DOWNRIVER UTILITY WASTEWATER AUTHORITY
MAY 14, 2020 MEETING MINUTES

Taylor City Hall City Council Chambers

1. Roll Call and Introductions

DUWA Chair Gail McLeod (Allen Park) called the virtual meeting to order at 9:00 AM and asked for roll call to be taken. At the time of roll call, voting representatives were in attendance from 10 communities: Allen Park, Belleville, Dearborn Heights, Ecorse, Lincoln Park, Riverview, Southgate, Taylor, Van Buren Township, and Wyandotte. A quorum (at least 7 members) was present. Romulus joined the meeting shortly after roll call.

2. Approval of Agenda

Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by Dustin Lent (Southgate) and seconded by Doug Drysdale (Riverview) to approve the Agenda. Motion passed unanimously. Under the Legal Update, Agenda Item 4c – Part 41 Permit Application for the Alkali Sewer Construction Project was added.

3. Approval of Minutes from April 16, 2020 Board Meeting

Copies of the meeting minutes from the April 16, 2020 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 minutes. Motion passed unanimously.

4. Legal Update

Attorney Andrea Hayden, of Fausone Bohn, provided the Legal Update.

a. General Counsel Monthly Report

Attorney Hayden provided a verbal summary of the monthly legal update. A written summary was provided in the pre-meeting Board packet (Attachment 3). Attorney Hayden noted the following highlights from the monthly legal update:

• Contracting for Phase I of the Biosolids project is complete and notices to proceed were issued to Walsh and Kruger. Fausone Bohn will continue to support the project as needed.
• Fausone Bohn is working closely with OHM to develop a strategy for the ratemaking process, and is advising on the legal structure.
• Wayne County has agreed to work with DUWA on transferring the appropriate real estate interests in the sewer system to DUWA.
• GIS data is being compiled as a part of the SEMCOG data sharing program and is expected to provide much of the information needed to facilitate the transfer of the real estate interests.
• Fausone Bohn is assisting with the legal requirements surrounding the non-residential user (NRU) fees.
• One sewer backup claim was received from a Dearborn Heights resident related to an alleged April 2019 sewer system backup. Fausone Bohn sent a response letter to the resident denying the claim.
• Fausone Bohn is continuing to assist OHM with negotiating contracts and amendments related to the various WIFIA projects and other service providers.

b. WIFIA Contract Addenda

During the course of the WIFIA application process, the EPA review team requested that specific verbatim language be included in all contracts with any contractor or vendor working on a WIFIA funded project (Attachment 4). The required language is specific with respect to civil rights, fair wage, and American Iron and Steel requirements. Addenda and amendments have been provided to Walsh, Kruger, and Veolia. Walsh has approved their addendum, and we are waiting on the final sign-off from Kruger and Veolia, which should be finalized next week. There is no change in the financial agreements.

Kerry Morgan (Riverview Legal Counsel) asked whether this language is mandated or requested by the EPA. Attorney Hayden responded that this language is not an EPA statutory requirement for contracts, but is required in order to receive WIFIA funding. Mr. Morgan asked what the fair wage is and whether the fair wage would increase the cost to DUWA. Attorney Hayden responded that the fair wage is the prevailing wage, and this would increase the cost to DUWA. Prevailing wages were already included in both Walsh and Kruger’s contracts, so their costs will not change.

Attorney Hayden requested a motion to authorize the chair or vice chair to execute these addenda as they are finalized, as well as others that may be identified as the application process proceeds. Motion by Dustin Lent (Southgate) and supported by Doug Drysdale (Riverview) to authorize the Chair or Vice Chair to execute all addenda, amendments, or change orders needed to add the EPA-required language to all WIFIA funded contracts. Motion passed unanimously.

c. Part 41 Permit Application for the Alkali Sewer Construction Project

Information regarding the Part 41 permit status for the Alkali sewer construction project was not provided in the pre-meeting Board packet, but an update was given by Attorney Hayden. The Part 41 permit application has been prepared for the Alkali sewer construction project. A question arose as to who would be the most appropriate person to execute the permit application. HRC, Veolia, and OHM were considered, and it was determined that OHM would be the most appropriate to sign the permit application. DUWA’s bylaws allow the Board to delegate that authority, and OHM’s contract allows them to sign these permit applications.

Attorney Hayden requested a motion to authorize OHM to execute the Part 41 permit application for the Alkali sewer project. Motion by Jim Taylor (Van Buren Township) and supported by Dustin Lent (Southgate) to authorize OHM to execute the Part 41 permit application for the Alkali sewer project. Motion passed unanimously.

5. System Manager Update

a. System Manager Monthly Report

b. Rate Methodology Approach

c. 2020 Capital Improvement Plan Update

d. Biosolids Dryer Facility Progress Monthly Report

System Manager Vyto Kaunelis, of OHM Advisors, provided a verbal summary of activities since the last meeting. A written summary was in the pre-meeting Board packet for the System Manager Report (Attachment 5).

a. System Manager Monthly Report

System Manager Kaunelis noted the following highlights from the System Manager Report:

• The bid advertisement for the Alkali Sewer Rehabilitation project has been posted. Bids are due on May 29th.
• The other items in the monthly report are relatively minor and were not covered in detail.

 b. Rate Methodology Approach

The future rate methodology was discussed at length at the last Board meeting. Since then, an approach to developing the new rate methodology was prepared and is detailed in a memo provided in the pre-meeting Board packet (Attachment 6). The memo details the following highlights:

• The historical Wayne County rate methodology is not well documented leading to skepticism in the fairness of current allocations.
• Establishing a general consensus by the DUWA communities for the criteria associated with the new rate methodology is desirable.
• It is expected that the rate methodology development process will be led by an experienced rate consultant with support from DUWA’s system manager, legal counsel, financial consultants, and flow metering consultants in addition to DUWA’s existing technical, financial, and legal committees and subject matter experts.
• It is suggested that DUWA invite GLWA to provide perspective on the lessons they have learned regarding their various rate methodology development processes as well as the evolution of their selected methodology.
• It is suggested that the new rate methodology be approved by the Board prior to determining the impacts to each individual community. This would prevent any influence to voting as the “winners” and “losers” would not yet be identified.

Chairperson McLeod (Allen Park) and Dustin Lent (Southgate) agreed to the process of voting on the rate methodology before seeing the impacts to each community as they are concerned that some communities may see their rates increase and then want to change the methodology.

Jim Taylor (Van Buren Township) asked what the criteria would be for determining the new rate methodology. Dustin Lent (Southgate) responded that an outside rate consultant would be used rather than City engineers or engineering consultants to prevent any bias.

Keith Boc (Taylor) noted each community will need to know their proposed, revised rates prior to approving the new methodology. He mentioned that the Board should review the service contract they signed outlining the voting process. Dave Flaten (Ecorse) supported these comments.

Beth Bialy (Plante Moran) explained her understanding that the process would be to hire an independent group to review and improve the rate methodology, and run the existing community flows through the new model to see the impacts to each community. Dustin Lent (Southgate) agreed with this process but noted that the Board approval of the methodology would come before the communities see their new rates, but after the methodology is reviewed by DUWA’s existing technical, legal, and financial committees.

Mr. Morgan thought it would be important for the independent group to review the current methodology and compare the positive and negative aspects of the current methodology to the new methodology. Keith Boc (Taylor) agreed with this statement and added that the existing methodology should be considered as an option along with the alternatives developed by the independent group. He mentioned that he is fine with any methodology as long as it is demonstrated to be accurate and fair. Jim Taylor (Van Buren Township) agreed with these comments and added that the communities probably already have an idea of whether they will be “winners” or “losers”.

A motion was made by Dave Flaten (Ecorse) to begin drafting the RFP for an independent rate consultant to review the rate methodology. The motion was seconded by Dustin Lent (Southgate). The motion passed unanimously.

c. 2020 Capital Improvement Plan Update

The current capital improvement plan (CIP) is based on the 2014 Project Plan and other evaluations completed since then to determine what major improvements are necessary in the facility in the next 2-5 years. The CIP was provided in the Board’s pre-meeting packet (Attachment 7). It was determined that the most critical projects are currently being implemented including the Biosolids Dryer project, the Alkali sewer rehabilitation project, and the various small capital projects which are all being funded through the WIFIA loan. Most of these projects involve replacement or rehabilitation. No other major projects were identified as needing to be addressed in the short term. A more formal CIP will be developed in about two years once the current biosolids, Alkali sewer rehabilitation, and various small capital projects are complete. Additionally, Veolia has begun developing the asset management program, which considers DUWA’s ~$2M annual budget for small capital projects. This budget was included in the rates for the past year and will have a similar rate going forward.

Keith Boc (Taylor) thought that two years seemed like a long time to wait to update the CIP. Kelly Irving (Veolia) responded that in addition to the items identified in the CIP, Veolia has a couple detailed maintenance models that look at both preventative work, small and medium capital projects, and full replacement work. These models are currently being migrated to an updated cloud-based model with more analytics, and these models will help guide decision making for CIP projects for the next couple years until a more formal CIP is developed.

Roberto Scappaticci (Romulus) asked whether the CIP should be completed in parallel with the rate methodology development so that communities can consider the capital revenue with the new rate structure. System Manger Kaunelis responded that the rate methodology will address the CIP in some form, but it should not be dictated by the CIP. Chairperson McLeod (Allen Park) noted that the CIP is scheduled to be prepared in 2 years and the new rate methodology is to be implemented in 3 years, so the CIP will be developed before the new rate methodology is in place.

d. Biosolids Dryer Facility Progress Monthly Report

The biosolids dryer facility monthly progress report is provided in the pre-meeting Board package (Attachment 8). It is expected that the 30% submittal from the DBE team will be provided at the end of May. This submittal will include the first formal cost estimate. The design work is primarily related to the layout of the equipment. The DBE team is looking into moving the bin that holds the biosolids between the centrifuges and the dryers from the main floor to the basement to allow more floor space on the first floor. This could also potentially reduce or eliminate the need for temporary dewatering equipment. There will be workshops to review the 30% submittal in mid-June.

Roberto Scappaticci (Romulus) asked whether moving the bin to the basement would significantly change the overall footprint such that it if an unexpected issue arises, it might be too late to change the footprint again. System Manager Kaunelis responded that they are looking into those details now.

6. Requests for Authorizations

System Manager Lambrina Tercala, of OHM Advisors, provided the following requests to the Board.

a. WIFIA Credit Ratings by S&P Global and Fitch

DUWA is in the process of applying for WIFIA financing to support four capital projects. PFM, DUWA’s financial advisor, is assisting with the preparation of the WIFIA Loan application and closing process. PFM estimated the Cost of Issuance (CoI) assuming a credit rating fee of up to $57k. The actual credit rating fee came in at $43.5k ($22.5k due to S&P Global and $21k due to Fitch) (Attachment 9).

Dave Flaten (Ecorse) noted that the motion should be amended to execute S&P Global’s quote for a not-to-exceed fee of $22,500 instead of the $43,500 as listed in the proposed motion included in the pre-meeting packet. System Manager Tercala agreed there was an error in the prepared motion.

Motion by Roberto Scappaticci (Romulus) and supported by Doug Drysdale (Riverview) to authorize the Chair or Vice Chair to execute S&P Global’s quote for a not-to-exceed fee of $22,500 and Fitch’s quote for a not-to-exceed fee of $21,000 to support the WIFIA loan application process. Motion passed unanimously.

b. SCADA Split: Low-Voltage Electrical Contract Work

The SCADA split work is being led by Eramosa. Limited aspects of the construction are required to be completed by a low-voltage electrical contractor. OHM and Veolia coordinated to solicit bids from four entities for the electrical work. Serve Electric was the second lowest bidder, and is being recommended for the work as they were very responsive during the bid phase and have available in-house staff to perform the work. The SCADA Split project cost is currently tracking under budget, inclusive of Serve’s proposed fee (Attachment 10). This project has an authorized budget of $450k and is included in DUWA’s FY2020 Rate Package. This project is included in the WIFIA Loan application as part of Project No. 4.

System Manager Tercala noted that the quotes received did not include a requirement to abide by the WIFIA cross-cutters. Serve Electric was then requested to adjust their quote to abide by the WIFIA cross-cutters, and their revised quote was substantially more at $70,500. It was then determined that Serve’s contract would not be included in the WIFIA application, so the initial quote could be used.

System Manager Tercala also noted that the motion should be amended to include the phrase “upon terms and conditions agreed upon by the general counsel” to the end of the motion statement. Kerry Morgan asked whether this statement is broad enough to include changing the amount of the authorization. System Manager Tercala responded that the language in the motion is not intended to change the amount, but it is intendent to exclude the WIFIA cross-cutters as it will not be included in the WIFIA Loan due to the higher cost of prevailing wages (if cross-cutters did apply).

Roberto Scappaticci (Romulus) asked whether the scope of work is along the lines of what was initially expected considering Eramosa’s estimate for this work was only $20k. System Manager Tercala responded that Eramosa reviewed the bid and the scope of work is consistent with what was expected by Eramosa, but Eramosa may not have budgeted enough for the cost of fiber and the COVID-19 climate.

Roberto Scappaticci (Romulus) asked whether a performance bond is necessary. Attorney Hayden responded that she would look into this. If it is necessary, it could potentially change the cost of the contract which would require another Board approval.

Greg Mayhew (Wyandotte) asked whether removing Serve’s contract from the WIFIA loan application would jeopardize the WIFIA loan application. System Manager Tercala responded that it would not impact the WIFIA loan application as Serve’s scope and fee will not be folded in.

Motion by Roberto Scappaticci (Romulus) and supported by Greg Mayhew (Wyandotte) to authorize the Chair or Vice Chair to execute Serve Electric’s contract for the SCADA project for a total of $45,740.00 upon terms and conditions agreed upon by the general counsel. Motion passed unanimously.

c. Centrifuge No. 2 Critical Repair

As noted at the previous Board and Technical Committee meetings, Centrifuge No. 2 required critical repair (Attachment 11). This work was planned and budgeted in the FY2021 rate package. The cost for the work was $49,688, which is under the allocated budget of $150k. OHM is also looking to include this repair in the WIFIA loan application as part of Project No. 4.

Upon recommendation by the Technical Committee, OHM will seek requests for authorization at the next Board meeting for other small capital projects including repair of Centrifuge No. 1, a centrifuge bowl assembly spare part, and roof inspections.

Motion by Keith Boc (Taylor) and supported by John Selmi (Dearborn Heights) to authorize Veolia for repair of Centrifuge No. 2 for a fee of $49,688 as budgeted by DUWA’s FY2021 Capital Outlay. Motion passed unanimously.

7. Contract Operator Update

Kelly Irving, Veolia’s Program Manager, provided the Contract Operator update.

a. March 2020 MOR

A March 2020 Monthly Operating Report (MOR) was provided in the Board’s pre-meeting packet (Attachment 12). Highlights from the summary and other updates included the following:

The executive summary of the MOR is now more comprehensive so readers can understand the highlights of the MOR.

• There is no change in staffing at the DWTF, but they are still recruiting for a collection systems position.
• Operations are good, with no compliance issues.
• One wet weather event in March required some bypassing, but everything went smoothly.
• The DWTF is still receiving some glycol from the airport, but levels are decreasing.
• PFAS sampling was performed in April and Veolia is now waiting for results.
• CCTV work within the DSDS will begin next week.
• Raw sewage Pump #6 has been repaired and re-installed. Raw sewage pump #5 is in repair now.
• Maintenance staff is very skilled in complex maintenance tasks allowing a lot of repair work to be done in-house instead of subcontracted out.
• Veolia is waiting on EGLE approval for the sampling line relocation.
• Veolia is currently preparing for this weekend’s forecasted wet weather event by pumping down the wet wells as low as they can go.
• Veolia is preparing a new workplace plan due to COVID-19.

Jim Taylor (Van Buren Township) stated that Kelly had provided him with useful information regarding masks and PPE. He also asked whether Veolia has looked into ways to lower their electrical costs. Ms. Irving responded that they are tracking their electrical usage and it has decreased some since they have been more cognizant of turning off lights when rooms are not in use. She noted that it is difficult to control the peak electrical usage as that occurs when the pumps kick on during wet weather events.

Chairperson McLeod (Allen Park) asked who Veolia is working with at EGLE to get the sampling line relocation approved. Ms. Irving responded that they are working with Tom McDowell, DWTF’s District Engineer. She noted that the sampling line relocation is not affecting operations, but will be necessary for NPDES reporting and future design.

8. Treasurer’s Report

a. Non-Residential User (NRU) Fees – FAQ’s and Survey Reminder

Beth Bialy, of Plante Moran, presented the non-residential unit (NRU) billings items. A survey was sent to all communities about a month ago to learn how each community is reporting NRUs and to identify any inconsistencies in reporting amongst the communities. Five communities have not yet completed the survey. Ms. Bialy also reviewed frequently asked questions regarding NRUs which were provided in the Board’s pre-meeting packet (Attachment 13).

NRUs bring in about $600k in revenue per year. NRU reporting allows DUWA to identify sources of extra strength flow into the system. NRUs should be self-reported if certain chemicals are contained in the wastewater. The NRU fee is $1.53 per 1000 cubic feet. Only some communities pass this fee down to the NRUs, others may absorb it.

Chairperson McLeod (Allen Park) asked whether the IPP guidelines are federal or County requirements. Ms. Bialy responded that these requirements are part of the Federal Clean Water Act. Chairperson McLeod (Allen Park) also thought that there should be clarification regarding NRUs versus industrial users. Rick Rutherford (Belleville) and Dave Flaten (Ecorse) supported this comment and asked why small businesses are included in the NRU fee as they are not industrial businesses. Rick Rutherford (Belleville) thought that the NRU definition is too broad as it includes small business that are not industrial users. Ms. Bialy responded that this NRU reporting process is to ensure that there is a comprehensive list of NRUs and to facilitate consistent reporting amongst all communities. The broad range of NRUs also allows the fee to be lower.

b. Resolution to Adopt FY2021 Rate Package (July 1, 2020 – June 30, 2021)

Accountant Doug Drysdale presented the FY2021 Rate Package (Attachment 15), which was reviewed in detail at the last Board meeting. It was presented to the Finance Committee on April 1, 2020 and minor adjustments were made thereafter. Accountant Drysdale highlighted the following items in the Rate Package:

• Total expenditures including administration operations, plant operations, senior lien debt service, capital outlay, and the Allen Park adjustment were about $24.9M.
• Non-rate revenues were about $1.7M.
• Total revenue required from the rates was about $23.2M.
• Based on the projected base flow and total flow volumes, the sewage disposal rate is $8.29. The debt retirement rate is $1.76. The total all-inclusive rate is $10.05, which is a 4.69% increase from last year.

A resolution was made to adopt the FY2021 Rate Package (Attachment 14). Motion by Jim Taylor (Van Buren Township) and supported by Dustin Lent (Southgate) to adopt the FY2021 Rate Package. Motion passed unanimously.

c. Pending Invoices

DUWA’s Treasurer Jason Couture (Taylor) presented the invoice register for a request for payment. The invoice register was provided in the pre-meeting packet (Attachment 16). The invoice register included 33 invoices due for a total of $1,988,678.70. Largest invoices included those to Veolia for O&M services, Walsh for their effort on the biodolids project, Wayne County for the Southgate-Wyandotte outfall usage, and Wyandotte for utility services. Motion by Keith Boc (Taylor) and supported by Dustin Lent (Southgate) to pay the invoices. Motion passed unanimously.

9. Public Comment

There was no public comment.

10. Other Business

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

11. Next Meeting Date: Thursday, June 11, 2020 (9:00 AM; Taylor City Hall, pending shelter-in-place order is lifted)

Chairperson McLeod (Allen Park) reminded the Board that the next meeting would be on Thursday, June 11, 2020 (9:00 a.m. Taylor City Hall, pending shelter-in-place order is lifted).

12. Adjournment

There being no other business, Chairperson McLeod (Allen Park) announced that a motion to adjourn would be in order. Motion by Dave Flaten (Ecorse) and supported by Dustin Lent (Southgate) to adjourn the meeting.  Motion passed unanimously at 11:19 AM.

Meeting Minutes Prepared by:
Lambrina Tercala, OHM Advisors, DUWA System Manager

Attachments

1. Meeting Agenda
2. April 16, 2020 DUWA Board Meeting Minutes
3. Monthly Legal Update (by Fausone Bohn)
4. WIFIA Contract Addenda Request (by Fausone Bohn)
5. System Manager Report for May 2020 Board Meeting (by OHM Advisors)
6. DUWA Rate Methodology Approach (by OHM Advisors)
7. DUWA Capital Improvement Plan (by OHM Advisors)
8. DUWA Biosolids Dryer Facility Monthly Progress Summary (by Veolia)
9. Request to Authorize Credit Ratings from S&P Global and Fitch
10. Request to Authorize Serve Electric LLC for Electrical and Misc Site Work Associated with SCADA Split
11. Request to Authorize Veolia for Critical Repair of Centrifuge No. 2
12. Monthly Operating Report for March 2020 (by Veolia)
13. Non-Residential User (NRU) Fees Frequently Asked Questions
14. Resolution to Adopt the FY2021 Rate Package (By Chairperson McLeod)
15. DUWA FY2021 Rate Package
16. Invoice Register, dated May 8, 2020 (by DUWA Treasurer)