DOWNRIVER UTILITY WASTEWATER AUTHORITY

NOVEMBEMBER 12, 2020 MEETING MINUTES

VIRTUAL MEETING (due to COVID19)

1. Roll Call and Introductions

DUWA Chair Gail McLeod (Allen Park) called the virtual meeting to order at 9:01 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, Brownstown Township, Ecorse, Lincoln Park, Riverview, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. A quorum (at least 7 members) was present.

John Selmi (Dearborn Heights) joined the meeting shortly after roll call was taken.

2. Approval of Agenda

Copies of the Agenda were made available prior to the meeting (Attachment 1). Motion by Dave Flaten (Ecorse) and supported by Dustin Lent (Southgate) to approve the Agenda.

Due to the meeting being held virtually, a roll call vote was completed for Board actions. A roll call vote was taken to approve the agenda. The motion passed with an affirmative vote by all attending members. Motion passed unanimously.

3. Approval of Minutes from September 10, 2020 Board Meeting

a. October 8, 2020 Board Meeting

Copies of the meeting minutes from the October 8, 2020 Board Meeting were distributed by email prior to the meeting (Attachment 2). Motion by Roberto Scappaticci (Romulus) and supported by Bill Turner (Brownstown) to approve the minutes. A roll call vote was taken and the motion passed with an affirmative vote by all attending members. Motion passed unanimously.

b. October 22, 2020 Special Board Meeting
Copies of the meeting minutes from the October 22, 2020 Special Board Meeting were distributed by email prior to the meeting (Attachment 3). Motion by Doug Drysdale (Riverview) and supported by Greg Mayhew (Wyandotte) to approve the minutes. A roll call vote was taken and the motion passed with an affirmative vote by all attending members. Motion passed unanimously.

4. Legal Update
Attorney Jim Fausone, of Fausone Bohn, provided the Legal Update.

a. General Counsel Monthly Report
Attorney Fausone provided a verbal summary of the monthly legal update. A written summary was provided in the pre-meeting Board packet (Attachment 4). Attorney Fausone noted the following highlights from the monthly legal update:

• The Southgate-Wyandotte Bypass Agreement is pending final review by SWRDDD. Upon their approval, the Agreement will be executed by the Chair or Vice Chair (per previous Board approval).
• Fausone Bohn has been working with OHM and Raftelis to draft the rate consultant contract documents.
• Fausone Bohn is participating in the Finance and Legal Committee meetings to discuss the introduction of a refund/credit/deduct policy.
• The System Manager review was conducted via Survey Monkey, and the results of the review were sent to the Board members. Comments are now being received on how to improve the review process next year.
• Virtual meeting policies will be discussed later in this meeting.

5. System Manager Update

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 latest PFAS sampling at the DWTF showed a significant increase in PFAS effluent concentrations, which may result in a EGLE requirement for increased sampling frequency. Increased sampling and monitoring at suspected industrial sources is occurring as a part of the IPP program to identify locations where PFAS can be reduced at the source. In-place minimization plans are being implemented.
• The SCADA implementation project is gaining more traction as border crossing issues are being resolved. Coordination is occurring between Wayne County and Tetra Tech to refine the software licensing split.
• Riverview presented a request at the last Technical Committee meeting for a new connection to the tunnel to mitigate basement backups in a portion of their system. Further discussion is planned at the next Technical Committee meeting prior to bringing the request to the Board.
• The manufacturer of the UV disinfection equipment has developed newer, more efficient equipment. Costs for replacement parts of the existing equipment are increasing. An evaluation of alternative approaches is being initiated. The Team are considering a transition of the DWTF’s existing equipment over to the new equipment in the next few years.
• The draft agreement on the WIFIA loan was presented to the EPA. Closing is projected to occur in December or January.
• The 2021 draft budget will be presented later in this meeting. There has been discussion on the policy for the use of reserves, and it is expected that the rate consultant Raftelis will also provide input.
• Based on the success of the Year 1 Summary that provides information of the system to the communities, a Year 2 Summary will be developed.

Kerry Morgan (Riverview Attorney) asked whether legal needs to be involved to provide a bond to cover the costs for PFAS reduction. System Manager Kaunelis responded that this is a problem nation-wide and EGLE has developed documents that discuss strategies to address this. Additionally, local PFAS limits will be developed as a part of the NPDES permit renewal in 2021. DUWA Attorney Jim Fausone noted that the local limits is the most economic solution and PFAS sampling is very expensive. Kerry Morgan added that EGLE is taking action so it would be good for DUWA to take action as well such as posting a bond to ensure the system is not tainted. Chairperson McLeod (Allen Park) asked what the penalties are and who is bearing the costs noting that financial actions/penalties to the industrial users would be most effective. Veolia Program Manager Kelly Irving responded that they have requested industrial users to increase their sampling frequencies and develop PFAS minimization plans. Sampling of the industrial users is at the industrial users’ expense. System Manager Kaunelis suggested to have a joint meeting with the Technical and Legal Committees to discuss strategies going forward. Keith Boc (Taylor) noted that those working with the IPP program contact industrial users so they are aware of the PFAS concerns and they are actively being addressed.

b. Biosolids Dryer Facility Project
The biosolids dryer facility monthly progress report is provided in the pre-meeting Board package (Attachment 6). Phase 2 of the Biosolids Dryer Facility project was approved at the last Special Board meeting. Work is in progress and Walsh is working with numerous contracts for all of the subcontractors. There may be a potential savings on the trucking, and further technical discussions are taking place.

c. Insurance Renewal Indications
AON provided a memo detailing expected cost increases on property and liability insurance based on industry rates (Attachment 7). There is an expected 25% increase on property and liability insurances, but AON is working with other carriers to provide multiple bids. Results of this work and recommendations for policy renewals will be presented at the next Board meeting. 

6. Requests for Authorizations
System Manager Tercala provided the following requests to the Board.

Bill Turner (Brownstown Township) left the meeting before the Requests for Authorizations.

a. Inland Water Change Order No. 2
The Alkali Sewer Rehabilitation project is underway with HRC as the project’s engineer and Inland Waters as the general construction contractor. The intent of Change Order No. 2 is to pay for Wayne County permit fees that were not anticipated during the design phase (Attachment 8). Change Order No. 2 is for a total of $11,255, which includes a $7,000 refundable bond. The Contractor’s retainage will not be released until the refundable bond has been returned. The total cost for Change Order No. 2 may range from $4,255 to $11,255 depending on the amount of Wayne County-completed inspections and/or restoration costs assigned to the bond. The cost for this Change Order will come out of DUWA’s 10% contingency budget, and the remaining contingency will be $132,993 if the total cost of this Change Order is utilized. HRC, as the project engineer, recommends payment of this Change Order. This item has not been reviewed by the Technical Committee.

Motion by Jim Taylor (Van Buren Township) and supported by Dave Flaten (Ecorse) to authorize the Chair or Vice Chair to sign Inland Waters’ Change Order No. 2. Change Order No. 2 relates to Wayne County permit requirements for the Alkali Sewer Rehabilitation project. Change Order No. 2 is for a not-to-exceed fee of $11,255. Change Order No. 2 shall prompt a reconciled change order at the end of the project for the total cost incurred. A roll call vote was taken, and the motion passed with 87.6% of the vote. Motion passed unanimously with all attending members.

b. Resolutions Associated with WIFIA Loan
DUWA’s Professionals have been working with PFM (Financial Advisor) and Dykema (Bond Counsel) in support of the WIFIA loan. The teams are actively engaged with the EPA in loan agreement negotiations with the desire to close the loan in December 2020. As part of the WIFIA process, it is necessary for the Board to adopt certain draft bond resolutions. The first is the resolution authorizing publication of notice of intent to issue sewage system revenue bonds, and the second is the draft bond series resolution (Attachment 9). The total project cost for the WIFIA loan is anticipated to be about $36M. The WIFIA loan would cover 49% of the total cost (~$17.6M) and DUWA would be responsible for a 51% match (~$18.4M). The resolutions contemplate a loan amount up to $20M as a conservative ceiling only. The total cost for ordinance publication is anticipated to be no more than $4500 and will be rolled into the loan’s cost of issuance.

Motion by Roberto Scappaticci (Romulus) and supported by Jim Taylor (Van Buren Township) to adopt the Notice of Intent Resolution and authorize the Chair, Vice Chair, or their designee to take such actions as required by the Resolution, including, but not limited to, publication in a newspaper of general circulation in DUWA’s municipalities. A roll call vote was taken, and the motion passed with 87.6% of the vote. Motion passed unanimously with all attending members.

Motion by John Selmi (Dearborn Heights) and supported by Roberto Scappaticci (Romulus) to adopt the draft Series Bond Ordinance Resolution and authorize the Chair, Vice Chair, or their designee to take such actions as required by the Resolution, including, but not limited to, publication in a newspaper of general circulation in DUWA’s municipalities. A roll call vote was taken, and the motion passed with 87.6% of the vote. Motion passed unanimously with all attending members.

c. Rate Consultant Services (Raftelis)
At the last Board meeting, the Board approved the advancement of contract negotiations with Raftelis, the selected rate consultant who will advise on considerations related to the existing and future rate methodology options. OHM worked with Raftelis on the proposed scope and budget and a significant reduction of costs was realized by transitioning from in-person meetings to virtual meetings, and also by combining meetings. The proposed fee was reduced from $217,535 to $139,855 (Attachment 10). The major elements of the scope were not impacted by the negotiations. Raftelis will have virtual touch points with the Board and Committees via town hall meetings. The scope also budgets for up to one optional meeting for each member community to discuss with Raftelis their concerns with the existing rate methodology and their thoughts on a fair and equitable revised methodology. Should any community desire to meet with Raftelis beyond this meeting, Raftelis may provide that service, but it will be paid for by the community rather than DUWA. A DUWA Professional will attend the one-on-one meetings.

DUWA’s current rate year includes up to $50k for rate consultant efforts, but the rate method review is anticipated to be a multi-year process. In the 2-year, 2021-2022 budget package, up to $150k has been included over the course of the two-year process. The Selection Committee recommended Raftelis as they were the most qualified candidate, and Raftelis’ proposed scope was provided to the Finance Committee for their review and feedback.

Motion by Roberto Scappaticci (Romulus) and supported by John Selmi (Dearborn Heights) to authorize the Chair or Vice Chair to execute an agreement with Raftelis, subject to mutually agreeable terms and conditions between legal counsels, and in accordance with Raftelis’ November 5, 2020 rate consultant proposal for a not-to-exceed fee of $139,855. A roll call vote was taken, and the motion passed with 87.6% of the vote. Motion passed unanimously with all attending members.

7. Contract Operator Update

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

a. September 2020 MOR

The September 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:

• The DWTF is now fully staffed as a warehouse clerk and collection system operator have been hired.
• Flows have been generally low, but are as expected per the last 12 months.
• There have been 353 MissDig tickets.
• Precautions continue to be taken regarding COVID-19 especially as more contractors are visiting the DWTF for ongoing construction activities. There is a separate, streamlined screening process for those working on the biosolids dryer facility project.
• Plant operations were in compliance, and the Phosphorous levels have remained below the limit with the help of the online Phosphorous monitoring.
• There was a large rain event in early September that required the use of the Tunnel, but no bypass was necessary.
• The Polymer makeup water on the centrifuge was converted to Screened Final Effluent water resulting in a small cost savings.
• Many maintenance activities were completed including the reinstallation of Tunnel Pump #3, manhole repairs, and IPP meetings with industrial users.
• Veolia is still waiting on EGLE’s approval of the sampling line relocation. Veolia is drafting the SOP and will send it to EGLE for approval once finalized.
• In looking forward to the October MOR:
  o There have been three visits from insurance companies as part of DUWA’s renewal process. They have focused on asset management. Veolia shared their asset management report with the insurance companies.
  o Low flows can cause challenges with operations, but no major issues to date even though low flows are being experienced by the system.
  o The DAF building trenches have been filled in.

b. Flow Metering Contract Renewal Preview
Veolia has a two-year contract with DUWA to manage its flow metering program. Veolia needs the ability to obtain and analyze the data at the rain gauges and flow meters to better manage the flows at the DWTF. The proposed approach is to use cellular technology with the flow meters and rain gauges to allow for near real-time data to be pushed directly to the H2OMetrics software, which is a user-friendly tool that will be used for data analysis by Veolia and the member communities. The cellular technology and H2OMetrics software will likely cost less over the next two years than the current approach. The conversion of the flow meters to cellular technology and the up-front costs for the H2OMetrics software total about $125k. More detail will be presented at the next Technical Committee meeting and will be brought to the Board for approval at the December Board meeting.

c. Asset Management
The Asset Management report has been submitted to EGLE and uploaded to BaseCamp for the Technical Committee to review. The report includes information on annual condition assessment which includes predictive testing (vibration testing and thermography). Predictive testing will now be performed quarterly instead of annually. The asset database was updated and obsolete equipment was removed from the database. The updated cost model shows that the DWTF is on track with what was expected for repairs and replacements.

8. Treasurer’s Report

a. Quarterly Financial Statement – 2020Q3
Accountant Doug Drysdale (DNS Financial Services; Riverview) presented the Quarterly, Q3, Financial Statement (Attachment 12). The balance sheet shows that the US Bank and Chase Bank cash funds are about at the same level of cash ($40M) as the beginning of the year. Accounts receivable has increased and there have been no changes on fixed assets. The prepaid insurance balance is the last quarter of the unamortized cost. Liabilities include bonds payable, which will be adjusted at the end of the year, and accrued interest, which is the amount due as of September 30, 2020 for the bonds. The fund balance will be adjusted at the end of the year. The net revenue is about $727k more than expenditures.

Chairperson McLeod (Allen Park) asked what the uncollectable accounts receivable are. Doug Drysdale (Riverview) responded that it is a reserve booked for the end of the year that comprises 10% of the non-municipal customers. It is a standard setup per accounting procedures.

On the revenues and expenditures report, revenues are on track at about 77% of the budget at 75% of the way through the year. Interest rates have dropped substantially due to COVID-19 causing interest earnings to go from $40k-$50k per month to $1000 per month. There are ongoing discussions with US Bank and Chase Bank to identify other ways to increase interest earnings. In regards to the SRF debt, most of the debts have been paid through October 1, 2020. Plant operation expenditures are at about 72.8% of the budget used, and other expenditures are at about 61.4% of the budget used. The capital outlay projects include the biosolids dryer facility and other WIFIA loan projects, so some of these costs will be reimbursed.

b. CY2021-2022 Budget Preview
Accountant Drysdale presented the CY2021-2022 (2-year) Budget Preview (Attachment 13). The capital outlay and WIFIA financing are currently being worked on in the final version of the budget, which will be presented to the Board for approval at the December Board meeting. Focusing on 2021, the Other Revenue items include SRF billing to communities and loan proceeds on WIFIA. In the Operating Revenue category, the sewage disposal charges increased by 4% from last year, and the industrial surcharges decreased due to AmeriCane Sugar going out of business. The excess flow charges will be $870k more than what is presented as only 11 months were included in the budget. DUWA will be paying on the principal of its debts in 2021, and $21,650 was included in the debt schedule for WIFIA bond issuance fees. The budget for plant operations is similar to that of last year’s with inflation added. The sludge hauling/disposal item is budgeted to be $1.2M in 2021, but is expected to be $0 in 2022 after the biosolids dryer facility project is complete.

The budget for financial services increased by $119k to include rate consultant efforts, WIFIA fees, and insurance premiums. The capital outlay budget includes the Alkali Sewer and Biosolids Dryer Facility projects, which will be 49% reimbursable. The dollar amounts for these projects may change in the final version of the budget.

Chairperson McLeod (Allen Park) asked when the Brownstown Township repayment ends. Accountant Doug Drysdale (Riverview) responded that the repayment to Brownstown Township will end at the end of 2023. Chairperson McLeod (Allen Park) also asked why the operator management fees significantly decrease in 2022. Accountant Doug Drysdale (Riverview) responded that these fees are 10% markup of the reconciled utility costs paid by Veolia, but there will be no sludge hauling and disposal in 2022 so the fee drastically reduced. Roberto Scappaticci (Romulus) asked whether the $260k for electrical fees is per year or per month. Treasurer Jason Couture responded that this is a monthly cost and usually fluctuates between $250k-$300k per month. Roberto Scappaticci (Romulus) asked if Wayne County has ever performed an energy audit on the DWTF as it would be good to switch to LED lights and look for other energy savings. Kelly Irving responded that Veolia has been working to find energy efficiencies, but the energy demand during wet weather significantly increases due to the operation of the pumps. Veolia plans to install electrical meters in the plant and on larger equipment to track daily usage, and electricians have already replaced numerous indoor lights to LED. System Manager Kaunelis added that Wayne County did perform an energy audit and Veolia has implemented some energy savings through their O&M contract since they took over operations. Opportunities for grant funding is also being considered.

c. Pending Invoices
Accountant Drysdale 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 59 invoices due for a total of $2,021,757.31. Largest invoices included those to Veolia for O&M services, Walsh for their effort on the Biosolids Dryer Facility project, Inland Waters for their effort on the Alkali Sewer Rehabilitation project, and Wyandotte for utility services. Motion by John Selmi (Dearborn Heights) and supported by James Krizan (Lincoln Park) to pay the amended invoice register. A roll call vote was taken and the motion passed unanimously with all attending members.

9. Public Comment

There was no public comment.

10. Other Business

For the Board’s consideration, Attorney Fausone noted that there will be a policy change to the Open Meetings Act in 2021, and the policy is currently being drafted. Virtual meetings will likely only be able to be conducted under special circumstances in 2021, and under even more limited circumstances in 2022.

11. Next Board Meeting Date: Thursday, December 17, 2020 (Virtual via Zoom)

Chairperson McLeod (Allen Park) reminded the Board that the next meeting would take place on Thursday, December 17, 2020 virtually via Zoom. This meeting is being held on the third Thursday of the month instead of the second Thursday in consideration of the timeline of the WIFIA work that is being completed and requests for approval that will require Board action.

12. Adjournment

There being no other business, Chairperson McLeod (Allen Park) announced that a motion to adjourn would be in order. Motion by Dustin Lent (Southgate) and supported by Jim Taylor (Van Buren Township) to adjourn the meeting. A roll call vote was taken and the motion passed unanimously with all attending members. The meeting adjourned at 10:28 AM.

Meeting Minutes Prepared by:

Mackenzie Johnson, OHM Advisors, Engineer

Meeting Minutes Reviewed by:

Lambrina Tercala, OHM Advisors, DUWA System Manager

 Attachments

1. Meeting Agenda
   2. October 8, 2020 DUWA Board Meeting Minutes
   3. October 22, 2020 DUWA Special Board Meeting Minutes
   4. Monthly Legal Update (by Fausone Bohn)
   5. System Manager Report for November 2020 Board Meeting (by OHM Advisors)
   6. Biosolids Dryer Facility Project November 2020 Monthly Progress Summary (by Veolia)
   7. January 1, 2021-22 DUWA Insurance Renewal Update
   8. Request for Approval of Inland Waters’ CO#2 for Wayne County Permit Fee Reimbursement
   9. Request to Adopt WIFIA Resolutions
   10. Approval of Raftelis as Rate Consultant for Rate Methodology Review
   11. Monthly Operating Report for September 2020 (by Veolia)
   12. Quarterly Financial Report, Q3
   13. CY2021-2022 Budget Preview
   14. Invoice Register, dated November 5, 2020 (by Doug Drysdale)