System Transfer – From County to Community

On May 11, 2016, the Downriver Utility Wastewater Authority (“DUWA”) issued a Letter Of Intent to
purchase the Downriver Sewage Disposal System (“DSDS”) from Wayne County for $57,500,000 subject
to certain terms and conditions. Wayne County subsequently accepted the purchase offer, and the two
Parties began work on a number of items that need to be finalized in order to transfer the System to the
Authority.

The following is a compilation of the major tasks needing to be completed to accomplish the transfer:

• Adoption of a new Service Agreement between DUWA and the 13 Member Communities
establishing the rights and responsibilities of all parties, including agreement that the Authority
will accept, convey and treat wastewater generated in the Service Area and agreement that the
Communities will pay the cost of operating the System under rates established by DUWA
• Transfer of all outstanding debt for the System from Wayne County to DUWA, including the
Judgment Levy debt which currently utilizes millage assessments as part of the revenue stream
to retire the debt;
• Sale of a new Revenue Bond by DUWA to generate funds to be used for the initial purchase
price of the System;
• Adoption of Sewer Use Regulations by DUWA to control and manage the character of
wastewater allowed to be discharged into the System;
• Conduct a “due diligence” condition assessment of all assets being acquired, and identify
deficiencies needing to be corrected prior to system transfer (if any);
• Negotiation of a “Definitive Agreement” which officially transfers responsibility for the DSDS
from Wayne County to DUWA. The Definitive Agreement will address the transfer of existing
contracts for goods and services, an inventory of all assets including equipment, vehicles and
spare parts, transfer of all cash and reserves held by Wayne County on behalf of the System,
disposition of current County employees including resolution of any unfunded Legacy Costs
associated with Pension Plans and OPEB, transfer of all Real Estate including deeds, titles and
easements, transfer of all intellectual property, acquisition of insurance coverage, resolution of
responsibility for all pending claims, and transfer of Inter-Governmental Agreements between
the DSDS and local facilities served by the System (e.g. Drainage Districts);
• Hire staff to manage and oversee the System, and negotiate a contract with firm qualified to
operate and maintain the facilities;
• Secure a new NPDES discharge permit for the System from the Michigan Department of
Environmental Quality with provisions to transfer such permit to DUWA as of the effective date
of the acquisition of the System by the Authority;
• Approval of an Industrial Pretreatment Program to be administered by DUWA to control and
regulate industrial waste discharges into the System.

The Parties have a goal to complete these action items to allow for the System to be transferred by October 1, 2017.