ended contract.

Roll call was taken per the previous motion. Ecorse, Riverview, and Wyandotte did not support the contract due to lack of term duration. The motion failed with 65.578% approval; super majority requires 66% approval. A new motion was requested to provide for a 3-year agreement with ability to renew. Motion by Mayor Paletko (Dearborn Heights) and supported by Todd Drysdale (Wyandotte). Dustin Lent (Southgate) requested OHM Advisors provide comment that they would accept this change. Mr. Kaunelis accepted the change. A roll call was collected. Motion passed unanimously with 83.010% approval.

b. Veolia’s Flow Metering Contract

Mr. Kaunelis provided the considerations for why the Flow Metering contract was not included in Veolia’s 20-year O&M agreement. The Flow Metering contract is for 2 years with ability to extend. The Flow Metering contract with Veolia (Attachment 15) includes Applied Science, Inc (ASI) as a subcontractor. ASI is the current service provider to Wayne County for this work, and is approximately ~$400k. The current contract to DUWA is just over $300K.

The Board noted there is a disconnect in the reference of written versus numeric pricing on Item 3 of the first page of the contract. Mr. Kaunelis clarified the pricing is as presented in the numeric value, and the contract will be updated.

Motion by Mayor Paletko (Dearborn Heights) and seconded by Jim Taylor (Van Buren Township) to approve of the Flow Metering contract with Veolia. Motion passed unanimously.

c. Hubble Roth & Clark’s As-Needed Engineering Services Contract

Mr. Kaunelis noted the Authority needs to have an as-needed contract with Hubbell, Roth and Clark, as Wayne County’s contract will not be transferred to DUWA. HRC’s contract was provided in the pre-meeting package (Attachment 16). The contract mimics Wayne County’s contract with HRC, other than the billing mechanism. The billing mechanism with DUWA will be based on direct cost plus overhead build up.

Motion by Roberto Scappaticci (Romulus) and seconded by Todd Drysdale (Wyandotte). Roll call was made and the motion passed unanimously (83.010%).

7. Request for Approval of Ancillary Contracts and Other Assignments

a. Southgate-Wyandotte Discharge Agreement

Mr. Fausone and Mr. Kaunelis presented the discharge agreement between DUWA and Southgate-Wyandotte (Attachment 17). The discharge agreement embodies how the DSDS and SWRDDD work together. A formal agreement was not in place between Wayne County and SWRDDD.

Mr. Kaunelis also highlighted the following:

• The new agreement includes a methodology for electrical charge split. This method was prepared by HRC. Mark Kowalewski, of SWRDDD and Wyandotte, is aware of the charge split, and has noted the projected cost split assigned to SWRDDD is more than it has traditionally been with Wayne County. The current bill split arrangement is assignment of 92% of bill to Wayne County and 8% to SWRDDD. SWRDDD and DUWA will review the existing and proposed bill splitting approach. The options exist to retain the 92%/8% split or to phase in or delay of payment from SWRDDD to DUWA given the proposed methodology.
• A drainage credit is assigned. While the dollar value is nominal, there is ongoing discussion on if this item is appropriate for the Agreement. The parties may be revisiting this language in the future.

Motion by Doug Drysdale (Riverview) and seconded by Roberto Scappaticci (Romulus) to approve of the Southgate-Wyandotte Discharge Agreement and allow the agreement to be executed by the Chairman or System Manager. Motion passed unanimously.

b. ECPAD Discharge Agreement

Mr. Fausone and Mr. Kaunelis presented the discharge agreement between DUWA and ECPAD (Attachment 18). Much like the SWRDDD discharge agreement, the ECPAD agreement memorializes what has historically occurred and how the systems work together. A request was made for motion. Dearborn Heights and Taylor are both affected by this agreement, but the Board did not see a reason for these communities to abstain.

Motion by Mayor Paletko (Dearborn Heights) and supported by Dustin Lent (Southgate) to approve of the ECPAD Discharge Agreement and allow the agreement to be executed by the Chairman or System Manager. Motion passed unanimously.

c. Shared Services Agreement between Wayne County and DUWA

Mr. Fausone presented the Shared Services agreement (Attachment 19). The agreement includes how services can be provided by or to Wayne County and likewise by or to DUWA.

Mr. Kaunelis presented the major components of the agreement, which includes SCADA, Shared Personnel, Completion of Construction Work, and Financial Service Assistance. In general, the scope of these services are anticipated to be complete within 6 months of the transfer.

Motion by Jim Taylor (Van Buren Township) and seconded by Roberto Scappaticci (Romulus) for approval of the Shared Services Agreement with execution by the Chair or System Manager. Motion passed unanimously.

d. Transfer of Software

Mr. Fausone and Mr. Kaunelis presented the assignment of the Industrial Pretreatment Program software (Linko) from Wayne County to DUWA (Attachment 20). Ultimately, the software license would be provided from DUWA to Veolia.

Motion by Roberto Scappaticci (Romulus) and seconded by Mayor Paletko (Dearborn Heights) to approve of the software transfers from Wayne County to DUWA and from DUWA to Veolia. Motion passed unanimously.

8. 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 21), the Authority’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 22).

Treasurer Drysdale (Riverview) noted that eight (8) invoices have been received from DUWA Professionals or other Consultants. A Treasurer’s Invoice Register Report was provided to summarize the invoices (Attachment 23):

• Aon Risk Services in the amount of $5,000.00 (Attachment 24)
• BTG Solutions in the amount of $450.00 (Attachment 25)
• City of Riverview in the amount of $24.70.00 (Attachment 26)
• Deluxe Checks in the amount of $39.47 (Attachment 27)
• Environmental Consulting & Technology, Inc. in the amount of $1,402.50 (Attachment 28)
• Fausone Bohn in the amount of $28,065.30 (Attachment 29)
• OHM Advisors in the amount of $19,128.00 (Attachment 30)
• Veolia Water of North America in the amount of $553,955.00 (Attachment 31)

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

9. Public Comment

Mr. Fausone advised the Board they should have received an email with a press release article of the pending bond sale within the Bond Buyer’s publication.

Mr. Fausone reminded the Board of the Treasurer vacancy and to reach out to those that may be interested.

10. Other Business

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

11. Next Meeting Date
Chairman Sollars reminded the Board that the next meeting would be the Special Board Meeting on September 21, 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 Roberto Scappaticci (Romulus), seconded by Dustin Lent (Southgate) to adjourn the meeting. Motion passed unanimously at 10:45 AM.

Meeting Minutes Prepared by:

Vyto Kaunelis/Lambrina Tercala
DUWA System Managers
October 3, 2018 [Corrected]

Attachments
1. Meeting Agenda
2. August 23 DUWA Special Board Meeting Minutes
3. PFM & Dykema Fee Memo (by Fausone Bohn)
4. Estimated Cost of Closing Memo (by Fausone Bohn)
5. Sale Order Agreement (draft; by Dykema)
6. Bond Purchase Agreement (Draft; by Dykema)
7. Bond Insurance and Surety Analysis Memo (by Fausone Bohn)
8. Final Closing Memo (by Fausone Bohn)
9. Nuisance Payment Agreement
10. Title Search and Commitment Memo (by Fausone Bohn)
11. Accounting Service Provider Memo (by Fausone Bohn)
12. SRF Point of Contact Memo (by Fausone Bohn)
13. Resignation of Treasurer Memo (by Fausone Bohn)
14. OHM’s System Manager Services Agreement
15. Veolia’s Flow Metering Contract
16. HRC’s As-Needed Engineering Contract
17. Southgate-Wyandotte Discharge Agreement
18. ECPAD Discharge Agreement
19. Shared Services Agreement w/ Wayne County
20. Linko Software Assignment
21. Status Report re: Payments from Communities dated August 31, 2018
22. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
23. Treasurer’s Invoice Register Report
24. Invoice from AON, dated July 16, 2018 for August services
25. Invoice from BTG Solutions, dated August 25, 2018
26. Invoice from City of Riverview, dated July 3, 2018
27. Invoice from Deluxe Checks, dated August 29, 2018
28. Invoices from Environmental Consulting & Technology, Inc, dated August 20, 2018
29. Invoice from Fausone Bohn, LLP, dated August 1, 2018
30. Invoice from OHM Advisors, dated August 10, 2018
31. Invoice from Veolia Water of North America, dated August 24, 2018