DOWNRIVER UTILITY WASTEWATER AUTHORITY

MAY 10, 2018 MEETING MINUTES

 

Taylor City Hall City Council Chambers

 

1. Roll Call and Introductions

DUWA Chairman Rick Sollars called the meeting to order at 9:07 AM, and asked for roll call to be taken. At the time of the Roll Call, voting representatives were in attendance from 10 communities: Allen Park, Dearborn Heights, Ecorse, Lincoln Park, Riverview, Romulus, Southgate, Taylor, 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 Vice Chairman Bill Matakas (Allen Park) and seconded by Dustin Lent (Southgate) to approve the Agenda as presented. Motion passed unanimously.

3. Approval of Minutes from April 12, 2018 Board Meeting

Copies of the meeting minutes from the April 12, 2018 Board Meeting were distributed by email prior to the meeting (Attachment 2).  Motion by Jim Taylor (Van Buren Township) and seconded by Dave Flaten (Ecorse) to approve the Board meeting minutes. Motion passed unanimously. 

4. Report on System Issues

a. Technical Issues

System Manager Vyto Kaunelis, of OHM Advisors, provided a status update to the Board related to the following technical items:

• Yesterday, a meeting was held with the System Manger, Wayne County, and Veolia. The intent of the meeting was to provide a status update on technical items since the teams are in the 90-day transition period. There was lots to cover, and more items for communication will be provided later in the agenda. As part of the meeting, Wayne County communicated that they have elected to start staffing up at their ‘other’ facilities since they will not have treatment plant staff available to assist with those facilities after the transfer. It was noted that Veolia was solicited for proposal to operate the Southgate Wyandotte Relief Drain Drainage District (SWRDDD). Mark Kowalweski (Wyandotte) suggested Judge Feikens’s court order may require SWRDDD and the Downriver Wastewater Treatment Facility (DWTF) to be operated by the same entity. This item will be further discussed at the next Technical Committee meeting.
• Wayne County recently received a request for an EPA Desktop Audit for combined system overflow and sanitary sewer overflow information. It is understood the EPA has interest in the collection system, and the communities may be contacted related to this audit.
• Wayne County is processing a biosolids contract amendment. The current contract does not have enough funding to bridge through transition.
• Ecorse and Lincoln Park have requested priority review of a section of the Riverdrive Interceptor to assess if river water is entering and causing excess flows. This being a reasonable request, the System Managers will work with Veolia to prioritize inspection of this area in Veolia’s first year as long as the Technical Committee agrees.

Ecorse has a cost allocation and water usage issue; it appears Ecorse has large consumptive use that does not come back into the sewer system. The System Manager notified Ecorse that there is a process for industrial exemption, but this has not yet been pursued. It is believed Ecorse is looking for the data to meet this exemption.

b. Financial Transition Items

 DUWA Financial Consultant, Beth Bialy, of Plante Moran, noted the team is working on an update to the Financial Forecast, and will include reworking the debt service schedules. The rework will consider smoothing the increases over time. Ms. Bialy also noted the team is working on carving out reserves for when DUWA goes to bond.

Mr. Kerry Morgan (Riverview’s Attorney) asked if it would be appropriate to provide Wayne County with a letter noting the expected reserves for transfer. Ms. Bialy responded that Wayne County assisted with the Definitive Transfer Agreement’s (DTA) language, and they have the funds available for transfer, and the team is confident with the folks in Wayne County’s Management and Budget in that they will proceed per the agreement.

c. Bond Underwriter Selection

DUWA Financial Advisor, Kari Blanchett, of PFM Group, approached the Board regarding a recommendation to select JP Morgan as the underwriter rather than the previous recommendation of Bank of America Merrill Lynch (BofAML) (Attachment 3). (At this time, River Rouge’s representative joined the meeting.) Ms. Blanchett noted the banker DUWA had worked with at BofAML was let go due to downsizing associated with the federal tax reform work; the municipal bond market shrunk as part of this reform. While the downsizing was concerning, BofAML assured DUWA’s advisors that BofAML would provide coverage. However, as of the first quarter of 2018, their team appears to be spread very thin, and they are not being responsive. As such, PFM Group recommends DUWA use JP Morgan as their underwriter. JP Morgan was the next qualified bidder during the underwriter review process. BofAML would remain engaged as the selling group. JP Morgan’s underwriter fees were negotiated to be in line with BofAM’s previous fees. Doug Drysdale (Riverview) inquired if the fee would go up if DUWA proceeded with JP Morgan as the underwriter. Ms. Blanchett noted the fee will be based on maturity number, and that JP Morgan’s fee may be $20,000 more than BofAML’s fee.

Chairman Sollars requested motion for approving the recommendation of JP Morgan as underwriter. Vice Chairman Matakas (Allen Park) requested confirmation there is no contract with BofAML as the underwriter. DUWA’s Attorney, Jim Fausone, of Fausone Bohn, noted there was no contract, and that a formal motion is being requested now, because a formal motion was previous received for the BofAML recommendation in July 2017. Motion by Dan Paletko (Dearborn Heights) and seconded by Bill Matakas (Allen Park) to approve the recommendation of JP Morgan as the underwriter. Motion passed unanimously.

Ms. Blanchett provided the Board with an updated financial calendar (Attachment 4). The updated calendar shows the pricing effort in August. The timeline’s goal is to complete the transition in or by September 2018.

d. Definitive Transfer Agreement

Mr. Fausone started by thanking the Board and the team’s for their efforts to advance the DTA within the communities. Affirmative votes were provided by all the communities for the Chairman’s authorization. This authorization will occur after today’s Board meeting if the DTA is approved by the Board. Subsequent to this, the documents will be packaged and provided to DUWA’s legal counsel, and then to Wayne County. Wayne County will ultimately provide to the County Commissioners. It is anticipated that by late June or early July, Wayne County will have their Chief Executive Officer authorize the DTA on behalf of the County. DUWA’s next steps for legal transition items include Veolia’s contract negotiation, advancing bylaws for the organization, and preparing policies and procedures.

Mr. Fausone read the May 9, 2018 resolution of the DUWA in Favor of the DTA with Wayne County (Attachment 5). Motion by Mark Kowalweski (Wyandotte) and seconded by Jim Taylor (Van Buren Township) to approve the DTA resolution. Motion passed unanimously. At the time of the motion, 11 communities were in attendance and provided Aye votes. Two (2) communities were absent (Belleville and Brownstown Township).

e. Insurance Broker Services

Mr. Fausone reminded the Board of last month’s action item from the Board to coordinate with Aon for their insurance broker scope and associated costs. Their proposal was provided in the pre-meeting packet (Attachment 6). Mr. Fausone noted Aon’s major scope items and the overall anticipated fee of $40,000 over the entire period. This time period is anticipated to be from date of authorization (today) until December. Motion by Bill Matakas (Allen Park) and seconded by Roberto Scappaticci (Romulus) to approve Aon as the insurance broker. Motion passed unanimously.

f. Due Diligence Update

System Manager Lambrina Tercala, of OHM Advisors, provided an update on the due diligence work related to the interceptors. Ms. Tercala reported that Veolia’s fieldwork was completed, and HRC (Wayne County’s engineer) is in receipt of the video tapes. Wayne County reported that a summary of the inspection findings would be provided by HRC at the next Technical Committee meeting. In general, the findings show the inspected areas are in good to fair condition (for inspections from 2009 to 2018), and that over 5% of the system has been inspected. Poor condition sewer was noted along Alkali Avenue and a single manhole (location unknown) was noted. These findings will be further communicated at the Technical Committee meeting.

Ms. Tercala briefly discussed the status of the boundary survey, but withheld conversation until the next agenda item.

Mr. Fausone updated the Board on the status of Wayne County coordination for the Phase I and II Environmental Site Assessment (ESA) and the Baseline Environmental Assessment (BEA) (Attachment 7). A draft Phase I ESA has been prepared by ECT; the ESA presented recognized environmental conditions (RECs). Some of these RECs require site access to the DWTF to advance soil borings. A Work Plan was prepared by ECT for Wayne County’s review and consideration of providing a Right of Access to DUWA. As part of the Right of Access, Wayne County requires a large insurance requirement that a consultant would not normally carry. DUWA’s legal and technical advisors do not feel it is necessary to pay for the insurance since DUWA is purchasing the DWTF as-is. Mr. Fausone noted that a BEA can be prepared before or up to 45 days after the transfer date. If Phase II work was performed after the transition, DUWA can have control of where to put the borings and may consider focusing on boundary conditions rather than the as-is site. The desires of how to approach the Phase II ESA and BEA work will be discussed with and received by the Technical Committee. Some Board members shared concern with the schedule for completion of the BEA if work waits until transfer, and other members shared opinions on how to proceed with satisfying some of the Phase I RECs. These concerns will be further discussed at the Technical Committee meeting.

g. Request for Proposal Amendment for Boundary Survey by Hennessey

Ms. Tercala presented the Board with a request for a not-to-exceed fee proposal amendment by Hennessey for up to $7,000 (Attachment 8). The need for the amendment is based on the additional communication that is necessary to help satisfy the carve out of SWRDDD’s Pump Station No. 5 property given the lack of available records. Motion by Jim Taylor (Van Buren Township) and seconded by Roberto Scappaticci (Romulus) to approve the proposal amendment. Motion passed unanimously.

h. Lincoln Park Litigation

Mr. Fausone noted there is on-going litigation by Wayne County and a class action lawsuit. Mr. Fausone said there is also on-going dispute with Ecorse and Wayne County. These matters continue to move on. There is a Wayne County Circuit Court date set for some time in June to address the Lincoln Park ligation. DUWA’s legal and technical advisors will continue to make the Board aware of what is going on relative to this litigation; the intent of DUWA’s advisors will try to help resolve these matters promptly by assisting with facilitation. 

i. Romulus Sewer Issues 

Mr. Fausone noted Romulus’s attorney forwarded historic sewer maps that presented sanitary sewers as possibility Wayne County interceptors. These sanitary sewers were not noted as Wayne County-owned sewers on the DTA’s ‘Schedule A’ interceptor map. After review and coordination with Wayne County, it is believed the sanitary sewers are local to Romulus only, and are not Wayne County assets.

5. 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 9), the Authority’s Revenue and Expenditure report and the updated DUWA Balance Sheet Report (Attachment 10).

He noted that five invoices have been received from DUWA Professionals.

• Fausone Bohn in the amount of $21,170.77 for work performed in March 2018 (Attachment 11).
• OHM Advisors in the amount of $20,587.50 for work performed in March 2018 (Attachment 12).
• Plante Moran in the amount of $6,800.00 for work performed through March 2018 (Attachment 13).
• Detroit Legal News (via Dykema) in the amount of $4,362.75 for Master Bond notification in April 16, 2018 (Attachment 14).
• BTG Solutions in the amount of $225.00 for work performed in April 2018 (Attachment 15).

Motion by Robert Scappaticci (Romulus) and seconded by Dustin Lent (Southgate) to pay the invoices. Motion passed unanimously.

6. Public Comment

No issues or concerns were raised as part of the Public Comment agenda item.

7. Other Business

Mr. Fausone approach the Board to give thanks for the hard work that it took from each of the Board members, their communities and their advisors, and DUWA’s advisors. Mr. Fausone reported that even with the long road ahead, advancement of the DTA is great for the region. Mr. Fausone gifted t-shirts that read “DUWA 100%” to the Board members, and meeting attendees.

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

8. Next Meeting Date

Chairman Rick Sollars reminded the Board that the next regularly scheduled DUWA Board meeting is June 14, 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 Bill Matakas (Allen Park), seconded by Dustin Lent (Southgate) to adjourn the meeting.  Motion passed unanimously at 10:00 AM.

Meeting Minutes Prepared by:

 

Vyto Kaunelis/Lambrina Tercala

DUWA System Manager

May 22, 2018

 

Attachments

1. Meeting Agenda
2. April 12, 2018 Board Meeting Minutes [Corrected]
3. Recommendation for Underwriter
4. Updated Financial Calendar
5. DTA Resolution for DUWA Board
6. Insurance Broker (AON) Proposal for Board Consideration
7. Request to Delay Phase II ESA/BEA
8. Request for Proposal Amendment for Boundary Survey from Hennessey Engineers
9. Status Report re: Payments from Communities dated January 31, 2018
10. DUWA Revenue/Expenditure Report and Updated DUWA Balance Sheet
11. Invoice from Fausone Bohn, dated April 1, 2018
12. Invoice from OHM Advisors, dated April 10, 2018
13. Invoice from Plante Moran, dated April 2, 2018
14. Invoice from Detroit Legal News (via Dykema), dated April 24, 2018
15. Invoice from BTG Solutions, LLC, dated April 23, 2018