DOWNRIVER UTILITY WASTEWATER AUTHORITY

JUNE 11, 2020 MEETING MINUTES

VIRTUAL MEETING

1. Roll Call and Introductions

DUWA Chair Gail McLeod (Allen Park) called the virtual meeting to order at 9:07 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, 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 Dave Flaten (Ecorse) and seconded by Greg Mayhew (Wyandotte) to approve the Agenda. Motion passed unanimously.

3. Approval of Minutes from May 14, 2020 Board Meeting

Copies of the meeting minutes from the May 14, 2020 Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Rick Rutherford (Belleville) and seconded by Roberto Scappaticci (Romulus) 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:

• OHM, Plante Moran, and Fausone Bohn are reviewing the applicability of the state use tax on the biosolids equipment. The state use tax is estimated at approximately $425,000 and was not planned for in the initial project budgets. Potential exemptions are being explored.
• WIFIA addenda have been executed by Walsh and Kruger for the biosolids project. The addendum for the Veolia O&M contract should be ready for execution within the next week.
• Fausone Bohn is assisting with the review and evaluation of the Non-Residential User (NRU) Fee. Information is being collected to ensure the fee structure is accurate and universally applied across all communities. Fausone Bohn will participate in the Townhall meeting on the NRU fee calculation on June 17, 2020.
• The next legal committee meeting will be held on June 23, 2020 at 1:00pm at Fausone Bohn and via Zoom. These will be held quarterly.
• Two contracts have been drafted/revised in the last month. These contracts pertained to the WIFIA addenda and the Alkali sewer construction project.
• At the last meeting, a question was raised as to whether DUWA has a minimum contract amount for which a bond is required. There is no such requirement in DUWA’s governing documents or procurement policy, however there is a $50,000 threshold established by statute for work on or improvements to a public work or building. There is no threshold for goods and other services. Fausone Bohn recommends leaving bonding requirements to the discretion of the Board for these items.

5. System Manager Update

a. System Manager Monthly Report

b. Rate Consultant Scope of Work

c. 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 4).

a. System Manager Monthly Report

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

• HRC has begun work on the blending design improvements. Motors on the aeration mixer will be upsized and will require new couplings. An updated analysis on the upper tunnel, control measure C has been prepared based on the actual blending events that have occurred since Veolia took over operations. The new analysis suggests that the proposed improvements could potentially be reduced.
• The 60% design submittal from the dryer equipment manufacturer has been received.
• The 30% basis of deign from the Design-Build Entity has been received. The first formal cost estimate should be received next week. There will be a workshop to review and finalize that package next week and a presentation will be made to the Technical Committee on June 25.
• A summary form to track the budgets of the small capital projects has been developed and reviewed with the Technical Committee.
• The WIFIA loan cost estimates are being periodically updated as better information is available. A call with Fitch was held to initiate the process of obtaining a second credit rating.
• Rain gage access agreements were generated and are in the process of getting approvals.
• Veolia is implementing cellular technology for the existing flow meters, which is less expensive than the current land-line communication. A formal approval process is not needed for these improvements.

Roberto Scappaticci (Romulus) asked whether any projects could be funded through the federal CARES Act. System Manager Lambrina Tercala, of OHM Advisors, responded that OHM has a group that is monitoring the CARES Act and she notified the group of the DUWA projects to see if any would qualify for funding, however none have yet been identified. System Manager Tercala noted that it is possible that PPE purchases could qualify. A line item will be added to future System Manager Reports to discuss any funding opportunities through the CARES Act for DUWA projects.

Kelly Irving (Program Manager, Veolia) mentioned that there has been no discussion of passing any COVID related costs to clients. Chairperson McLeod (Allen Park) asked whether Veolia had any issues with payroll and using the PPP program, but Program Manager Irving noted that everyone received their full pay even while working from home – use of PPP program was not applicable to Veolia operations.

b. Rate Consultant Scope of Work

A draft RFP has been prepared for rate consultant services (Attachment 5). The RFP includes the scope of work and consideration of the existing rate methodology as an option. Four consultants have been contacted and two seem to be willing to propose on the RFP. The draft RFP will be sent out to potential consultants for their comments before finalizing the RFP.

Jim Taylor (Van Buren Township) suggested that the Board should consider a minimum of 3 bidders and oral presentations should be mandatory. There were no objections amongst the Board members to approve these suggestions. System Manager Kaunelis noted that the RFP will be revised to address these suggestions. System Manager Tercala stated that the RFP will be revised and circulated for comments and will be finalized for Board approval at the July Board meeting.

System Manger Kaunelis mentioned that community representatives, to participate in the interviews and assist with the rate consultant selection, have not yet been identified. Jim Taylor (Van Buren Township) stated that Van Buren Township would like to have a representative on that subcommittee to select a rate consultant. Jim Taylor (Van Buren Township) also recommended that a motion be made to follow the same procedure for establishing a selection committee as was used for the biosolids dryer facility project. For the biosolids dryer facility project, the Board had made a motion to establish the selection committee, approve its participants, and set the parameters for the tasks of the selection committee including bringing recommendations to the Board. System Manager Tercala stated that a memo will be prepared for the July Board meeting to consider use of a Board-approved Selection Committee. In the meantime, System Manager Tercala will communicate with the various representatives from the member communities to identify any volunteers who would like to be on the selection committee.

c. Biosolids Dryer Facility Progress Monthly Report

The biosolids dryer facility monthly progress report is provided in the pre-meeting Board package (Attachment 6). The 30% design submittal from the DBE team has been received. The first formal cost estimate is expected to be received next week. The cost estimate will be circulated with the Board for review once it is received. The 60% design submittal from the dryer equipment manufacturer has been received.

6. Requests for Authorizations

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

a. Centrifuge No 1 Critical Repair (WIFIA Project #4.17)

As discussed at the May Board meeting, the repairs for Centrifuge No. 2 came in significantly under budget. The initial budget was for $150,000, but the work cost only $49,688. Similar repairs are necessary for Centrifuge No. 1. Veolia prepared a memo outlining the needs for this work (Attachment 7). The cost for the work would be funded per the balance of the unused budget from the repair of Centrifuge No. 2. The work will be completed through the terms of Veolia’s O&M agreement and is WIFIA eligible. Alfa Laval, the centrifuge manufacturer, will complete the repairs. This project was also recommended by the Technical Committee.

Motion by Jim Taylor (Van Buren Township) and supported by Rick Rutherford (Belleville) to authorize Veolia for repair of Centrifuge No. 1 for a fee of $58,772 to be funded by DUWA’s FY2021 Small Capital Outlay. Motion passed unanimously.

b. Centrifuge Spare Bowl Assembly (WIFIA Project #4.15)

Two existing Alfa Laval centrifuges are used at the DWTF to process solids. Critical spare parts are necessary to have on hand to ensure continuous operations, especially during the season when glycol is high. Veolia has identified a spare bowl assembly as a critical spare part and DUWA budgeted $500,000 for this item as a part of the FY2021 small capital budget. Alfa Laval provided a quote for a purchase price of $438,398 and an estimated freight charge of $2,200 (Attachment 8). The total anticipated price is $440,598, which is under budget. The purchase would be completed per the redlined terms and conditions prepared by DUWA’s legal counsel. This work is WIFIA eligible and was recommended by the Technical Committee.

Motion by Roberto Scappaticci (Romulus) and supported by Dustin Lent (Southgate) to authorize Alfa Laval for purchase of a centrifuge spare bowl assembly at a cost of $440,598 to be funded by DUWA’s FY2021 Small Capital Outlay. Motion passed unanimously.

c. Construction Services for Alkali Sewer Repair (WIFIA Project #2)

The Alkali Sewer Rehabilitation project includes rehabilitation of approximately 450 linear feet of 60-inch diameter brick sewer and construction of a new gate chamber of an existing SWRDDD-owned 72-inch sewer to allow for dry weather bypass during the liner installation and curing process. An approved agreement from SWRDDD is pending, but should be received soon.

HRC is providing engineering, bid assistance, and construction oversight work. An RFP for construction services was recently released. Two bids were received and are outlined in HRC’s recommendation of award (Attachment 9) to the apparent low bidder of Inland Waters Pollution Control, Inc. for a bid amount of $1,442,475. DUWA’s FY2020 rate package allocated $2,028,000 from Cash Reserves – Capital Improvement for this construction project. The work is WIFIA eligible for loan reimbursement. The Technical Committee did not have an opportunity to review the bids and provide a recommendation as the bids were received after the last Technical Committee meeting was held.

Roberto Scappaticci (Romulus) asked whether any contingency was included in this cost. System Manager Tercala responded that this is a direct bid cost and no contingency was included. Roberto Scappaticci asked whether the Board should give the System Manager flexibility to deal with contingencies as issues occur during construction. Jim Taylor (Van Buren Township) supported this recommendation.

Attorney Hayden (Fausone Bohn) noted DUWA’s Admin Policy allows a certain dollar value for the System Manager to approve independently. System Manager Tercala stated that a motion to request a contingency allowance for the System Manager will be considered in next month’s Board package along with the request for approval to execute the Inland Waters Pollution Control contract. Roberto Scappaticci (Romulus) added that another option would be to have DUWA sustain downtime damages by the Contractor if the System Manager is unable to act until the Board approves any contingencies, but noted it would be better to allow the System Manager flexibility to deal with contingencies as they arise to prevent any delays in construction.

Motion by Dave Flaten (Ecorse) and supported by Doug Drysdale (Riverview) to accept Inland Waters Pollution Control, Inc. proposal of $1,442,475 with intent to enter into contract negotiations. Motion passed unanimously.

d. Design Services for Critical Roof Repairs (WIFIA Project #4.10)

Five bids were received to repair and/or replace select critical roofs that are known to be old, in poor condition, and in some cases leaking. The bid tabulations ranged from $37k to $68k. DUWA budgeted $75,000 for this roofing work under its FY2021 small capital budget.

Intertek-PSI and HRC were the two apparent low bids and were further evaluated by OHM and Veolia for recommendation. Intertek-PSI’s scope of services included tasks beyond that required by the RFP including patching and roof cores (Attachment 10). An optional task of asbestos sampling and testing was also included for an additional $4,600. Intertek-PSI was deemed the best value to DUWA based on price and qualifications, and is recommended for the work. Intertek-PSI’s fee of $42,100 includes the base fee and the asbestos sampling adder. This work would be eligible for WIFIA reimbursement. The Technical Committee did not have an opportunity to review the bids and provide a recommendation as the bids were received after the last Technical Committee meeting was held.

Chairperson McLeod (Allen Park) asked whether any other bids went above the scope of work outlined in the RFP. System Manager Tercala responded that the scope of services outlined in the other bids were in line with the RFP. System Manger Tercala also noted that the bidders were aware of the budget and were asked to provide a quote by square footage.

Motion by Dustin Lent (Southgate) and supported by Roberto Scappaticci (Romulus) to approve Intertek-PSI for a not-to-exceed fee of $42,100, which includes optional asbestos testing, for the roofing design services required by RFP 2020-03. The motion authorizes the Chair or Vice Chair to execute the agreement upon review and approval of terms and conditions by DUWA’s General Council. A roll call vote was taken and the motion passed with 84.4% of the vote.

7. Contract Operator Update

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

a. April 2020 MOR

The April 2020 Monthly Operating Report (MOR) was provided in the Board’s pre-meeting packet (Attachment 11). Highlights from the summary and other updates included the following:

• There were no compliance violations in April.
• There were no wet weather events in April.
• Veolia is currently holding interviews for the collection system operator position.
• The warehouse has been vacated and organization of the new warehouse area is in progress.
• Veolia is still waiting on EGLE approval for the sampling line relocation.
• The number of Miss Dig tickets were low in April, but were much higher in May.
• All visitors are required to self-screen before entering the DWTF.
• Some glycol was received from the airport in April, but the airport discontinued its glycol usage last week.
• Preventative and corrective maintenance are within targets.
• Most of the equipment currently out of service was planned for.
• PFAS effluent concentrations are decreasing toward 12 ng/L.
• Sludge remains low due to the dewatering process and polymer feed optimization.
• Video monitors were installed throughout the DWTF to allow for smaller group trainings and meetings and allow for social distancing.
• There was one bypass event in May on May 19^th when approximately 16 MG were bypassed.
• Veolia is implementing the VIOS program to help them build dashboards and review metrics related to electrical usage. Electrical meters will also be tied in with this program to identify where electrical usage can be reduced.
• Jason Tapp covered various maintenance activities at the DWTF
  • Ten vibration dampeners were replaced while Centrifuge No. 2 was out for repair.
  • Some preventative maintenance was completed on aerated grit tank No. 3.
  • Lighting in the secondary chemical building was upgraded to LED.
  • Raw sewage pump #6 was repaired, reinstalled, and put back in service.
  • New oil feed lines were installed on Centrifuge No. 2.

Jim Taylor (Van Buren Township) stated that he appreciates the detailed electrical consumption review and also asked whether the records Veolia was storing in the warehouse were records that need to be returned to Wayne County. Program Manager Irving responded that the warehouse is owned by Wayne County and Veolia was paying rent to Wayne County to use the warehouse to store Wayne County records not related to the wastewater plant. These records have now been transferred to Wayne County’s warehouse for storage and Veolia will no longer need to pay rent for the warehouse.

8. Treasurer’s Report

a. Non-Residential User (NRU) Fee Meeting on June 17, 2020

Beth Bialy, of Plante Moran, reminded the Board that the Non-Residential User (NRU) Fee meeting will take place on June 17, 2020 at 1:00pm via Zoom. Topics discussed will include the background of the NRU fee, how it fits into the IPP program, the survey that was sent to all communities, and how the fee is computed. All communities have responded to the survey.

b. Approval of FY2019 Audit Report

Beth Bialy, of Plante Moran, reviewed DUWA’s CY2019 Financial Audit Report (Attachment 12). There was about $23M in unrestricted cash and about $17M in restricted cash which includes debt service, rate stabilization, and the tunnel repair. There was about $221M in total assets and $123M in total debt/liabilities. DUWA’s total net position at the end of 2019 was about $97.7M.

The end of audit letter noted a few areas for improvement including a lack of segregation of duties, which includes access to cash and reconciling bank accounts. Jason Couture (DUWA Treasurer, Taylor) and Doug Drysdale (Riverview) will work to put controls in place to mitigate the lack of segregation of duties. It was also identified that there was not a second review of the self-reported billings by communities to DUWA, specifically for Riverview and Wyandotte. Jason Couture (DUWA Treasurer, Taylor) has agreed to review the self-reported billings. Lastly, the 2019 SRF bond payments were inadvertently left off of the invoice register distributed to the Board so it is recommended that a process be put in place to account for the numerical sequence of the entire check run for the calendar year to ensure all invoices are included in the Board’s packet for approval.

The audit opinion is that the financial statements provided present fairly, in all material respects, the financial position of DUWA as of December 31, 2019, and the changes in its financial position and cash flows for the year ended in accordance with accounting principles generally accepted in the USA.   

Motion by Rick Rutherford (Belleville) and supported by Dave Flaten (Ecorse) to approve the 2019 annual audit performed by Plante Moran, along with the end of audit letter, and to direct Plante Moran to upload the financial statement and letter to the Michigan Department of Treasury, as required by Public Act 2 of 1968. Motion passed unanimously.

c. Quarterly Financial Statement – 2020Q1

Accountant Doug Drysdale reviewed the quarterly financial statement for Quarter 1 of CY2020 (Attachment 13). A percentage of budget used column has been added, and it would be expected to be about 25% after the first quarter. Currently, the operating revenue is at 24.5% of budget used. Some payments have been delayed due to COVID. Interest rates have also decreased due to COVID. The SRF billings to communities are included in other revenue, and the debt payment was not made until April so this is not yet reflected in the debt service. Overall, DUWA is at 25.45% and is on pace for what was budgeted. Administration costs are at 21% of budget used. There have been more expenditures in capital outlay which will be reflected in the next quarterly financial statement. There is a net surplus of about $3M. The balance sheet shows that the total assets are about the same as they were at the end of 2019. Accounts receivable is slightly up.

DUWA’s Treasurer Jason Couture (Taylor) asked whether any communities have seen a decrease in usage noting that the City of Taylor has seen a reduction in volume used, especially with the commercial users. Doug Drysdale (Riverview) responded that he has not yet received all of the payments for the first quarter so he has no comment. Jim Taylor (Van Buren Township) stated that Van Buren Township has seen a decrease in usage and noted that GLWA reported they had a 5% reduction in sales. System Manager Tercala noted that IPP closures are being tracked and also mentioned that while commercial usage is decreasing, residential usage is increasing for water.

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 14). The invoice register included 53 invoices due for a total of $1,892,066.89. Largest invoices included those to Veolia for O&M services, Walsh for their effort on the biosolids project, 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

a. Future CY2020 Board Meeting Safety Considerations

There was discussion on how future Board meetings should be held. Dustin Lent (Southgate) recommended holding in-person Board meetings with social distancing measures put in place as there is value in meeting in-person. Dave Flaten (Ecorse) supported this recommendation. Jim Taylor (Van Buren Township) agreed that there is value in building working relationships via in-person meetings, but also noted that there are advanced technological capabilities and both in-person and virtual meetings should be available as it also eliminates travel time. Chairperson McLeod (Allen Park) supported this recommendation as it would allow for everyone to participate. Dustin Lent (Southgate) noted that it can be difficult to allow for both in-person and virtual meetings as there can be lag with the screen and/or audio and Keith Boc (Taylor) added that not everyone has cameras at home. Dustin Lent (Southgate) also offered to use Southgate’s chambers for the next Board meeting if the City of Taylor is not yet open.

Dustin Lent (Southgate) also mentioned that it may be best to allow committee meetings to be held virtually. Greg Mayhew (Wyandotte) added that it may be difficult to social distance due to the large number of attendees. System Manager Tercala added that there has been more engagement in the virtual Technical Committee meetings, and the use of PowerPoint has worked well.

It was determined that the next Board meeting will take place at Taylor City Hall provided the City is open, and System Manager Tercala will work with Keith Boc (Taylor) on logistics. It was also determined that all committees can meet either in-person or virtually, whichever they prefer. System Manager Tercala will follow up with committee members to determine how they would like to proceed for future meetings.

11. Next Meeting Date: Thursday, July 9, 2020 (9:00 AM; Taylor City Hall)

Chairperson McLeod (Allen Park) reminded the Board that the next meeting would be on Thursday, July 9, 2020 (9:00 a.m. Taylor City Hall) with social distancing measures put in place.

12. Adjournment

There being no other business, Chairperson McLeod (Allen Park) announced that a motion to adjourn would be in order. Motion by Keith Boc (Taylor) and supported by Dustin Lent (Southgate) to adjourn the meeting. Motion passed unanimously at 11:05 AM.

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

Attachments

1. Meeting Agenda
   2. May 14, 2020 DUWA Board Meeting Minutes
   3. Monthly Legal Update (by Fausone Bohn)
   4. System Manager Report for June 2020 Board Meeting (by OHM Advisors)
   5. Rate Consultant Scope of Work (by OHM Advisors)
   6. DUWA Biosolids Dryer Facility Monthly Progress Summary (by Veolia)
   7. Request to Authorize Veolia for Critical Repair of Centrifuge No. 1
   8. Request to Authorize Alfa Laval for Purchase of Centrifuge Spare Bowl Assembly
   9. Request to Enter into Contract Negotiations with Inland Water for Alkali Sewer Rehabilitation
   10. Request to Authorize Intertek-PSI for Inspection and Design of Critical Roof Repairs (WIFIA Prj #4.10)
   11. Monthly Operating Report for April 2020 (by Veolia)
   12. Request for Approval of DUWA’s Annual Audit Report for CY2019
   13. Quarterly Financial Statement – 2020Q1 (By Doug Drysdale)
   14. Invoice Register, dated June 5, 2020 (by DUWA Treasurer)