2018 September – Special Board Meeting Minutes

DOWNRIVER UTILITY WASTEWATER AUTHORITY
SEPTEMBER 21, 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 9:12 AM and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 10 communities: Belleville, 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). DUWA Attorney, Jim Fausone (Fausone Bohn), requested the addition of Agenda Item ‘8.k Omnibus Motion’ to the Agenda. The propose agenda item would give the Chair the ability to sign contracts or other agreements to effectuate the system transfer. Motion by Vice Chairman Matakas (Allen Park) and seconded by Mayor Kuspa (Southgate) to approve the amended Agenda. Motion passed unanimously.

3. Approval of Minutes from September 13, 2018 Board Meeting

Copies of the meeting minutes from the September 13, 2018 Special Board Meeting were distributed by email prior to the meeting (Attachment 2). Mayor Kuspa (Southgate) request ‘Item 7a: Request for Approval of SWRDDD Agreement’ be edited to include an option for SWRDDD to preserve the current bill split arrangement, and noted that Southgate is interested in maintaining the current bill split arrangement. Motion by Jim Taylor (Van Buren Township) and seconded by Doug Drysdale (Riverview) to approve the Board meeting minutes contingent on amendment. Motion passed unanimously.

4. Contract Operator Transition Update, including Day 1 Expectations

Mark Sanderson, Vice President of Veolia Water of North America (Veolia), provided a brief update to the Board regarding system transition. A Day 1 Report and Key Contact List were provided in the pre-meeting package (Attachment 3). Mr. Sanderson noted the team members are working well together, and handover of operations will occur on Friday, September 28 at 7:00a. Staffing up the Veolia team is an item of focus.

DUWA’s System Manager Vyto Kaunelis, of OHM Advisors, presented the Board with a summary of Veolia’s sludge hauler contract considerations (Attachment 4). Veolia’s sludge hauler will be Custom Ecology, who was also Wayne County’s provider. Contract considerations were presented to the Board, as the risk of unit costs for sludge hauling is DUWA’s risk and as such the Board needs to be aware of the terms between Veolia and Custom Ecology. Other items of note were that 1) no fuel surcharge is included and this is of benefit to DUWA and 2) if the landfill fee changes then that cost would be passed through to DUWA. It was also referenced that if landfill fees increase in the future, Veolia may have leverage with other landfills in the area due to their sizeable network and working relationship with major landfill companies.

Veolia had not yet entered into an agreement with Custom Ecology – execution of the agreement was pending the Board’s feedback today. The contract term would be for 3-years, which is a reasonable duration. A shorter duration is possible, but the costing structure would be different. It was recommended the Board motion to agree with Veolia executing a 3-year contract with Custom Ecology per the terms presented. Motion by Mayor Kuspa (Southgate) and seconded by Doug Drysdale (Riverview) to approve the rates in the 3-year contract terms between Veolia and Custom Ecology. Motion passed unanimously. After the motion, there was clarification that DUWA’s procurement policy was not considered as part of the sludge hauler contract as the contract is between Veolia and their sludge hauler.

Mr. Kaunelis notified the Board of a Praxair agreement that requires transfer from Wayne County to DUWA and then Veolia. Praxair provides pure gaseous oxygen to DWTF for use in the secondary treatment process. Praxair recently notified Veolia that the agreement with Wayne County not only includes the utility service but also physical assets. Praxair is only willing to communicate with Wayne County as the agreement is in their name. DUWA and Veolia have been working with Wayne County (and with attempts with Praxair) to transfer the agreement. A copy of the transfer agreement was provided to the Board ahead of the meeting time (Attachment 5). The agreement includes a copy of the last available contract that Wayne County had on file with Praxair. The contract appeared to be outdated, and several instances included handwritten notes. The Board requested more information be provided, as it becomes available, relating to the unit cost and volume requirements. The expectation is that DUWA’s new agreement will be inline with Wayne County’s current charges and operations.

Motion by Vice Chairman Matakas (Allen Park) and seconded by Mayor Kuspa (Southgate) to approve the Praxair agreement, with the understanding that the contract terms will be updated as information becomes available. Motion passed unanimously.

5. Legal Update

a. Expectations for Flow of Funds at Bond Closing

DUWA’s Attorney Jim Fausone, of Fausone Bohn, noted DUWA’s Professionals are hard at work preparing closing documents. The current closing sequence assumes the legal documents will be frozen today at 3:00p, and Mayor Sollars and Wayne County Executive Warren Evans will sign the closing papers at a pre-closing meeting on Monday, September 24. The bonding team will then sign and date as of closing date, assuming funding is complete. The completion of the system transfer is slated for Thursday, September 27.

Mr. Fausone informed the Board that pending litigation for the system is not completely resolved, as was previously understood. Settlements have been reached, but legal documentation and payment of funds are still outstanding. Because of this, Mr. Fausone will bring to the Board at the October 11 meeting a request to authorize the bonding law firm of Wayne County, Bodman, to close on this matter.

DUWA’s Bond Counsel Ann Fillingham, of Dykema, approached the Board on closing matters. Ms. Fillingham provided the Board with an updated version of the closing index and outline of the documents to be delivered at the bond closing (Attachment 6). Mr. Fillingham provided an overview of sequencing of events for the pre-closing and closing activities.

6. Post-Pricing Report

Mr. Max Teener, analyst with PFM (DUWA’s Financial Advisor), approached the Board to provide an overview of the pricing of the bonds from last Thursday. A summary document was provided at the meeting (Attachment 7). Mr. Teener noted the pricing went well overall, and there was excellent resolve and lots of demand from major market investors. Oversubscription of orders were received, which helped drive down the blended interest rate to 4.05%, which favorably exceeded DUWA’s projections.

7. Request for Approval of Professional Services Contracts

a. Legal Counsel Contract w/ Fausone Bohn

Mr. Fausone presented the Board with a 3-year contract to renew Fausone Bohn’s involvement as DUWA’s legal counsel (Attachment 8). The contract duration is 3-year. The contract’s template and insurance requirements remain consistent with Fausone Bohn’s previously authorized contract; billing rates did increase.

Motion by Vice Chairman Matakas (Allen Park) and seconded by Mayor Kuspa (Southgate) to approve of the Fausone Bohn contract. A roll call was collected and achieved 84.378% approval with favorable votes from all Board members in attendance. Motion passed with supermajority.

b. Financial Consultant Contract w/ Plante Moran

Mr. Fausone presented the Board with a 3-year contract to renew Plante Moran’s involvement as DUWA’s financial consultant (Attachment 9). The contract duration is 3-year. The contract holds a not-to-exceed fee of $75k for the contract duration. The burn rate of the contract is not expected to be equal each year. It is anticipated heavier involvement will be needed in Year 1 than Year 3.

Motion by Mayor Kuspa (Southgate) and seconded by Jim Taylor (Van Buren Township) to approve of the Plante Moran contract to act as DUWA’s financial consultant. A roll call was collected and achieved 84.378% approval with favorable votes from all Board members in attendance. Motion passed with supermajority.

c. Financial Auditor Contract w/ Plante Moran

Mr. Fausone presented the Board with a 3-year contract to allow Plante Moran to act as DUWA’s financial auditor on an annual basis (Attachment 10). DUWA’s financial calendar is the same as a typical calendar year. Auditor fees will be based on the provided hourly rates.

Motion by Jim Taylor (Van Buren Township) and seconded by Mayor Kuspa (Southgate) to approve of the Plante Moran contract to act as DUWA’s auditor. A roll call was collected and achieved 84.378% approval with favorable votes from all Board members in attendance. Motion passed with supermajority.

8. Request for Approval of Agreements or Other Assignments

a. Budget Amendment

DUWA’s Accountant, Doug Drysdale (Riverview), of DNS Financial Services, presented the Board with two budget amendments to close out DUWA’s calendar year (Attachment 11). The first budget amendment is for costs and revenue through the transition period. The second budget amendment is for costs and revenue from the transition date through the end of the calendar year. The budget amendments were based on Wayne County budgets, Veolia’s contract, and Plante Moran’s projections.

Motion by Vice Chairman Matakas (Allen Park) and seconded by Roberto Scappaticci (Romulus) to approve of the first budget amendment. Motion passed unanimously.

Motion by Jim Taylor (Van Buren Township) and seconded by Rick Rutherford (Belleville) to approve of the second budget amendment. Motion passed unanimously.

b. Southgate-Wyandotte Maintenance Building Lease

Mr. Fausone provided the Board an overview of the Southgate-Wyandotte Maintenance Building lease agreement (Attachment 12). Under the agreement, DUWA will lease the building from SWRDDD. DUWA will share portions of the building with Wayne County. DUWA’s portions of the building will be used by Veolia, with the primary use to be for spare parts. The sharing of the space and utility allocations were determined by the Technical Professionals. The lease term is for 18 months.

Motion by Vice Chairman Matakas (Allen Park) and seconded by Jim Taylor (Van Buren Township) to approve of the Southgate-Wyandotte Maintenance Building Lease agreement and allow the agreement to be in DUWA’s name. Motion passed unanimously.

c. Insurance Policies

Joe Perry, of AON Risk Solutions, presented the Board with an update on the proposals received from insurance carriers for various insurance policies DUWA will hold. AON is acting as DUWA’s insurance broker. A summary of the proposals were provided in the pre-meeting packet (Attachment 13).

The Board discussed the various options with AON and Mr. Fausone. Mr. Fausone then requested a motion to authorize the Chair to execute policies that have been recommended by general counsel and AON and per feedback received from the Board today. A summary of final coverages will be provided to the Board at the next Board meeting.

Motion by Vice Chairman Matakas (Southgate) and supported by Doug Drysdale (Riverview) to authorize the Chair to execute the recommended insurance policies. Motion passed unanimously.

d. Appointment of Treasurer

Mr. Fausone reminded the Board that Mr. Drysdale (DNS Financial Services) had been affirmed as DUWA’s accountant at the last Board meeting, and that once a new Treasurer was recommended, that Mr. Drysdale would resign as Treasurer. Per the Articles of Incorporation, the Treasurer does not need to be a member of the Commission.

Mayor Sollars recommended City of Taylor’s CFO, Jason Couture, as the future Treasurer. Mr. Couture greeted the Board and volunteered to act as the Treasurer, assuming no one else was interested. No other volunteers were identified.

Motion by Doug Drysdale (Riverview) and supported by Mayor Kuspa (Southgate) to approve Mr. Couture as the new Treasurer. A roll call was collected and achieved 84.378% approval with favorable votes from all Board members in attendance. Motion passed with supermajority.

e. Authorized Representative for Bond Closing w/ US Bank (Trustee/Escrow Agent)

Mr. Fausone requested a motion to authorize Mr. Couture, DUWA’s Treasurer, as US Bank’s authorized representative.

Motion by Jim Taylor (Van Buren Township) and supported by Doug Drysdale (Riverview) to approve Mr. Couture as a US Bank authorized representative. Motion passed unanimously.

f. Bill of Sale

A copy of the Bill of Sales agreement was provided in the pre-meeting packet (Attachment 14). Mr. Fausone noted this is an outstanding closing document that is currently undergoing signature by Wayne County.

g. Wyandotte Electric Energy Contract Assignment

Mr. Fausone requested the assignment of the Wyandotte Electric service from Wayne County to DUWA. It is a basic agreement (Attachment 15) for electric supply to the plant and Southgate-Wyandotte Maintenance Building.

Motion by Vice Chairman Matakas (Allen Park) and supported by Mayor Kuspa (Southgate) to execute the Wyandotte Electrical Energy Contract Assignment. Motion passed unanimously.

h. Assignment of Interceptor Easements/Prescriptive Rights

Mr. Fausone requested the Board approve of the assignment of the interceptor easement and prescriptive rights (Attachment 16). Wayne County and Fausone Bohn have coordinated on which easements that Wayne County has assigned over to DUWA, in addition to the quitclaim of the treatment facility.

Motion by Rick Rutherford (Belleville) and supported by Mayor Kuspa (Southgate) to authorize assignment of interceptor easement and prescriptive rights. Motion passed unanimously.

i. Deed Transfer from DUWA to SWRDDD for Pump Station No. 5

Mr. Fausone reminded the Board that the Professionals are working on segregating SWRDDD’s Pump Station No. 5 parcel and property from the treatment plant proper. A legal description is being created for the parcels. The transfer deed (Attachment 17) will define the property and transfer it from DUWA to SWRDDD once DUWA receives ownership of the property from Wayne County. The deed transfer will happen as part of the closing process.

Motion by Jim Taylor (Van Buren Township) and supported by Roberto Scappaticci (Romulus) to provide the quitclaim of Pump Station No. 5 property from DUWA to SWRDDD. Motion passed unanimously with Wyandotte abstaining. Wyandotte abstained due to the lack of legal description to coordinate with the provided map in th agreement. This detail will be provided to the Board subsequent to the meeting.

j. Authorized Signer for Vehicles

Mr. Fausone requested the Board authorize System Manager Kaunelis as an authorized signer for DUWA in association of transferring the vehicles from Wayne County to DUWA and retaining license and registration from the Secretary of State.

Motion by Mayor Kuspa (Southgate) and supported by Doug Drysdale (Riverview) to authorize Mr. Kaunelis as authorized signer for purpose of vehicle transfer. Motion passed unanimously.

k. Omnibus Motion

Mr. Fausone requested this new agenda item at the onset of the Board meeting. The intent of the proposed motion is to allow the Chairman to execute documents that will be necessary to effectuate the transfer of the system by September 27.

Motion by Mayor Kuspa (Southgate) and supported by Rick Rutherford (Belleville) to authorize Chairman Sollars to execute documents that effectuate the system transfer. Motion passed unanimously with the understanding that any new documents that required execution will be provided to the Board.

9. Other Business

Mark Kowalewski (Wyandotte) notified the Board of a letter he provided to the Chairman regarding the SWRDDD-DUWA electrical split. Mr. Kowalewski reminded the Board that the communities wanted the system transfer to be cost neutral, and that changing the electrical cost split away from 92% of cost to Wayne County (to be DUWA) and 8% of cost to SWRDDD puts SWRDDD at a hardship. If the cost split is changed to the new methodology, then electrical costs would be a third of SWRDDD operating budget. Mr. Kowalewski also noted that Pump Station No. 5’s operation is critical to support the DWTF during wet weather events. Mayor Kuspa (Southgate) echoed Mr. Kowalewski’s cost concerns. Southgate and Wyandotte object to the proposed cost split and seek to have additional discussions on the matter. System Manager Kaunelis agreed to facilitate further discussions on the matter, and anticipates Technical Committee involvement may be necessary.

Patrick McCauley, attorney to Dearborn Heights, Taylor and Van Buren, asked Mr. Fausone to comment on the mechanics of the September 27 closing date. Mr. Fausone responded that a majority of the documents would be signed ahead of the closing date by corporate and bond team members. Once corporate and bond teams have signed off, Dykema will work on exchange in Detroit and Lansing. The critical piece is funding in the morning of the closing date. It is expected that financial closure will occur by 11am, which leaves time for documents to be released and wires to go out to US Bank. Ultimately, the deal is anticipated to be shored up by 2pm on date of closing. Actual operations by Veolia will be Friday, September 28 at 7am. This was defined based on normal work shifts.

10. Next Meeting Date: October 11, 2018 (9:00 AM; Taylor City Hall)

Chairman Sollars reminded the Board that the next meeting would be the Special Board Meeting on October 11, 2018 (9:00 a.m. Taylor City Hall).

11. Adjournment

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 10:53 AM.

Meeting Minutes Prepared by:

Lambrina Tercala
DUWA System Manager
October 5, 2018

Attachments
1. Meeting Agenda
2. September 13 DUWA Board Meeting Minutes
3. Day 1 Report and Key Contact List (by Veolia)
4. Custom Ecology Executive Summary (by Veolia)
5. Assignment of the Contract Between Wayne County and Praxair, Inc. for the Supply of Oxygen (by Fausone Bohn)
6. Bond Closing Overview (by Dykema)
7. Post Pricing Overview (by PFM)
8. Fausone Bohn Contract for Legal Counsel Services (by Fausone Bohn)
9. Plante Moran Contract for Financial Consulting Services (by Plante Moran)
10. Plante Moran Contract for Financial Auditing Services (by Plante Moran)
11. Budget Amendment (by DNS Financial Services)
12. Southgate-Wyandotte Maintenance Building Lease (by Fausone Bohn)
13. DRAFT Insurance Policy (by AON)
14. Bill of Sale and Assignment and Assumption Agreement (by Fausone Bohn)
15. Wyandotte Electric Energy Contract Assignment (by Fausone Bohn)
16. Assignment of Interceptor Easements/Prescriptive Rights (by Fausone Bohn)
17. Deed Transfer for DUWA to SWRDDD for Pump Station No. 5 (by Fausone Bohn)