DOWNRIVER UTILITY WASTEWATER AUTHORITY
MARCH 10, 2022 MEETING MINUTES
CITY OF TAYLOR COUNCIL CHAMBERS WITH VIRTUAL OPTION
1. Roll Call and Introductions
DUWA Chair Gail McLeod (Allen Park) called the hybrid meeting to order at 9:02 AM and asked for roll call to be taken. At the time of roll call, voting representatives were in attendance from 9 communities: Allen Park, Dearborn Heights, Ecorse, Lincoln Park, River Rouge, Riverview, Southgate, Taylor, 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 Doug Drysdale (Riverview) and supported by Dustin Lent (Southgate) to approve the Agenda. The motion passed unanimously by all attending members.
3. Approval of Minutes from February 10, 2022 Board Meeting
Copies of the meeting minutes from the February 10, 2022 Board meeting were distributed by email prior to the meeting (Attachment 2). Motion by Doug Drysdale (Riverview) and supported by Dustin Lent (Southgate) to approve the minutes. The motion passed unanimously by all attending members.
4. Legal Update
Attorney Brandon Grysko, of Fausone Bohn, provided the Legal Update.
a. General Counsel Monthly Report
Attorney Grysko stated that a written summary of the monthly legal update was provided in the pre-meeting Board packet (Attachment 3). The Fausone Bohn team has been assisting the System Manager with various contract reviews, and has been working with the Legal Committee to develop policy updates and address insurance matters.
b. U.S. Bank Successor Trustee
Attorney Grysko stated that the U.S. Bank National Association has transferred its corporate trust to its affiliate, U.S. Bank Trust Company, National Association as of January 29, 2022 (Attachment 4). The DUWA Master Bond Ordinance requires the Board to ratify and confirm the appointment of the U.S. Bank Trust Company, National Association as the successor to U.S. Bank National Association. Chairperson McLeod (Allen Park) stated that she understands this is simply a name change with no operational changes or impacts to DUWA.
Motion by Dave Flaten (Ecorse) and supported by James Krizan (Lincoln Park) to ratify and confirm the appointment of U.S. Bank Trust Company, National Association as successor to U.S. Bank National Association as trustee. The motion passed unanimously with all attending members.
c. Board Member Appointment Policy
The Fausone Bohn team worked with the Legal Committee to develop a Board Member Appointment Policy (Attachment 5). DUWA’s Articles of Incorporation state that the governing body shall be made up of elected officials and municipal employees. The Policy states that a municipal employee can mean a person either directly employed by the municipality or an individual signed to a personal service contract with the municipality. This Policy was approved by the officers at the officers meeting and was approved by the Legal Committee with few comments. Page 2 of the Policy includes bracketed language for the Board to consider regarding the term limit of an individual signed to a personal service contract.
Dustin Lent (Southgate) proposed removing the 6-month term limit of an individual signed to a personal service contract. Kerry Morgan (Riverview’s attorney) stated that he understood that the purpose of the policy was to allow contract employees to serve on the Board in an interim capacity only – implying short duration. That is why there was a recommendation in the Legal Committee to include the 6-month term. Dustin Lent (Southgate) responded that if the mayor or governing body of the municipality wants to enter a long-term personal service contract with someone who is more knowledgeable of the DUWA system, the Board does not want to take that decision away from the municipality. Chairperson McLeod (Allen Park) noted that this issue arose when Jim Taylor (former Van Buren Township commissioner) retired. Recognizing his knowledge of the system, the Board wanted him to continue to serve even after he retired from Van Buren Township, and this policy would allow him, and others, to do so via a personal service contract. Kerry Morgan (Riverview’s attorney) stated that the original Articles of Incorporation addressed this; it states elected officials and municipal employees can serve on the Board. Attorney Morgan feels the policy, without the time duration, expands the definition of a “municipal employee.” Mayor Tim Woolley (Taylor) responded that Taylor considers all of their personal service contractors as municipal employees.
Motion by Dustin Lent (Southgate) and supported by Dave Flaten (Ecorse) to adopt the Board Member Appointment Policy with the 6-month term limit removed. The motion passed unanimously with all attending members.
d. Resolution Regarding Use of ARPA Funds
The Fausone Bohn team developed a resolution regarding the use of American Rescue Plan Act funds (ARPA) (Attachment 6). The federal government made funds available to communities in response to the financial damaged caused by the COVID-19 pandemic. This resolution is a means by which DUWA can encourage its member communities to use a portion of their ARPA funds to support the improvement of water and sewer infrastructure. This would benefit the community as well as the residents. This resolution may encourage other government entities, such as Wayne County, to consider DUWA when they allocate their ARPA funds.
Motion by Mayor Bill Bazzi (Dearborn Heights) and supported by James Krizan (Lincoln Park) to adopt the Resolution Regarding the Use of American Rescue Plan Act Funds. The motion passed unanimously with all attending members.
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 provided in the pre-meeting Board packet for the System Manager Report (Attachment 7).
a. System Manager Monthly Report
System Manager Kaunelis noted the following highlights from the System Manager Report:
- The NPDES permit application for renewal has been submitted, and a meeting was held with EGLE to review. EGLE reiterated their desire to reduce the frequency of blending, with the goal of eventually eliminating blending. While DUWA continues to take measures to reduce blending frequency, DUWA hopes to focus on blending reduction, but not elimination, as blending will continue to be necessary at times during large rain events.
- The rain event on February 17th produced about 1.2-inches of rain in conjunction with ongoing snow melt. The DWTF handled 137 MGD for about 12 hours. Recent improvements to the secondary treatment allowed for increased flow capacity at the plant, which allowed for the plant to handle this flow without the need for blending. The operations staff also did a great job during this rain event.
- Most ongoing construction projects are beginning to wrap up. The next round of improvements will be started soon. Meetings were held with the three as-needed engineering firms to discuss the upcoming projects. These upcoming projects include the development of a long-term capital improvement plan, HVAC improvements in the electrical room, and the development of a UV disinfection replacement plan. The UV manufacturer no longer supports the equipment currently being used at the DWTF, so major revisions to the flow channels will be necessary or another method of disinfection will have to be considered.
- Individual meetings with most of the member communities have been held to discuss the alternate rate methodology process and to review the calculations. Some questions were raised regarding the flow metering data as it is planned to be used in the cost allocations. A lot of work is ongoing to ensure communities are comfortable with the accuracy of the flow meter data.
- SEMCOG has been working on updating the region’s Water Resources Plan and invited OHM to participate in the steering committee. This is a good opportunity to obtain regional support on DUWA’s issues such as funding and blending issues. Although no other Detroit communities have blending issues, this topic relates to water quality which all communities consider to be important. As a part of this steering committee, smaller work groups will be formed to focus on particular topics, with the next topic being storm water. The System Manager will work with the Technical Committee to seek their input on storm water issues even though DUWA does not directly deal with storm water. Information for past and upcoming meetings will continue to be provided in the System Manager Update.
b. Biosolids Dryer Facility Project
i. Project Cost Savings Update
Projected cost savings for the biosolids project are summarized in the pre-meeting Board package (Attachment 8). The new biosolids dryer facility will use a significant amount of natural gas. Natural gas prices are higher than previously anticipated, which impacts the project’s anticipated cost savings. The project pro forma was updated, and the biggest increase is the natural gas cost. Initially, a cost of $550k for natural gas was anticipated over the life of the dryer project, and now based on the current natural gas market, a cost of $782k is anticipated. However, it is expected that there will be an increased savings in biosolids hauling, which will help offset the increased natural gas costs. Additionally, based on the current market, landfilling may be more desirable compared to land application, but these costs will continue to be monitored and compared. Overall, the project will still result in a cost savings.
ii. Veolia CPM Update
The biosolids dryer facility monthly progress report is provided in the pre-meeting Board package (Attachment 9). Construction is progressing well, and start-up of the dryers is anticipated to occur in April.
6. Other Requests for Authorizations and Approvals
System Manager Lambrina Tercala, of OHM Advisors, provided the following requests to the Board.
a. Alternate Rate Method Additional Efforts
Raftelis, ASI, and OHM have been extensively involved with the development of the new alternate rate methodology, and have prepared proposals to complete additional efforts related to this work (Attachment 10).
Raftelis has been continuously working on developing the alternate rate methodology. They are halfway through conducting the one-on-one meetings with the member communities to review the rate calculations in more detail. Overall, the feedback has been positive and shows that the Board and communities are embracing the alternative rate methodology with the caveat that some data refinement is still necessary. Raftelis’ involvement with the one-on-one community meetings is beyond the scope of their existing contract. Raftelis would like to refine the rate methodology model with new data that becomes available and would like to continue supporting community meetings going forward. Raftelis prepared a proposal for this additional effort for a fee of $40,970. In addition, Raftelis’ proposal includes a future effort to review the winter flows in 2022 and to assist with the rate package development and transition to the new rate methodology that will take effect in July 2023 for a fee of $13,895. Raftelis’ proposed not-to-exceed fee for the above work totals $54,865. This fee was not planned for in the budget, however it is recognized that this is an essential effort.
ASI has been supporting Veolia with flow metering efforts and has also supported Raftelis with their development of the alternate rate methodology by reviewing flow metering data. Additional efforts related to reviewing the Allen Park and Ecorse flow metering data as well as updating the community populations with 2020 Census data is necessary for Raftelis to update the rate methodology calculations and model. ASI proposes to complete these efforts for a not-to-exceed fee of $29,400, which was not budgeted for, but would be paid from the Engineering Services line item of the budget.
Dick Hinshon, from OHM, has been working closely with Raftelis and ASI throughout the development process of the alternate rate methodology. He previously served as a technical advisor to DUWA and thus was requested to assist with the alternate rate methodology development due to his extensive historical knowledge of the system. His CY2022 efforts were not budgeted but are recognized to be important to the process. OHM has a budget line item of $300k for System Manager services. The current rate making effort is a one-time effort that is beyond routine System Manager services. As such, OHM asked the Board for support of the additional work. OHM’s proposal for continued System Manager support of the rate methodology includes a not-to-exceed fee of $77,220 based on current billing rates and anticipated hourly efforts. This work will be paid from the System Administrator Services budget line item.
Considering these additional efforts by Raftelis, ASI, and OHM were not anticipated nor budgeted for, a future budget amendment may be necessary.
Dick Hinshon (OHM) complimented the communities stating that everyone has been pleasant to work with even though there have been some concerns and objections. He also stated that the feedback has been positive, and it appears that there is universal acceptance of the new rate methodology despite the fact that some communities will benefit more than others.
Motion by Dustin Lent (Southgate) and supported by Greg Mayhew (Wyandotte) to authorize Raftelis for additional services related to the finalization and implementation of the alternative rate methodology for a not-to-exceed fee of $54,865. This work will be paid from DUWA’s Other Services and Charges section of the budget. Due to this motion being related to authorizing a professional services contract, a roll call vote is required. A roll call vote was taken and the motion passed with 75.99% of the vote (affirmative vote by all attending members). Motion passed unanimously.
Motion by Mayor Bill Bazzi (Dearborn Heights) and supported by Dustin Lent (Southgate) to authorize ASI for continued technical support of the rate methodology development for a not-to-exceed fee of $29,400. This work will be paid from DUWA’s Engineering Services line item of the budget. Due to this motion being related to authorizing a professional services contract, a roll call vote is required. A roll call vote was taken and the motion passed with 75.99% of the vote (affirmative vote by all attending members). Motion passed unanimously.
Motion by Mayor Bill Bazzi (Dearborn Heights) and supported by James Krizan (Lincoln Park) to authorize OHM for continued System Manager support of the rate methodology development at an anticipated additional fee of up to $77,220. This work will be paid from DUWA’s System Administrator Services budget line item. Due to this motion being related to authorizing a professional services contract, a roll call vote is required. A roll call vote was taken and the motion passed with 75.99% of the vote (affirmative vote by all attending members). Motion passed unanimously.
b. Natural Gas Supply
The DWTF will have a significant increase in natural gas usage once the biosolids dryer facility comes online. The natural gas costs no longer flow through Veolia’s O&M contract, in recognition of the future increased usage, as DUWA’s purchase of natural gas can be sales tax exempt when purchased directly by DUWA.
DUWA has retail contracts in place with DTE for transport and Constellation for supply of natural gas to the DWTF. The current unit pricing is $4.50 per dekatherm, inclusive of Constellation’s unit price of $2.90 per dekatherm and DTE’s unit price of $1.60 per dekatherm. Constellation’s current unit pricing is valid through the end of 2022 for existing natural gas demand only.
Veolia relies on SourceOne as their energy sector expert. This outside consultant tracks the natural gas market and advises Veolia on when to lock in rates for future demands based on the targeted budget. Due to the current volatility of the natural gas market, SourceOne recommends that DUWA run out the current contract with Constellation and extend the contract at market rate through December 2023 with the additional demand from the dryer facility (Attachment 11). The actual fee included in the amended transaction agreement will be updated based on the market on the date of the transaction.
The System Manager and Veolia will work with SourceOne over the next few months to determine the level of service and desired budget for the future natural gas demand, and will work on an amended transaction agreement with Constellation. SourceOne will act as a technical advisor to DUWA, through Veolia, for risk management services for the next few months. Ultimately, it is expected DUWA will engage SourceOne in a direct contract to support natura gas purchases.
Motion by Dave Flaten (Ecorse) and supported by Dustin Lent (Southgate) to execute the pending transaction agreement with Constellation for natural gas supply through 2023. This will be paid from DUWA’s Utilities – Natural Gas line item of the budget. The motion passed unanimously with all attending members.
7. Contract Operator Update
Kelly Irving, Veolia’s Program Manager, and Jason Tapp, of Veolia provided the Contract Operator update.
a. January 2022 MOR
The January 2022 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:
- January was a quiet month with relatively low flows, as the maximum flow received was only 55 MGD. This allowed for staff to work on other projects at the DWTF.
- There are currently two open staffing positions; one for a laborer and one for maintenance staff.
- The PFAS effluent was measured to be slightly above the Water Quality Standard, but the February lab report shows the PFAS concentration to be below the Water Quality Standard, so it is hopeful that the concentration will remain low.
- With lower flows at the plant, staff has availability to work on spring cleaning projects inside and outside of the plant.
- Operators have been working closely with the contractors to coordinate shutdown and startup activities in the biosolids room as the biosolids project nears completion.
- Individual meetings were held with operators to develop a plan to increase communication throughout the plant. Previously, not all information was being relayed during shift change. It was determined that a longer shift overlap period was necessary to reduce the amount of information that was falling through the cracks. There has been substantial improvement since then.
- An operations supervisor has been hired to oversee the off-shifts. This supervisor used to be the lead operator at the plant, and has extensive knowledge of the facility. He will work the off-shifts to help support operations as well as support the startup of the dryer facility.
- Consumables are tracking as expected.
- Many maintenance activities have been completed, including the following:
- Over 270 work orders were placed this month. Most of the work is preventative maintenance, but there were about 30 corrective work orders placed. Work orders are being completed quickly.
- Two maintenance professionals were hired in February.
- A new heater was installed in the conveyer building after the previous one failed.
- Two wall-mounted power washers were installed in the UV building so that hoses no longer need to be dragged through the building.
- Corp sleeves and UV bulbs were replaced. A third-party equipment supplier was used for these new parts as they were a cheaper option than the original manufacturer. Trojan, the manufacturer, has significantly increased equipment prices which will force the DWTF to eventually migrate to a different disinfection system.
- A job safety analysis was performed with the electrical team. The team used the bridge crane in the biosolids building to access the high bay lights to replace the lightbulbs.
- Electrical components in the low lift pumps were replaced and are now working well.
- Faulty electrical components on the hydraulic grippers were replaced to reduce leaks.
- A bearing on the rotating assembly of fine screen #4 in the Influent Pump Station was replaced.
- Electricians replaced the contactors in the heaters after they failed.
- Degreasing work was performed to improve cleanliness and safety for staff.
- Some ice was discovered in the Tunnel Pump Station due to moisture/condensation. An inline heater was installed to melt the ice and keep the moisture from freezing.
- A small water main leak was discovered in the plant at the Pennsylvania entrance. This was fixed quickly, but then a larger leak was discovered in February. This leak required replacement of approximately 40 ft. of ductile iron pipe. This leak occurred in the high traffic area for sludge trucks. The repair took two days to complete due to saturated ground conditions on the first day. It is believed the weak spot in the pipe has now been replaced.
Chairperson McLeod (Allen Park) encouraged those who have not yet toured the plant to do so as it is an impressive facility.
8. Treasurer’s Report
a. Quarterly Financial Statement Q42021
Doug Drysdale (Accountant, Riverview) presented the Quarterly Financial Statement for Q42021 (Attachment 13). He noted that all numbers are unofficial and unaudited as the audit will not be completed until May 2022. In the Other Revenue section, the percentage of budget used is 147% due to the WIFIA loan proceeds that were completely drawn down in 2021. The Operating Revenue budget is at 95% used as there is one remaining community whose sewer disposal charges need to be included. This should be resolved this week. The Industrial Surcharges budget used is lower than expected because the Wayne County airport contributed less flow than expected. The Non-Residential User fees are also a bit off as these are still in the process of being sorted out. The Annual Reimbursement to Allen Park budget used is a bit higher than expected because it includes some carryover from the previous year. The Debt Service budget used is about right on target. The Sewer System expenses are at about 65% of the expected budget, and Plant Operations are at about 96% of the budget used. The Capital Outlay expenses are at about 73% of the budget used, and include the Alkali sewer rehabilitation project, the biosolids dryer facility project, the roofing repairs, and the centrifuge replacement project, among others. The overall net of revenues and expenditures is a deficit of about $2.8M, which was expected as some reserves were planned to be used for the capital outlay projects.
The balance sheet shows that DUWA has about $640k less in cash than at the beginning of the year. The Accounts Receivable shows an improvement of about $800k from the beginning of the year, which shows that the communities and IPP customers have been making timely invoice payments. The Fixed Assets and Bonds Payable numbers will be updated as a part of the audit.
b. Aging AR
Treasurer Jason Couture presented the Aging Accounts Receivable report (Attachment 14). Treasurer Couture stated that most communities are up-to-date on their payments. Belleville has an outstanding payment of about $10k that is over 60 days, Van Buren Township has an outstanding payment of $1000 that is over 60 days, and Dearborn Heights has an outstanding payment of about $8.5k that is over 90 days. These bills are related to adjustments that have been made. Treasurer Couture encouraged these communities to pay these invoices as soon as possible.
c. Pending Invoices
Treasurer Jason Couture presented the invoice register for a request for payment. The invoice register was provided in the pre-meeting packet (Attachment 15), and a revised invoice register was provided the day before the meeting. The revised invoice register included 43 invoices due for a total of $8,257,583.23. Largest invoices included those to US Bank for semi-annual SRF bond and WIFIA loan payments, Veolia for O&M and unit cost reconciliations as well as for the pump gripper repair capital project, Walsh for the biosolids dryer facility project, and Wyandotte for utility services.
Motion by Mayor Tim Woolley (Taylor) and supported by Greg Mayhew (Wyandotte) to pay the invoice register. The motion passed unanimously with all attending members.
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 Board Meeting Date: Thursday, April 14, 2022 (9:00 AM; In-Person)
Chairperson McLeod (Allen Park) reminded the Board that the next meeting would take place on Thursday, April 14, 2022 at 9:00 AM in-person at Taylor City Hall.
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 Greg Mayhew (Wyandotte) to adjourn the meeting. Motion passed unanimously at 10:03 AM.
Meeting Minutes Prepared by:
Mackenzie Johnson, OHM Advisors, Engineer
Meeting Minutes Reviewed by:
Lambrina Tercala, OHM Advisors, DUWA System Manager
- Meeting Agenda
- February 10, 2022 DUWA Board Meeting Minutes
- Monthly Legal Update (by Fausone Bohn)
- S. Bank Successor Trustee (by Fausone Bohn)
- Board Member Appointment Policy (by Fausone Bohn)
- Resolution Regarding Use of American Rescue Plan Act Funds (by Fausone Bohn)
- System Manager Report for March 2022 Board Meeting (by OHM Advisors)
- Biosolids Cake Disposition Project Proforma
- Biosolids Dryer Facility Project February 2022 Monthly Progress Summary (by Veolia)
- Alternate Rate Methodology Additional Efforts
- Natural Gas Supply
- Monthly Operating Report for January 2022 (by Veolia)
- Quarterly Financial Statement Q42021 (by Doug Drysdale)
- Aged Accounts Receivable Report, dated March 3, 2022 (by Doug Drysdale)
- Invoice Register, dated March 9, 2022 (by Doug Drysdale)