DOWNRIVER UTILITY WASTEWATER AUTHORITY
JULY 14, 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 9:03 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, Belleville, Dearborn Heights, 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 Mayor Bill Bazzi (Dearborn Heights) and supported by Rick Rutherford (Belleville) to approve the Agenda. The motion passed unanimously by all attending members.
3. Approval of Minutes from June 9, 2022 Board Meeting
Copies of the meeting minutes from the June 9, 2022 Board meeting were distributed by email prior to the meeting (Attachment 2). Motion by Greg Mayhew (Wyandotte) and supported by Roberto Scappaticci (Romulus) to approve the minutes. The motion passed unanimously by all attending members.
4. ARPA Funding Request for UV Disinfection Project
a. Funding Need Presentation
System Manager Lambrina Tercala, Attorney Jim Fausone, and Chairperson Gail McLeod (Allen Park) presented the request for ARPA funding for the UV disinfection project to Annie Mendoza, Deputy Director of Economic Development for Wayne County, who was in attendance (Attachment 3). Chairperson McLeod (Allen Park) provided an overview of DUWA and the organization and noted that the individual member communities are automatically eligible to receive ARPA funds, but DUWA as an entity is not automatically eligible and would like to receive funds as well. Attorney Fausone reviewed the history of Wayne County’s ownership of the DWTF as well as the system transfer to DUWA noting that DUWA purchased the system as-is with significant deferred maintenance. He also noted that the system purchase was a win-win in that Wayne County desired to phase out of providing wastewater treatment services and DUWA was now able to manage their own local infrastructure as desired and ensure continued optimal operation. DUWA purchased the system for $57M and has a final payment of $3.5M due to Wayne County in September of 2023.
System Manager Tercala provided an overview of DUWA’s assets and noted that the system is in good condition for its age. She added that the lack of staff during Wayne County’s ownership led to deferred maintenance causing the only non-compliance event (TSS due to build up of solids in process units) in DUWA’s ownership. The exceedance started during Wayne County’s ownership and continued through DUWA’s Day 1 of system ownership. There have been no compliance issues since. DUWA has realized numerous successes to date including creating a 5-year Capital Improvement Plan along with a $2M annual small capital project plan, performing interceptor repairs, advancing on the biosolids dryer facility project, implementing control measures to reduce blending events, and identifying ways to minimize PFAS from the source.
System Manager Tercala presented the need for ARPA funding for the UV disinfection project. DUWA’s existing Trojan 4000 UV system has been discontinued and the manufacturer is no longer supplying spare parts. This system has been in place since the 1990s and has reached the end of its useful life. UV disinfection is the last step of the wastewater treatment process where pathogenic bacteria are killed before the wastewater is discharged into the receiving outfall. Vendors have estimated a project cost of between $6M and $10M to install a new disinfection system. This anticipated cost must be balanced with other system costs considering that the biosolids dryer facility project is still ongoing and commodity, utilities, and sludge hauling and disposal costs have significantly increased due to the impacts COVID has had on the supply chain.
DUWA is currently projecting a $1.9M budget deficit this year due to these increased system operating costs. DUWA will also administer an 8.55% rate increase in 2023 due to commodity market volatility, WIFIA debt coming online to fund the biosolids dryer facility project, decrease in overall system flows, and to ensure there are enough reserves to pay the $3.5M promissory note to Wayne County in September of 2023. This rate increase is significantly higher than DUWA’s previous rate increases. This 8.55% rate increase will heavily impact DUWA’s disadvantaged communities, such as Ecorse and River Rouge, as these communities have high numbers of persons in poverty according to SEMCOG data. Additionally, Allen Park, Ecorse, and Lincoln Park were placed under a State Financial Emergency Manager during COVID.
The DUWA Board signed a resolution to encourage its member communities to use their ARPA funds for water and wastewater infrastructure, and also to encourage Wayne County to allocate a portion of their ARPA funds to DUWA for the UV disinfection project since DUWA did not receive ARPA funds directly. DUWA has as-needed engineers available to proceed with the design and construction of the new disinfection system once funding is identified. The system can be online within the ARPA milestone dates.
b. ARPA Model Resolution for Local Government Use
Attorney Fausone presented the ARPA Model Resolution calling for the State of Michigan and Wayne County to allocate a portion of their ARPA funds to DUWA in support of the UV disinfection project (Attachment 4). This resolution can be presented and approved by the local member community City Councils to ask for ARPA support from Wayne County. This resolution was reviewed by the Legal Committee.
Mayor Tim Woolley (Taylor) asked if the $8M project cost and $3.5M promissory note stated in the resolution were final values. Attorney Fausone responded that these are the final values that are presented in the resolution noting that it is important to include the reminder of the $3.5M promissory note due to Wayne County should the County consider providing ARPA funds to DUWA.
Mayor Bill Bazzi (Dearborn Heights) asked when the communities should plan to present this resolution to their City Councils. Attorney Fausone responded that it would be best to present this resolution to the City Councils as soon as possible as this resolution from the member communities would provide further support for DUWA’s request. Attorney Kerry Morgan (Riverview’s attorney) asked if the resolution was to request $6M in ARPA funds in support of a $8M UV disinfection project. Attorney Fausone confirmed that $6M is being requested based on the technical team’s current project projections.
Annie Mendoza, Deputy Director of Economic Development for Wayne County, stated that Wayne County received $340M to distribute and has 290 community projects for consideration. She asked if the member communities would be willing to contribute some of their ARPA funds toward the UV disinfection project as well. Attorney Fausone responded that DUWA, which is a wholesaler made up of its member communities, would use its reserves to contribute funds toward the project, but the communities would not be using their allocated ARPA funds to support this project.
Chairperson McLeod (Allen Park) asked to whom the resolution should be sent once it is passed. Attorney Fausone responded that the resolution can be sent to the System Manager who will then send it to him to pass along to Wayne County.
5. Legal Update
Attorney Jim Fausone, of Fausone Bohn, provided the Legal Update.
a. General Counsel Monthly Report
Attorney Fausone stated that a written summary of the monthly legal update was provided in the pre-meeting Board packet (Attachment 5). Attorney Fausone stated that it was a typical month of activities for Fausone Bohn in their assistance to the System Manager, whose activities will be discussed in further detail later in the meeting.
6. System Manager Update
System Manager Lambrina Tercala, 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 6).
a. System Manager Monthly Report
System Manager Tercala noted the following highlights from the System Manager Report:
- There has been a major focus on minimizing spending and how DUWA can increase its revenue as a budget deficit of $1.9M is currently projected due to increased Plant Operation costs since the beginning of 2022.
- The biosolids dryer facility is not yet ready for its 30-day acceptance test which was planned for July. Bill Hanley, Veolia’s CPM, will provide an update later in the meeting.
- OHM is working with Veolia to explore land application opportunities once the dryers are online. Land application will likely not be an option for beneficial reuse this growing season.
- Joe Moylan of MEA, Inc., DUWA’s utility consultant, has been reviewing DUWA’s natural gas and electrical usage. DUWA has excess volume of natural gas in storage that is not currently being used since the dryers are not yet online. There is an opportunity to sell back unused natural gas that has already been purchased for a credit since natural gas prices are much higher now than when the gas was purchased.
- An Alternate Rate Methodology Town Hall will be held on Friday, July 29th at 11am. Tom Beckley from Raftelis and Dick Hinshon from OHM will present the updated calculations for the anticipated cost impacts to each community. A pre-meeting packet will be provided for review ahead of the Town Hall.
- The 3-year SAN warranty quote of $6,724.20 is no longer being honored by the company providing the warranty. Thus, the SAN warranty was instead renewed for one year at a cost of $2,801.75.
- ASI has been assisting with various tasks outside of their contracted scope of work with Veolia for flow monitoring. ASI has assisted with review of the Riverdrive Interceptor hydraulic grade lines for operational alternatives as well as reverse flow through the Southgate-Wyandotte gate. The total cost for this completed work is $9,472 and was approved by the System Manager. The expense applies to the Engineering Services line item of the budget.
- City of Taylor staff toured the DWTF, and other communities are encouraged to do the same.
b. Biosolids Dryer Facility Project and Updated Pro Forma
Bill Hanley, Veolia’s CPM, provided an update on the Biosolids Dryer Facility project to the Board (Attachment 7). The dryers were expected to come online this past week, but several issues were encountered.
- It was discovered that drain lines needed to be redesigned. The drain lines will be modified in the next two weeks. The modified drain lines will minimize clogging events.
- There have been some electrical issues with equipment tripping when the dryer system is running at full capacity. The team is evaluating the electrical components and the voltage coming into the plant to resolve these issues.
- The solids become overdried (over 94% dry) which has resulted in several thermal/reheating events presenting a safety concern. The thermal oil skids will be dialed back to reduce the percent dryness.
The 30-day performance test is anticipated to start on August 15th. The odor control system is online and the centrifuges are optimized. The dryer was run yesterday for seven continuous hours without trips, and the dryer is online again today.
The Kruger (equipment provider) and Walsh (design build firm) contracts are being analyzed to determine where the responsibility will fall as it relates to schedule delays. Initially, the project was to be substantially complete in March, but now is expected to be complete in August. DUWA is realizing budget shortfalls as the dryers have not come online as soon as was anticipated.
An updated project pro forma was provided to the Board (Attachment 8) to compare the status quo to the dryer project benefits. The updated pro forma shows that DUWA will still recognize a significant cost savings once the dryers are consistently online. The dryer project remains attractive for cost savings.
c. Increased Plant Operation Costs and Budget Offset Need
System Manager Tercala presented the need for revised surcharge fees due to increased plant operating costs to the Board (Attachment 9). Current projections show that DUWA will have an estimated budget shortfall of approximately $1.9M this year. Various options are being considered to offset this budget shortfall without pulling from reserves. Options include pausing the remaining small capital projects and engineering efforts for the rest of the year, which would save about $1.3M, and increasing the surcharge fees for BOD, TSS, and Total Phosphorous, which would generate a revenue of about $8,100. Additionally, since the rate setting effort that occurred after January 2022 and prior to July 2022 recognized some of the 2022 commodity increases, a revenue of about $385k is expected to be generated from DUWA’s wholesale rates compared to what was projected as revenue in the 2022 budget.
It is proposed to increase the surcharge fees as follows:
- BOD Proposed Surcharge: $0.390/lb (Proposed) $0.343 (Current)
- TSS Proposed Surcharge: $0.269/lb (Proposed) $0.257/lb (Current)
- Total P Proposed Surcharge: $3.022/lb (Proposed) $2.564/lb (Current)
These surcharge fees would not go into effect until the Technical and Financial Committees review and approve them.
Jim Taylor (Van Buren Township) asked if these proposed surcharge fees will be reviewed by the Technical Committee and what would happen if the Technical Committee proposes different numbers. System Manager Tercala responded that these proposed rates will be reviewed by the Technical Committee and that the current rates would remain in effect if the Technical Committee did not agree with the proposed surcharge fees. Roberto Scappaticci (Romulus) asked if these surcharge fees would impact residential customers. System Manager Tercala responded that these surcharge rates would only apply to commercial and industrial users with higher strength wastewaters. Doug Drysdale (Riverview) asked when the proposed surcharge fees would take effect. System Manager Tercala responded that these fees would go into effect on August 1, 2022, and some industries could be billed on a prorated basis if needed based on their billing cycles. Chairperson McLeod (Allen Park) asked why these chemical overages were not budgeted for in the 2022 budget. System Manager Tercala responded that the anticipated overages were budgeted for and included in Amendment 7 of Veolia’s O&M contract, which was effective as of January 2022, but the significant price increases experienced a few months later were not anticipated.
Motion by Mayor Bill Bazzi (Dearborn Heights) and supported by Mayor Tim Woolley (Taylor) to update the surcharge fees as presented for an effective date of August 1, 2022, pending agreement of the need for the fee increases with the Budget Offset Subcommittee and Technical Committee. The motion passed unanimously with all attending members.
7. Other Requests for Authorizations and Approvals
System Managers Lambrina Tercala and Mackenzie Johnson, of OHM Advisors, provided the following requests to the Board.
a. Veolia MOU re: Sludge Limit + Commodity Markup
Veolia prepared a Memo of Understanding (MOU) related to their commodity markups and sludge limits (Attachment 10). Veolia currently charges a 10% markup on expenses of consumables that are above the contract assumptions. Under this MOU, Veolia proposes to waive their 10% markup for the remainder of 2022 in recognition of high inflation and volatile market pricing. This could save DUWA approximately $51k based on current projections. Additionally, Veolia’s Amendment 7 to their contract reconciled commodity unit rates and sludge limits assuming the dryers would be online by March 2022. Thus, sludge limits were not specified for the months of March through December. This MOU now specifies the sludge limits for March through December, which reflect the maximum quantity Veolia budgeted for in their existing 2022 annual fee. Both the Legal and Technical Committees had an opportunity to review and comment on this MOU.
Motion by Jim Taylor (Van Buren Township) and supported by Mayor Bill Bazzi (Dearborn Heights) to authorize the Chair or Vice Chair to execute the MOU as presented. The motion passed unanimously with all attending members.
b. PFAS Action Act Opposition Letter
The PFAS Action Act of 2021 (H.R. 2467) was passed by the House in 2021 and currently awaits consideration by the Senate. The proposed PFAS Action Act includes a mandate to designate PFAS chemicals as hazardous substances under the CERCLA/Superfund Act. This could potentially result in the designation of wastewater treatment facilities as Superfund sites and could expose those facilities that land apply their biosolids to liability for cleanup or financial damages. Additionally, the designation of PFAS chemicals as hazardous substances could result in increased management and disposal costs associated with biosolids.
In response to this proposed piece of legislation, the Fausone Bohn team prepared a letter template for communities to use to oppose this legislation (Attachment 11). Since that date, several communities have passed resolutions at their local level to sign and submit the letter. It is proposed that DUWA also submit a letter to state Senators.
Motion by Rick Rutherford (Belleville) and supported by Greg Mayhew (Wyandotte) to authorize the Chair or Vice Chair to sign the letter as presented on behalf of DUWA and its Board. The motion passed unanimously with all attending members.
c. Fordline Interceptor Grouting Project: Final Reconciliation Change Order
During Veolia’s CY2020 CCTV efforts, two localized infiltration ‘runners’ were identified in the Fordline Interceptor (60-inch brick sewer) that required near-term rehabilitation. The area of interest is near Goddard Road and the I-75 overpass (Allen Park and Southgate region), which is a critical crossing. HRC was authorized by DUWA in February 2021 to support preparation of a bid package for the repair. The scope of services included chemical grouting the areas with leaks. Doetsch Environmental was the lowest bidder and was authorized by DUWA with HRC’s recommendation to perform the work for the original contract price of $106,240.
In early October, Doetsch completed the planned grouting work. Three additional days for grout setup and installation were required due to the necessary repair of a third leak that was identified upon mobilization. During the post-grouting inspection, a new infiltration runner was identified downstream of sewer repair area #2. In November, Doetsch was authorized for Change Order #1 for $47,200 to 1) reconcile the extra three grout days to repair the third leak identified during the first mobilization, 2) add an additional grout quantity for repair of this fourth (new) leak and 3) extend the completion dates to account for the extra work. HRC was also authorized for additional construction administrative services for the extra work. The proposed Change Order #2 will reconcile the project unit rates and close out the final project costs for a net project cost decrease of $24,614 (Attachment 12). HRC recommended this change order for approval. The Technical Committee did not have the opportunity to review this change order based on timing of receipt of the change order request.
Motion by Roberto Scappaticci (Romulus) and supported by Mayor Bill Bazzi (Dearborn Heights) to authorize the Chair or Vice Chair to sign Doetsch Environmental’s Change Order #2 in association with the Fordline Interceptor rehabilitation efforts for a net project cost decrease of $24,614. The motion passed unanimously with all attending members.
8. Contract Operator Update
General Manager Jason Tapp, of Veolia, provided the Contract Operator update.
a. May 2022 MOR
The May 2022 Monthly Operating Report (MOR) was provided in the Board’s pre-meeting packet (Attachment 13). Highlights from the summary and other updates included the following:
- Four operator positions have now been filled.
- DUWA will receive a vacancy credit for one open operator position until the vacancy is filled.
- Kudos were given to the operations and maintenance teams for their teamwork as they had been short-staffed, and many employees covered others’ shifts. It was a great bonding and learning experience for those who had to cover others’ shifts in different areas of the plant.
- May was a very wet month with average flows around 60 MGD at the plant.
- Veolia staff has had trainings regarding heat stress, office ergonomics, and safety. Staff are encouraged to schedule frequent breaks and stock up on water to ensure everyone stays cool and hydrated.
- 312 Miss Dig tickets were submitted in May.
- Several preventative and corrective maintenance items were addressed, including the following:
- Veolia staff has ordered spare parts for the existing UV system to stockpile parts for use until the new disinfection system is online.
- There was a small fault in one of the boards of the UV system that melted some sleeves. This was discovered quickly and resolved, and the bulbs were replaced. These boards are no longer produced so new boards cannot be ordered, so the malfunctioned board will be sent in for repair instead.
- A crane was rented to lift the sludge pumps so that their clearances and oil levels could be checked. One pump had to be sent in for repair.
- Veolia staff has been repairing vent stacks that have been damaged from car impacts. Veolia will stockpile spare parts so that the vent stacks can be repaired quickly when they get damaged.
- A manhole cover was stolen in a greenbelt area where someone could easily fall in. A company came out to install a metal plate over the manhole to secure the location.
Mayor Tim Woolley (Taylor) thanked Jason Tapp and Veolia staff for the tour of the DWTF and noted that the staff’s knowledge of the facility was incredible. Chairperson McLeod (Allen Park) encouraged everyone to tour the facility to understand the scope of work and complexity involved with operating this facility.
b. Chemical & Sludge Price Updates
General Manager Jason Tapp, of Veolia, presented the summary of commodity unit price changes to the Board (Attachment 14). There has been a 60% increase in polymer and 20% increase in ferric chloride since January of this year. Veolia is trying to leverage their national purchasing power to stabilize these unit price increases.
9. Treasurer’s Report
a. Aging AR
Treasurer Jason Couture (Taylor) presented the Aging Accounts Receivable report (Attachment 15). Treasurer Couture stated that the total amount in the Accounts Receivable is approximately $1.7M, and about $1.6M is current. The amount in Accounts Receivable is higher than usual due to the inclusion of some industrial service charges. Dearborn Heights has an outstanding payment of about $3600 related to a rate correction that is over 120 days. Accountant Doug Drysdale (DNS; Riverview) is currently working with Dearborn Heights to get this resolved.
b. Pending Invoices
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 45 invoices due for a total of $2,860,047.46. Largest invoices included those to Veolia for two months’ worth of O&M and unit cost reconciliations and Wyandotte for utility services.
Motion by Greg Mayhew (Wyandotte) and supported by Jim Taylor (Van Buren Township) to pay the invoice register. The motion passed unanimously with all attending members.
10. Public Comment
There was no public comment.
11. Other Business
a. EGLE Intent to Apply Forms due Nov 1, 2022 for SRF Loan Programs
System Manager Tercala stated that EGLE recently presented on the State Revolving Fund (SRF) program at the MWEA annual conference (Attachment 17). She reminded the Board that if there are any upcoming water or sewer projects that the member communities would like to receive funding for, then they must submit the notice of intent to EGLE by November 1, 2022. The notice of intent does not obligate the community to proceed with the project, but if a notice of intent is not submitted, then the community will not be eligible to receive SRF funding for that project. Principal forgiveness is also available for disadvantaged communities. DUWA will be submitting a notice of intent for SRF funding as well.
Jim Taylor (Van Buren Township) informed the Board that Kevin Lawrence, the new Water and Sewer Director, will be Van Buren Township’s new Board representative and will also participate in the Technical Committee meetings. An official letter will be forthcoming authorizing Mr. Lawrence as the new DUWA Board representative.
12. Next Board Meeting Date: Thursday, August 11, 2022 (9:00 AM; In-Person)
Chairperson McLeod (Allen Park) reminded the Board that the next meeting would take place on Thursday, August 11, 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 Mayor Bill Bazzi (Dearborn Heights) and supported by Rick Rutherford (Belleville) to adjourn the meeting. Motion passed unanimously at 10:14 AM.
Meeting Minutes Prepared by:
Mackenzie Johnson, OHM Advisors, Engineer
Meeting Minutes Reviewed by:
Lambrina Tercala, OHM Advisors, DUWA System Manager
- Meeting Agenda
- June 9, 2022 DUWA Board Meeting Minutes
- ARPA Funding Request for UV Disinfection Project Presentation
- ARPA Model Resolution (by Fausone Bohn)
- Monthly Legal Update (by Fausone Bohn)
- System Manager Report for July 2022 Board Meeting (by OHM Advisors)
- Biosolids Dryer Facility Project June 2022 Monthly Progress Summary (by Veolia)
- Biosolids Dryer Project Pro Forma Update (by Veolia)
- Revised Surcharge Rates
- Veolia’s MOU re: 2022 Sludge Limits and Waiver of Chemical/Sludge/Utility Markups (by Veolia)
- Opposition Letter to PFAS Action Act of 2021 (by Fausone Bohn)
- Fordline Interceptor Rehabilitation Project Change Order #2 (by Doetsch)
- Monthly Operating Report for May 2022 (by Veolia)
- DWTF Unit Price Changes Summary (by Veolia)
- Aged Accounts Receivable Report, dated July 7, 2022 (by Doug Drysdale)
- Invoice Register, dated July 7, 2022 (by Doug Drysdale)
- EGLE Presentation on SRF Funding