DOWNRIVER UTILITY WASTEWATER AUTHORITY
JANUARY 12, 2018 MEETING MINUTES
Taylor City Hall City Council Chambers
- Roll Call and Introductions
DUWA Chairman Rick Sollars called the meeting to order at 9:05 AM, and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 11 communities: Allen Park, Belleville, Brownstown Township, Ecorse, Lincoln Park, Riverview, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. A quorum (at least 7 members) was present.
- Approval of Agenda
Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by Vice Chairman Bill Matkas (Allen Park) and seconded by Doug Drysdale (Riverview) to approve the Agenda as presented. Motion passed unanimously.
- Approval of Minutes from December 14, 2017 Board Meeting
Copies of the meeting minutes from the December 14, 2017 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. Report on System Transfer Issues
a. Update re: coordination with Wayne County on Transition Plan, including NPDES Permi
In the interest of time, and the future focus on Agenda Item 4c – Action of Definitive Transfer Agreement (DTA), System Manager Vyto Kaunelis provided a brief status update to the group:
- Communication and coordination with Wayne County and Veolia regarding transition action items has favorably progressed.
- In late December, a meeting with Veolia occurred with select DUWA Consultants to re-initiate contract discussions and discuss Veolia’s proposed scope of work.
- A meeting has been set with Wayne County, DUWA, and the MDEQ on January 23, 2018 to discuss NPDES submittals and the transition of the system.
b. Contract Requests for Limited Engagement, As-Needed DUWA Consultants
DUWA Attorney, Jim Fausone provided background understanding for authorization of limited engagement DUWA contracts for select, as-needed consultants. These as-needed DUWA consultants would include the following:
- Dick Hinshon with Hinshon Environmental
- Former DUWA System Manager to assist in negotiations with Veolia and to provide background information when needed
- Firooz Fath-azam
- Downriver Wastewater Treatment Plant Operator and SHVUA System Manager to assist in negotiations with Veolia
- BTG Solutions
- DUWA Website Administrator
These consultants were previously anticipated to be subcontractors to the System Manager. However, the System Manager contract with DUWA requires subcontractors to hold the same extensive insurance and indemnification requirements as the System Manager. These consultants are not in position to obtain the insurance or indemnification requirements based on their anticipated limited scope of work and low volume revenue. Thus, the motion is to seek authorization from the Board for Chairman Sollars to execute contracts between DUWA and these consultants. The contracts will be terminable within 30 days or less of request.
Motion by Todd Drysdale (Wyandotte) and seconded by Roberto Scappaticci (Romulus) to approve the Chairman to execute an as-needed DUWA contract with the consultants. Motion passed unanimously.
c. Action on Definitive Transfer Agreement
Mr. Fausone provided an update on questions and talking points that have been received since the December 2017 DTA presentation. The Board tabled action on moving the DTA conversations forward to within their communities during the December 2017 meeting.
Mr. Fausone presented the frequently asked questions (FAQ) to the Board. Prior to presenting the questions, Mr. Fausone clarified that the current action for the Board is not for approval of the DTA. The action is to commence DTA discussions within the communities. The Board would not be asked to vote on advancement of the DTA until community discussions have been completed. In consideration of the anticipated July 2018 closing date, Mr. Fausone provided reference that the DTA community discussions might be a 2-3 month effort.
Question 1 – If less than 100% of the communities vote for the DTA, how will this impact selling bonds?
There will be no impact if less than 100% support for the DTA is received, because the bonds are revenue related bonds. Bonds are rate revenue bonds sold by DUWA, not the communities. DUWA’s revenue is backed by the revenue DUWA receives based on their rate settings for either owners or customers. As presented in the Service Agreement, there is a decision each community will need to make regarding being an owner or customer.
Q2 – Will there be bond payments by the individual communities?
No. The communities pay a portion of the judgment levy bond in their taxes, and that will continue.
Q3 – Does the DTA require 100% or 66% approval?
It is the goal of the Board to obtain 100% participation. The Service Agreement, which received 100% approval, details the decision-making that is necessary for 66% approvals; this is consistent with current (amended) articles of incorporation. While the Service Agreement doesn’t explicitly discuss the DTA or the purchase of the system, the Service Agreement requires 66% approval for issuance of bonds. Issuance of bonds is necessary for execution of the DTA.
Community representatives from Southgate, Lincoln Park, and Ecorse responded to Q3’s response. The communities commented that the 66% approval requirement for approval of the DTA may be misinterpreted. Mr. Fausone responded that selling of the bonds are necessary for final execution of the DTA, and that the 66% approval applies to issuance of bonds. Mr. Fausone also commented that the Board has the ability to stop advancement of the DTA based on future financial considerations – and this can occur after receiving 66% approval from the communities.
Q4 – What is the completeness and accuracy of the Schedules in the DTA?
The Schedules are a part of representations and warranties for the downriver sewer system. Schedules are posted to a cloud-based file server for all city attorneys to access. Wayne County and their legal team upload to the file server, and DUWA Legal reviews. The process is agile in nature. The Schedules are refined on an on-going basis. That is, once more information is realized, that information is updated within the associated Schedule. The Schedules are amended on a continuous basis.
Q5 – What is the process of due diligence DUWA is acting upon? Do we need to do more in relation to the interceptors?
DUWA Legal is planning to engage with environmental services consultants (for Phase I/II and BEA services) and surveyors (for boundary survey as part of title considerations) as part of current due diligence efforts (Agenda Items 4f & 4g). Yes, additional effort is needed for due diligence on the interceptor system. DUWA Legal and the System Manager are engaged and talking with Veolia for preparation of strategic work effort to review existing data and perform additional work.
Q6 – Is DTA Schedule U irrelevant?
This schedule relates to Employee plans and documents and is no longer deemed relevant.
Q7 – What is rate neutrality?
Rate neutrality has been previously defined to mean that future rate increases will be similar or lower than what could be reasonably expected if the County continues to operate the system. Plante-Moran completed a 5-year financial projection of rates assuming the deal is completed in CY2018. This financial projection provided DUWA a range of rate increases from 1.4% to 6.1% or roughly 4% on average. A significant rate increase is not anticipated based on the projection’s assumptions, other than confirmation of Veolia’s final contract costs. DUWA’s projected operation and maintenance costs, especially as it relates to the interceptors, include more costs that Wayne County currently realizes. This is because DUWA will be proactive at risk management for their assets by completing efforts such as routine inspections.
Matt Coppler (Lincoln Park) followed Mr. Fausone’s Q7 response by suggesting the definition of rate neutrality has evolved since first inception. Previously, the dialogue around the purchase was communicated as a savings to the communities – that Wayne County is spending more than the communities would if they take ownership of the assets. Mr. Coppler asked what happens if bonds are higher than currently projected – will DUWA go forward with the deal? Mr. Coppler recommended that DUWA needs to define what rate neutrality means and at what point the purchase of this asset is no longer fiscally smart.
Allen Park followed by asking if there is a capital reserve for funds in the projections. DUWA Financial Consultant Beth Bailey, of Plante-Moran, responded by stating DUWA has $6M of Wayne County’s capital replacement funds that will transfer as part of the purchase. The financial projection includes rate setting that will generate 110% of rate services. The extra 10% would help generate funds for capital reserves. The extra 10% is roughly $500-600k that may be earmarked for future capital improvements or other funding needs as established by the Board. The average capital improvement currently projected in the projections is approximately $300k. Thus, any capital improvement needs beyond $300k would need to be pulled from the reserves.
DUWA Bond Counsel Ann Fillingham, of Dykema, followed by stating the Master Bond Ordnance layers in budget and rate stabilization funds. The extra 10% revenue may be placed within these funds as the MBO provides flexibility to meet the Authority’s needs.
Mr. Fausone reminded the Board that DUWA will inherit Wayne County’s reserves, and Wayne County’s $6M in capital reserves are a part of the $36M to be provided by Wayne County at purchase.
Q8 – How will DUWA’s Consultants support the DTA messaging in the communities?
Mr. Fausone comment that Agenda Item 4h relates to the request to hold an information meeting with community stakeholders. The intent of the meeting would be to provide a common message relating to the DTA process for system purchase. As with rollout approach of the Service Agreement, DUWA consultants would also hold follow-up, individual meetings with each community, as necessary, to get the information out to the voting electives.
Following the last FAQ, community members and DUWA consultants further dialogued on additional system transfer items associated with: due diligence, condition assessments, capital improvement planning, NPDES blending options, SRF considerations for financial projections, rate neutrality, and the reminder that DUWA’s 13 communities are the revenue source for the system under Wayne County’s ownership.
Subsequent to these discussions, the Board chose to request a motion to table action for the DTA until the February 8, 2017 monthly Board meeting. Motion by Vice Chairman Matakas (Allen Park) and seconded by Mayor Joe Kuspa (Southgate). Motion passed unanimously.
d. Update on Escrow Agreements
Mr. Fausone provided update from the December 2017 agenda item related to the Wyandotte and Riverview Escrow Agreements. Mr. Fausone stated the agreements are with the communities, and that the work is in process.
e. Request for Notice of Intent for Public Notice re: Master Bond Ordinance
Ms. Fillingham presented the Board with the request for public Notice of Intent, which is a procedural protocol for DUWA’s tentative, future revenue bonds. The presented Notice of Intent was noted as being preliminary and could be refined in the future. The Notice of Intent is meant to provide transparency to the public about the progress DUWA is making with respect to the revenue bond issue. The Notice of Intent does not obligate DUWA to issuance of the bonds.
Roberto Scappaticci (Romulus) requested clarification for the $65M principal amount that is presented in the provided version of the Notice (provided as Attachment 3). Ms. Fillingham responded the value is a not-to-exceed price that gives DUWA headroom for public funding, and is not an obligation for payment. Mr. Scappaticci responded that Romulus has redlines to consider in next draft of the Notice, but the items can be discussed off-line. Ms. Fillingham will follow-up with Mr. Scappaticci to receive the redlines. DUWA is in a position to adopt a refined Notice of intent in the future.
Motion by Vice Chairman Matakas (Allen Park) and seconded by Robert Scappaticci (Romulus) for adoption of the current version of the Notice of Intent. Motion passed unanimously.
f. Request for Authorization of Baseline Environmental Assessment Proposal
Mr. Fausone presented additional environmental services proposals that were received based on the December 201 Board meeting feedback. The December feedback was a request to receive proposals from Downriver Brownfield Consortium companies. The previous proposer was Environmental Resources Group.
Five (5) additional proposals were received for the environmental work at the Downriver wastewater treatment facility. The new proposers include TTL Associates, AKT Peerless Environmental, ECT Inc, and SME USA. Fausone-Bohn prepared a summary to compare the proposers to ease the Board’s review of the proposals (for Agenda Items 4f and 4g). The summary is provided as Attachment 4. The new environmental work proposal are provided as Attachment 5.
As presented, the range of pricing for the new and former proposers is generally in line with one another. For no distinguishing of one company over another based on pricing or experience, ECT’s proposal was recommended for authorization based on the additional detail that was presented related to work at the treatment facility. Mr. Fausone further noted that all firms appear to be sufficient to complete the work.
A motion was made by Vice Chairman Matakas (Allen Park) to approve of authorization of ECT for the environmental assessments and seconded by Rick Rutherford (Belleville). Motion passed unanimously.
g. Request for Authorization of Land Surveyor Proposal
Mr. Fausone presented additional survey proposals that were received based on the December 2017 Board meeting. The December feedback was a request to receive proposals from Downriver or other DUWA affiliate companies.
Mr. Fausone noted authorization for land survey work was requested as Wayne County does not have a legal description for the Downriver wastewater treatment facility. Wayne County offered to complete the survey work, but the cost was substantial compared with DUWA completing the work.
Mr. Fausone requested authorization for a land surveyor from the four (4) proposers, which included the following: Hennessey Engineers, Spalding DeDecker, CE Raines, and Boss Engineering. Survey proposals are included as Attachment 6 for the proposers other than Boss Engineering. (Boss Engineering’s proposal was provided as part of the December 2017 Board minutes.)
The proposal costs are within range of one another. Hennessey Engineering was recommended unless the communities held issue with the recommendation. Several community representatives expressed favoring the recommendation as Hennessey Engineering acts as their City’s engineers.
A motion was made by Jim Taylor (Van Buren Township) to approve of authorization of Hennessey Engineers for the environmental assessments and seconded by Rick Rutherford (Belleville). Motion passed unanimously.
h. Updated on DUWA Stakeholder Meeting for Definitive Transfer Agreement
The December 2017 Board meeting including a PowerPoint presentation by Mr. Fausone to highlight the DTA. A refined PowerPoint presentation will be provided to DUWA Stakeholders in the coming weeks. The presentation will be refined based on frequently asked questions and feedback received since the December meeting.
Southgate offered to host the event in lieu of the Lakes of Taylor being out of commission due to a water line break. Board members and DUWA Consultants will follow-up to finalize meeting details.
- Treasurer’s Report
DUWA Treasurer Doug Drysdale presented the Treasurer’s Report that was included in the pre-meeting packet. This included the status of Community payments (Attachment 7), the Authority’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 8).
He noted that one invoice had been received from Fausone Bohn in the amount of $38,199.55 for work performed in November 2017 (Attachment 9).
Motion by Mayor Kuspa (Southgate) and seconded by Roberto Scappaticci (Romulus) to pay the invoice. Motion passed unanimously.
- Public Comment
No issues or concerns were raised as part of the Public Comment agenda item.
- Other Business
Jim Taylor (Van Buren Township) followed up on a suggestion by Vice Chairman Matakas regarding possible video tapping of future DTA-focused meetings. The intent of videotaping would be to provide a resource to help communicate the transition to stakeholders and the public. Mr. Taylor suggested DUWA consider producing marketing videos for future use much like GLWA has prepared.
There were no items brought forth for consideration as “Other Business” items.
- Next Meeting Date
Chairman Rick Sollars reminded the Board that the next regularly scheduled DUWA Board meeting is February 8, 2018 (9:00 a.m. Taylor City Hall).
There being no other business, Chairman Rick 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 10:46 AM.
Meeting Minutes Prepared by:
Vyto Kaunelis/Lambrina Tercala
DUWA System Manager
January 16, 2018
Attachments
- Meeting Agenda
- December 14, 2017 Board Meeting Minutes
- Public Notice of Intent to Issue Sewage Revenue Bonds
- DUWA Summary and Notes re: Environmental and Survey Work Proposals
- Proposals for Environmental Assessment Services from: TTL Associates, AKT Peerless Environmental, ECT Inc, and SME USA
- Proposals for Boundary Survey Services from: Hennessey Engineers, Spalding DeDecker, and CE Raines.
- Status Report re: Payments from Communities dated December 31, 2017
- DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
- Invoice from Fausone Bohn for work performed in November 2017