DOWNRIVER UTILITY WASTEWATER AUTHORITY
May 9, 2024 Meeting Minutes
CITY OF TAYLOR COUNCIL CHAMBERS

1. ROLL CALL AND INTRODUCTIONS
DUWA Chair Gail McLeod (Allen Park) called the 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 12 communities: Allen Park, Belleville, Brownstown Township, Dearborn Heights, Ecorse, Riverview, River Rouge, Romulus, Southgate, Taylor, Van Buren Township, and Wyandotte. A quorum (at least 7 members) was present.

a. DUWA Commissioners
The DUWA Board Commissioners present at the time of roll call introduced themselves as follows: Rick Rutherford (Belleville), Roxie Fairchild (Brownstown Township), Mayor Bill Bazzi (Dearborn Heights), David Hall (Ecorse), Mayor Joseph Kuspa (Southgate), Chairperson and Mayor Gail McLeod (Allen Park), Roberto Scappaticci (Romulus), Jeff Dobek (Riverview), Lou Arapakis (River Rouge), Mayor Tim Woolley (Taylor), Kevin Lawrence (Van Buren Township), Greg Mayhew (Wyandotte).

b. Other Meeting Attendees
Board meeting attendees present in the audience at the time of roll call introduced themselves as follows: Dan Marsh (Southgate), Jim Taylor (Van Buren Township), Gerry Barr (Allen Park), Souheil Sabak (C.E. Raines/Riverview engineer), Kerry Morgan (Riverview attorney), Brandon Grysko (Fausone & Grysko; DUWA Legal), Rumzei Abdallah (Plante Moran, DUWA Financial Consultant), Doug Drysdale (DNS Financial Services, DUWA Accountant, Southgate Finance Director & Assistant City Manager), Jason Couture (Taylor CFO, DUWA Treasurer), Jason Nash (Veolia CPM for Dryer project), Travis Tuma (Veolia OM), Jason Tapp (Veolia OM), Lambrina Tercala (OHM Advisors, DUWA System Manager), Mackenzie Chamberlain (OHM Advisors, DUWA System Manager).

 

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 Mayor Joseph Kuspa (Southgate) to approve the Agenda. The motion passed unanimously by all attending members.

 

3. APPROVAL OF MINUTES FROM April 11, 2024 BOARD MEETING
Copies of the meeting minutes from the April 11, 2024 Board meeting were included in the pre-meeting Board packet (Attachment 2). Chairperson McLeod (Allen Park) asked to revise the minutes to include the following statement under the “UV Disinfection Project: Recommendation of CCC for General Contractor” section: “Some concerns were expressed about the contractor’s experience with this type of project.”

Motion by Mayor Joseph Kuspa (Southgate) and supported by Rick Rutherford (Belleville) to approve the revised minutes. The motion passed unanimously by all attending members.

 

4. LEGAL UPDATE
Attorney Brandon Grysko, of Fausone & Grysko, 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). Attorney Grysko stated that it was a typical month of activities as the legal team supported the System Manager on matters regarding the Biosolids Dryer project and participated in virtual Technical Committee and Board Officer meetings over the past month. The legal team has also been working with Kruger to develop an agreement to create a Joint Technical Committee that would work to resolve the technical issues associated with the Biosolids Dryer project.

Mayor Joseph Kuspa (Southgate) thought that a technical committee was already set up with Kruger to review dryer system issues ahead of the expiration of the Tolling Agreement that is set to expire in July, and asked what additional value this committee would provide compared to the daily meetings that are currently in progress. Attorney Grysko stated that Kruger advanced a draft agreement to create a Joint Technical Committee, and this agreement has been under negotiation for some time. The agreement is now being finalized and a kickoff meeting date is being scheduled. This effort is separate from the daily meetings that are currently being held to review dryer system issues. The request for the Joint Technical Committee was driven by Kruger. We expect Kruger will bring additional expertise from personnel in Paris who will help identify technical solutions. This will add another level of discussion and technical expertise to resolve dryer system issues.

b. Fiscal and Rate Year Memo
At the April Board meeting, DUWA Commissioners inquired about the possibility of aligning DUWA’s rate year and fiscal year. DUWA’s rate year is currently July 1 – June 30 and the fiscal year is January 1 – December 31. Fausone & Grysko developed a memo describing the legal basis that set DUWA’s rate year and fiscal year (Attachment 4). The fiscal year is set by DUWA’s Articles of Incorporation, and a change in the fiscal year would require an amendment to the Articles. The Board Officers supported changing the fiscal year to align with the rate year. Fausone & Grysko is drafting a resolution that would amend DUWA’s Articles of Incorporation to change the fiscal year to match the rate year. The resolution will be provided to each Board Commissioner to bring to their local City Councils/Township Boards for adoption, as a resolution to amend the Articles must be adopted by each member community.

 

5. SYSTEM MANAGER UPDATE
System Manager Mackenzie Chamberlain, 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 5).

a. System Manager Monthly Report
System Manager Chamberlain noted the following highlights from the System Manager Report:

• DUWA is still pending EGLE’s response to the NPDES Permit renewal response letter that was submitted in January 2024.
• A secondary clarifier Towbro arm assembly has experienced corrosion, and a request to purchase a replacement Towbro will be brought forward later in the meeting.
• CCTV efforts along the Eureka Interceptor are complete, and HRC will now begin reviewing the inspection videos to identify repair needs in those areas showing degradation from hydrogen sulfide.
• Wade Trim performed a condition assessment of the Allen Park Tunnel Spur Flushing Gate, and the results were shared with Allen Park’s City representatives and their engineer. The gate was originally intended to be used to flush the tunnel, but there has been no evidence of sediment buildup in the tunnel and flushing has not been necessary. However, Allen Park may have interest in restoring the gate to assist with dewatering of their local retention basin between storm events. If restoration of the gate is desired, additional due diligence will be necessary to consider the technical scope of work and cost ownership.
• Veolia continues to advance upon their PFAS local limit development efforts as well as investigating potential causes of the increased mercury levels at the plant.
• OHM continues to monitor changes in PFAS regulations. The EPA recently designated PFOS and PFOA as hazardous substances under CERCLA, however they also issued a statement clarifying that the EPA does not intend to require response actions by publicly owned treatment facilities or farms where biosolids are land applied.
• OHM is working to develop a cybersecurity policy for internal use and for consultation with DUWA’s insurance providers, who are becoming increasingly interested in confirming that utilities have a plan in place. OHM will also be attending a free workshop on Cybersecurity in the Water Sector next Wednesday, May 15th in Bloomfield Hills.
• The draft Rate Package and surcharge rates will be presented later in the meeting for review. Approval of the rate package and surcharge rates will not be requested until next month.
• Plante Moran is in the process of performing their annual audit of DUWA’s financial statements as well as the single audit related to WIFIA financing. 

Mayor Joseph Kuspa (Southgate) asked if the EPA’s release of liability related to PFAS for wastewater treatment plants and land application sites would also extend to landfills where biosolids are disposed. System Manager Tercala responded that there are varying bodies regulating the compound in different ways. The EPA formally designated PFOA and PFOS as hazardous substances under CERCLA, whereas land application loading concentrations are managed and set by EGLE.

b. UV Disinfection Replacement Project Update
System Manager Chamberlain provided an update on the UV Disinfection Replacement Project to the Board (Attachment 6). Last month, CCC was approved as the General Contractor for the UV project for a fee of $8,895,000. OHM is now working to finalize and execute the contract documents, and the Notice to Proceed is expected to be issued within the next couple of weeks. Black & Veatch is also in the process of finalizing their proposal to provide construction administration and construction engineering services for the duration of the construction project. Their proposal will be presented to the Board next month.

The UV project will be funded in part by the $10M earmark from the State. OHM has drafted the first reimbursement request in the amount of about $635k, which includes costs related to Black & Veatch’s design efforts as well as OHM’s project support, and this reimbursement request is expected to be submitted to EGLE by the end of this week. EGLE has indicated that reimbursements can likely be paid within a few weeks once approved. The need for bonding is still being further reviewed with DUWA’s Officers and Financial Professionals.

 c. Biosolids Dryer Facility Project Update
Jason Nash (Veolia CPM) provided an update on the Biosolids Dryer Facility project to the Board (Attachment 7). Both dryers were offline for a period in March. The North Dryer experienced a gear box failure on one of its cake pumps. The gear box was replaced by the pump manufacturer. It is still unclear as to why the gearbox failed. The South Dryer experienced a bearing failure on one of its fans. The fan was replaced under warranty by Kruger. Both dryers were restarted on April 8th. Once both dryers were in operation, bucket tests were performed to evaluate the throughput of the dosing pumps. Results from the bucket tests showed that the dosing pumps were producing between 50-70% of the design throughput. The pump speeds were then increased to 100% to achieve more throughput.

On April 19th, Kruger performed pump tests and discovered that both the rotors and stators on the 16 dosing pumps need replacement. The pump manufacturer had ten rotors and stators in stock, and these were received the following week. Additional rotors and stators for the remaining six dosing pumps have an 8-week lead time. On April 21st, the larger variable frequency drives (VFDs) for the fans and cake pumps were installed. The larger VFDs will accommodate the increase in cake pump motor size from 5 horsepower to 7.5 horsepower. The upsized motors and gear boxes are expected to arrive onsite tomorrow. On April 29th, the dryers were shut down to replace the pump components on the North and South Dryer dosing pumps. The North Dryer was then started back up this week. Startup of the South Dryer was attempted yesterday, but issues arose causing it to remain shut down. Installation of the upsized cake pump motors will occur within the next two weeks, and this will require a one or two-day shutdown.

After replacement of the rotors and stators on the ten dosing pumps, additional bucket tests were performed on the North Dryer. Results from the bucket tests showed that the dosing pumps were now running at or above their design flows with the new rotors and stators. On two of the dosing pumps, the urethane stators were reused, but these pumps only operated at 75% of their design capacity, so these urethane stators will need replacement as well. Jason Nash reviewed the dryer system operation pie charts and noted that the recent shutdown of the South Dryer due to the fan bearing failure was classified as a ‘dryer repair’ as opposed to a ‘pump repair’.

Chairperson McLeod (Allen Park) asked who is covering these various pump component replacements and other dryer system expenses. Jason Nash responded that Kruger has been covering these expenses.

During the Biosolids Project Update, Lisa Griggs (Lincoln Park) arrived and took a seat at the Board.

 

6. REQUESTS FOR AUTHORIZATIONS AND APPROVALS
System Manager Mackenzie Chamberlain, of OHM Advisors, presented the following requests to the Board.

a. Biosolids Dryer Project: USP Proposal for Hydrogen Peroxide Feed for Condenser Towers
The biosolids dryer system has continued to experience challenges with fouling of the condenser towers, which are critical to the operation of the dryers as they lower the humidity in the dryers and improve the dried product. Veolia is currently using a temporary clean-in-place system to clean the media in the condenser towers. The System Manager also previously authorized purchase of spare condensing tower media for a fee of $3,695.

At the January Board meeting, the Board authorized the System Manager to secure a contractor to perform additional condenser tower improvements, as recommended by Stantec, DUWA’s Dryer Project Task Leader, for a not-to-exceed fee of $172k, which reflected Stantec’s opinion of probable construction cost. Stantec developed a concept design for the additional condenser tower improvements, but the pricing received from contractors to perform these improvements was well above the authorized amount of $172k, so the recommended improvements were not advanced.

Veolia OM then requested that USP, who is the current hydrogen peroxide chemical supplier, provide a budgetary quote for supply and installation of equipment to dose peroxide directly into the cooling water supply for the condensing towers to reduce the rate of biofouling. This effort would increase Dryer operating time and decrease the time needed for maintenance activities.

USP’s proposal includes a monthly service fee of $2,250 per month, a one-time mobilization fee of $12,000, and a hydrogen peroxide unit price of $4.78/gallon (Attachment 8). It should be noted that this unit price is about $1 per gallon cheaper than what has been charged previously. This proposal is based on a 5-year agreement between Veolia and USP, and either party can end the agreement by providing a 90-day notice. The costs to advance on USP’s proposal were included within the proposed 2025 rate package, and Veolia will provide a direct passthrough of costs to DUWA without markup. This proposal was also recommended by Stantec and the Technical Committee for approval.

Mayor Bill Bazzi (Dearborn Heights) asked if the unit rate per gallon of peroxide is locked in for the 5-year period. System Manager Chamberlain responded that the unit price can be adjusted every six months, but cannot be increased by more than 6% each time. Mayor Bill Bazzi (Dearborn Heights) asked if the proposed fee incorporates maintenance activities associated with typical wear and tear of the dosing system. Jason Tapp, of Veolia OM, responded that the agreement covers maintenance activities on both the condenser tower peroxide dosing system and the odor control peroxide dosing system. Mayor Bill Bazzi (Dearborn Heights) asked what type of stainless steel the peroxide storage tank is made out of noting that the material of construction is important as corrosion can occur in the presence of condensation causing early wear and tear of the system. Jason Tapp responded that the tank is made out of stainless steel 316 and the agreement includes maintenance activities to prevent and address wear and tear.

Motion by Mayor Bill Bazzi (Dearborn Heights) and supported by Roberto Scappaticci (Romulus) to authorize Veolia to approve USP’s proposal. The costs will be paid from DUWA’s Plant Operations – Utilities budget line item. The motion passed unanimously by all attending members.

b. Clarifier Towbro Replacement
The DWTF has six secondary clarifiers each outfitted with one Towbro arm assembly. The Towbros have been experiencing corrosion due to the corrosive conditions experienced by the clarifiers. Veolia’s maintenance team has been patching holes on the Towbros for the past few years, but the holes are getting larger and more numerous. Veolia has been replacing the Towbros with stainless steel, which will last longer in corrosive conditions.

Out of the six secondary clarifiers at the plant, Veolia has already replaced two Towbro assemblies and will be replacing a third Towbro this week. Purchase of a fourth Towbro assembly is now requested for replacement. Veolia plans to replace the remaining two Towbros over the next two years. Veolia received a quote from Evoqua, who is the original equipment manufacturer, for a cost of $153,103.40, inclusive of taxes and Veolia’s 10% markup (Attachment 9). This purchase was budgeted for within DUWA’s Small Capital Budget and was recommended by the Technical Committee for approval.

Mayor Bill Bazzi (Dearborn Heights) asked how large the Towbro arm assembly is. Jason Tapp responded that the Towbro is 165 feet in length. Mayor Bill Bazzi (Dearborn Heights) noted that he has experience in corrosion testing and has utilized an NSF-approved coating in the past that is very durable and requires an oven for curing. The Towbro may be too large to use this coating, but he offered to provide Veolia with additional information if they would like to explore this coating further or have other corrosion issues.

Chairperson McLeod (Allen Park) asked if the existing Towbro will be replaced with a Towbro of different material. Jason Tapp responded that the existing Towbro has a hot-dipped galvanized coating that corroded away after ten years. The new Towbro will be stainless steel which will last longer in corrosive conditions. Roberto Scappaticci (Romulus) asked who will perform the installation of the Towbro. Jason Tapp responded that Veolia OM will perform the installation.

Motion by Rick Rutherford (Belleville) and supported by Mayor Tim Woolley (Taylor) to authorize Veolia to purchase a secondary clarifier Towbro replacement from Evoqua for a not-to-exceed fee of $153,103.40. This fee will be paid from DUWA’s Capital Outlay budget line item. The motion passed unanimously by all attending members.

 

7. CONTRACT OPERATOR UPDATE
Jason Tapp and Travis Tuma, of Veolia, provided the Contract Operator update.

a. Plant Performance
Travis Tuma, of Veolia, stated that Veolia hosted a tour of the DWTF with an AP Environmental Science class from a high school in Allen Park. In addition to the approximately 30 students, Chairperson McLeod (Allen Park) also participated in the tour, which lasted several hours. The tour was very successful as the teacher desires to schedule annual DWTF tours for future AP Environmental Science classes. Travis Tuma extended the invitation to other schools in other communities who wish to take a tour of the DWTF as well.

b. March 2024 MOR
The March 2024 Monthly Operating Report (MOR) was provided in the Board’s pre-meeting packet (Attachment 10). Highlights from the summary and other updates included the following:

• The DWTF remained in compliance in the month of March and there were no violations.
• In March, the average flow into the DWTF was 44 MGD and the peak flow into the DWTF was 76 MGD. No bypass events occurred in March as it was a relatively dry month.
• Veolia continues to dose between 0.2 – 0.3 gpm of ferric chloride for odor control, and peroxide dosing was recently resumed in response to an odor complaint received from a resident in Wyandotte. Veolia OM investigated the location of the reported odor by inserting a gas sensor into the pipe near this location, but no odors were detected. This odor appears to occur intermittently and may be coming from a source other than the DWTF. Veolia plans to install a gas sensor in the manhole at this location which will record the hydrogen sulfide levels every 10 minutes. The data will be used to track the hydrogen sulfide levels throughout the day to see if there are certain times when the odors increase.
• Veolia staff completed several large maintenance jobs including the following:
  • Two of the four cables on the bar screen gripper failed. The gripper is a giant claw that is used to clean the bar screen at the headworks of the DWTF. Veolia OM rented a lift to extend over the 60-foot deep pit to repair the cables and put the gripper back in service.
  • Veolia OM discovered that the bearings failed on the South Dryer fan. This was a warranty item and was resolved by Kruger. Replacement of the failed parts required removal of the fan, which was a large task as the fan is the size of a small car.
  • Preventative maintenance and cleaning were performed on primary tank #2. Veolia OM performs preventative maintenance tasks on one primary tank or secondary clarifier each month. This tank required a lot of maintenance, but the work is now complete and the tank is back in service. The repair parts needed were in stock at the DWTF.
• Veolia OM staff performed routing maintenance activities within the Solids Handling Building and continues to find ways to make the work more user friendly.
• Veolia’s electrician continued work on installing the redundant soft starts on the raw sewage pumps. Raw sewage pump #6 should be completed this week. The variable frequency drives (VFDs) on raw sewage pumps #5 and #6 failed, but since these pumps are only used during wet weather, a large range of pumping rates is not needed. As such, it was determined that redundant soft starters could be installed instead of replacing the VFDs. Implementation of the soft starters was delayed as the equipment had a long lead time and Veolia was without an in-house electrician for a period of time. The last piece of equipment is expected to arrive at the end of May.
• Veolia had one maintenance position and one lab technician position open in March. Some prospective hires did not finish their onboarding process and thus were not hired. However, an operator, lab technician, and maintenance technician have since been hired, and Veolia is now fully staffed.
• At last month’s Board meeting, a question was raised as to how the sensor ring on flow meter PA-1 was ripped out of the pipe. Veolia’s Collection System Manager indicated that the rings are held in the pipe by pressure, and debris within the flow path sometimes catches on the rings and rips them out into the flow path. This is a common occurrence, and the ring has since been replaced.
• Veolia’s Health and Safety Manager tracks the number of confined space entries performed each month. March was a busy month as 8 confined space entries were performed at the DWTF and 15 were performed throughout the collection system.

c. Chemical & Sludge Price Updates
Jason Tapp and Travis Tuma presented the summary of commodity unit price changes to the Board (Attachment 11). There have been no recent significant increases on chemical unit pricing. There is expected to be a reduction in sludge hauling costs in future months as Veolia is in the process of finalizing a 3-year agreement with a landfill in Michigan that will accept DUWA’s dewatered (not dried) biosolids. This landfill is in closer proximity than the current landfills in Ohio. This Michigan landfill has a higher tipping fee than the Ohio landfills, but the reduced hauling distance will translate to an overall reduced sludge hauling and disposal cost. However, the beneficial reuse facility in Canada that accepts DUWA’s dried solids continues to be the cheapest option for solids disposal/reuse as there is no tipping/disposal fee, only a hauling fee.

Jason Tapp and Travis Tuma presented the sludge hauling volume tracker to the Board (Attachment 12). Between 80-88% of DUWA’s solids were hauled to the beneficial reuse facility in Canada in February and March 2023 when the dryers were running near their design capacities. The cake pumps and dosing pumps began to experience failures in April 2023 resulting in reduced production of dried solids. During the first few months of 2024, the dryers have been running more consistently and have been running at about 50% of their design capacity. On average, the percent of product that has been hauled to the beneficial reuse facility in Canada is higher in 2024 than in 2023, which indicates an improvement in dryer system operations. The sludge hauling volume tracker also provides a timeline of when certain haulers and landfills were used over the past year.

Roberto Scappaticci (Romulus) asked who provided the sludge volume data. Jason Tapp responded that Veolia provided the data and OHM developed the summary table. Mayor Tim Woolley (Taylor) stated that this is a useful summary table that could be used in discussions with Kruger. Mayor Joseph Kuspa (Southgate) agreed that this table is useful and summarizes the data well.

d. Existing Disinfection System Remaining Life Update
Jason Tapp stated that the UV system is currently running well and is achieving the required fecal disinfection. There are currently enough spare parts to maintain the UV system for approximately 10-12 months, which should accommodate the anticipated timeline of beginning to commission the new UV channels as they are constructed. Veolia will continue to work with Trojan to replenish the inventory of OEM spare parts, as needed. Veolia is also continuing to search for opportunities to purchase spare parts from other facilities that are decommissioning their existing UV systems in preparation for installation of their new UV systems.

 

8. TREASURER’S REPORT

a. Allen Park Overpayment Request
Accountant Doug Drysdale (DNS Financial Services/Southgate) presented the Allen Park Overpayment request (Attachment 12). In August 2023, the City of Allen Park submitted a request to DUWA for reimbursement due to overpayment on their sewer reporting. The City of Allen Park discharges wastewater to both DUWA and the Great Lakes Water Authority (GLWA), and they mistakenly reported their total metered flow instead of only the flow that is discharged to DUWA for the months of January through May in 2023. Plante Moran, OHM, and Accountant Doug Drysdale (DNS Financial Services/Southgate) reviewed the request along with supporting data, and reimbursement in the amount of $159,905 is recommended for approval. Per DUWA’s Overpayment Policy, reimbursement will occur over the same length of time during which overpayment occurred. As such, the reimbursement amount is requested to be paid in five monthly installments of $31,981 beginning in July 2024.

Mayor Bill Bazzi (Dearborn Heights) asked if the City of Dearborn Heights also plans to submit a request for reimbursement due to overpayment. Accountant Drysdale (DNS Financial Services/Southgate) responded that he met with the City Engineer yesterday to request supporting documentation for review of the overpayment request. The City Engineer will work with the City’s new controller to provide the requested supporting documentation soon for DUWA’s review.

Motion by Mayor Joseph Kuspa (Southgate) and supported by Mayor Bill Bazzi (Deaborn Heights) to refund the City of Allen Park a total of $159,905 payable in five monthly installments beginning in July 2024 in an amount of $31,981 per month. The motion passed unanimously by all attending members.

b. Draft FY2024-25 Rate Package and Surcharge Rates
Accountant Doug Drysdale (DNS Financial Services/Southgate) presented the Draft FY2024-25 Rate Package and Surcharge Rates (Attachment 13). As this is the second year of the 5-year phase in of the new rate methodology, the rates will be calculated using 40% of the new rate methodology and 60% of the old (legacy) rate methodology. The old rate methodology utilized self-reported flows from each community to determine the annual flow volume. However, the new rate methodology utilizes flow meter data to determine base and excess flows. Where flow meter data is not available, flow is allocated based on miles of collection system and number of footing drains. Self-reported flows are still used in the new rate methodology to determine the winter flow averages that are used to establish the base flow. The total all-inclusive rate is expected to increase by 8.23%. Of the 8.23% rate increase, 4.8% is attributable to increased expenditures and the rest is attributable to a decrease in flow volume. It should be noted that this rate increase includes the use of $1M from reserves for rate stabilization. Self-reported flows from each community were used in the development of the rate package, but the flows contributed from Dearborn Heights and River Rouge were estimated as these two communities have not yet submitted their self-reporting flow worksheets. Accountant Doug Drysdale will continue working with these communities to obtain the necessary flow data for the rate package and hopes to receive this data before finalization of the rate package. Incorporation of the updated flow data is not expected to significantly impact the projected rates.

The draft rate package was presented to the Finance Committee for review, and no comments were received. Accountant Doug Drysdale will work with Raftelis to finalize the rate package, and it will be brought forward to the Board for adoption at the June Board meeting. The rates will then take effect July 1, 2024.

Roberto Scappaticci (Romulus) asked if the Biosolids Dryer System challenges contributed to this year’s increased fee for Veolia OM Services compared to last year’s fee. Accountant Doug Drysdale responded that the increase in the Veolia OM annual fee is only attributable to the Consumer Price Index (CPI) inflationary increases. Roberto Scappaticci (Romulus) asked what services are included in the Miscellaneous Expenditures line item that totals about $450k. Accountant Doug Drysdale responded that this line item includes annual PFAS sampling, PFAS local limits development efforts, and repair and replacement costs associated with the Biosolids Dryer Project. Roberto Scappaticci (Romulus) asked if a cash flow analysis has been performed to show whether the UV project will impact next year’s rates and whether the $10M grant will affect cash flow. Accountant Doug Drysdale responded that the $10M grant will not impact cash flow because the funds will be disbursed on a reimbursement basis rather than being provided up front. EGLE has indicated that reimbursements will be disbursed within a few weeks of approval of the reimbursement request. Rumzei Abdallah, from Plante Moran, added that bonding efforts have been postponed as the cash flow analysis shows that bonding is not needed at this time as DUWA is projected to continue meeting its debt covenant ratios and target reserve levels. However, the consideration to bond will remain open for the next few months as the UV construction project is initiated. The cash flow analysis also shows a large draw from reserves to occur in December 2024 to pay for work performed by the General Contractor, so cash flow will continue to be closely analyzed over the next few months as reimbursements are received. Accountant Doug Drysdale added that the cash flow analysis is also conservative on the amount of interest expected to be earned.

Mayor Joseph Kuspa (Southgate) asked how the Biosolids Dryer repair and replacement costs were derived. System Manager Tercala responded that the repair and replacement costs were based on the dryers operating for 50% of the year. These costs include replacement of pump rotors and stators based on the actual timing of their wear and tear experienced to date.

Mayor Bill Bazzi (Dearborn Heights) requested that a benchmark comparison of DUWA’s rate to rates of other wholesale wastewater suppliers be provided so that he can share the data with his residents. System Manager Tercala responded that a benchmark comparison of rates was performed a couple years ago, and OHM will update this comparison to reflect this year’s rates of other wholesale wastewater suppliers in the region. She noted that wholesale rates will be different than retail rates. She added that opportunities to reduce costs continue to be explored by identifying controllable versus noncontrollable costs. Accountant Doug Drysdale added that of the 8.23% rate increase, 4.8% of the increase is associated with expenditures, which aligns with the rate of inflation. The remainder of the increase is due to reduced flow volume. Debt payments are also fixed costs that cannot be reduced. Chairperson McLeod (Allen Park) added that DUWA purchased the system to keep costs down whereas a private entity that purchased the system would otherwise charge rates to earn a profit and the communities would not have control over the rates charged to them. She added that the DWTF was in disrepair at the time of system transfer, but Veolia has performed significant cleanup and maintenance of the facility to improve its efficiency and functionality. She also added that water and sewer services are basic needs that require continuous operation, and supplying these services is not cheap.

Mayor Joseph Kuspa (Southgate) commented that several communities, including Southgate and Wyandotte, should expect to experience larger rate increases over the next few years as the new rate methodology is phased in, but added that the rate increases should stabilize once the old rate methodology is completely phased out. He also added that the rates should allow DUWA to continue supporting the Biosolids Dryer Project through completion. Accountant Doug Drysdale responded that the new rate methodology uses more accurate flow data as provided by the flow meters and agreed that the rates should stabilize once the old rate methodology is completely phased out. Jim Taylor (Van Buren Township) also noted that there have been substantial improvements to the DWTF since DUWA took ownership and Veolia has implemented many efficiencies. He noted that the Technical Committee plays a critical role in identifying additional efficiencies as they have insight into the operations of the DWTF. He added that it is important that each community has staff engaged in the Technical Committee.

Accountant Doug Drysdale encouraged the Board Commissioners to share the Draft FY2024-25 Rate Package and Surcharge Rates with their financial personnel for review ahead of adoption of the rate package and surcharge rates in June.

c. Quarterly Financial Statement – 2024 Q1
Accountant Doug Drysdale (DNS Financial Services/Southgate) presented the Quarterly Financial Statement for 2024 Q1 (Attachment 14). The balance sheet shows that DUWA has about $35.1M in cash at the end of Q1 compared to the $35.4M in cash at the beginning of the year. Some of the cash outflow was attributed to the SRF bonds that were paid this quarter. The amount in Accounts Receivable increased from $3.4M at the beginning of the year to $5.8M at the end of Q1 due to invoices created from the self-reporting flow worksheets. Many of these invoices have since been paid, and the amount in Accounts Receivable has now been reduced back down to about $3.4M. The Fixed Assets and short-term and long-term liabilities will be adjusted during the audit when the bonds payable and unamortized bond premiums are adjusted. The prepaid insurance was recorded inaccurately and should reflect a balance of about $550k instead of $700k. The amount in Accounts Payable is about $5.9M, most of which is related to debt payments that will be made on April 1st. There is no change in the fund balance from the beginning of the year, and the fund balance at the end of 2023 was about $108M pending the audit.

The Revenue and Expenditure report compares the 2024 Q1 balance to the 2023 Q1 balance. The targeted percentage of budget used is 25% for Q1. Revenues include the $10M ARPA grant from the State, SRF billings to the communities, industrial surcharges, and revenues from the sell back of unused natural gas. No UV project expense reimbursements have yet been requested from EGLE as it relates to the $10M grant. Industrial surcharge revenues totaled about $220k in Q1 as many payments were received after the winter season. This amount of industrial surcharge revenue is not expected to be collected each quarter, but total revenues are expected to be close to the annual budgeted amount. Interest earnings totaled about $377k in Q1, which exceeded the budgeted amount. Debt service charges include principal bond payments made as well as accrued interest. Most of the debt service payments are made in April, and some are made in October. Plant and administration costs are at about the budgeted amount. There has also been little capital project activity in Q1 so not much of the capital project budget has been spent. The net of revenues and expenditures through 2024 Q1 shows about a $183k deficit.

Mayor Joseph Kuspa (Southgate) asked if the unused natural gas is sold back to the market at the same rate that DUWA purchases the gas. System Manager Tercala responded that the natural gas is sold back to the market at the market price that day. A couple years ago, the market price was higher than what DUWA had paid for the gas, but currently the market price is lower than what DUWA pays for the gas.

d. Community Self-Reporting Status Log
Accountant Doug Drysdale (DNS Financial Services/Southgate) presented the Community Self-Reporting Status Log (Attachment 15). All communities except Dearborn Heights and River Rouge have reported their flows through February 2024. Self-reported flows through February 2024 are needed to develop the FY2024-25 rate package. Accountant Drysdale will continue coordinating with personnel from Dearborn Heights and River Rouge to receive their self-reported flow worksheets.

e. Aging AR
Treasurer Jason Couture (Taylor) presented the Aging Accounts Receivable report (Attachment 16). He stated that the total amount in the Accounts Receivable is approximately $3.2M of which 96% is less than 90 days delinquent. The City of Riverview has an outstanding payment over 90 days delinquent.

Treasurer Jason Couture (Taylor) stated that the Treasurer can authorize assessment of a 1.5% monthly fee for delinquent payment of invoices. Upon discussion with the Board Officers and per the Treasurer’s authority, a 1.5% monthly fee will be assessed beginning on July 1, 2024 for invoices over 60 days delinquent. This fee will accumulate each month that the invoice has not been paid. This proposed date provides an opportunity for communities to get caught up on their payments and self-reporting worksheets now. It is also important that self-reporting worksheets are provided timely as an inaccurate flow estimate would impact the rates charged to each community.

Treasurer Jason Couture (Taylor) also stated that a late fee will also be assessed to the industrial users who are delinquent on their payments, as many industrial users are significantly behind on their payments. The fees assigned will be based on the fee schedule in DUWA’s Sewer Use Ordinance. If payment continues to be delinquent, DUWA could revoke their industrial user permits. Treasurer Jason Couture (Taylor) will work with Fausone & Grysko to review the surveillance fees for the industrial users and determine the next appropriate actions to take.

Chairperson McLeod (Allen Park) appreciated that both the communities and industrial users are held accountable for delinquent payments. Mayor Joseph Kuspa (Southgate) requested that a notification be provided to the communities to inform them that a late fee will be assessed on delinquent payments beginning on July 1, 2024. Treasurer Jason Couture (Taylor) confirmed that he would work with OHM to develop a notification that will be sent to the communities.

f. Pending Invoices
Treasurer Jason Couture (Taylor) presented the invoice register for a request for payment (Attachment 17). The invoice register included 53 invoices due for a total of $771,278.86. The largest invoices included those to Wyandotte Municipal Services for utility services. There were no Veolia invoices included on this month’s invoice register, so it is expected that invoices for two months of Veolia’s operation and maintenance services and unit cost reconciliations will be included on next month’s invoice register.

Motion by Mayor Joseph Kuspa (Southgate) and supported by Roberto Scappaticci (Romulus) to pay the invoice register. The motion passed unanimously by all attending members.

Following approval to pay the invoice register, additional discussions were held regarding changing DUWA’s fiscal year (January – December) to align with its rate year (July – June), as was brought up during last month’s Board meeting. A change in the fiscal year would require each community to pass a resolution to amend the Articles of Incorporation, which sets DUWA’s fiscal year. A unanimous vote in favor of changing the fiscal year would be required. DUWA’s Board Officers previously discussed changing the fiscal year and were in support. Treasurer Jason Couture (Taylor) stated that the City of Taylor would be in favor of this change. OHM will work with Fausone & Grysko to develop a draft resolution that will be provided to each community for adoption at their local City Councils/Township Boards.

Most communities have a fiscal year that ends on June 30th, but the Townships have a fiscal year that ends on December 31st. Chairperson McLeod (Allen Park) stated that since most communities have a fiscal year that ends on June 30th, the change in DUWA’s fiscal year to match its rate year should not be a major change and would make sense for most of DUWA’s communities. Mayor Joseph Kuspa (Southgate) suggested that the Board make a motion to recommend changing DUWA’s fiscal year.

Mayor Joseph Kuspa (Southgate) asked how quickly the fiscal year change can be implemented once the resolutions are adopted. Rumzei Abdallah, of Plante Moran, responded that the change could be implemented at year-end such that there would be a short budget year from January 1, 2025 to June 30, 2025 to transition to the new fiscal year. However, timing would depend on the anticipated schedule for development of next year’s budget.

Motion by Mayor Joseph Kuspa (Southgate) and supported by Mayor Tim Woolley (Taylor) to authorize Fausone & Grysko to develop a resolution to change DUWA’s fiscal year to be in effect from July 1 – June 30. The motion passed unanimously by all attending members.

 

9. PUBLIC COMMENT
There was no public comment.

 

10. OTHER BUSINESS
Mayor Bill Bazzi (Dearborn Heights) reminded the Board that Memorial Day is coming up which provides an opportunity to pay respects to fallen soldiers who gave the ultimate sacrifice. He noted that there are several veterans on DUWA’s Board, including himself and Mayor Tim Woolley (Taylor).

Mayor Bill Bazzi (Dearborn Heights) also reminded the Board that he will be going to Canada for the Great Lakes and St. Lawrence Cities Initiative conference next week. He asked the Board Commissioners to provide him with any questions or concerns that they would like him to bring forward in his discussions with legislators at the conference. Mayor Joseph Kuspa (Southgate) asked Mayor Bill Bazzi (Dearborn Heights) to inquire about upcoming or anticipated regulations that could impact DUWA. System Manager Tercala asked Mayor Bill Bazzi (Dearborn Heights) to express the need for wastewater treatment facilities to have guaranteed biosolids disposal outlets and to encourage support of PFAS liability exemptions from the CERCLA Act for wastewater treatment facilities. Mayor Bill Bazzi (Dearborn Heights) responded that he would express these concerns and collaborate with the Downriver Community Conference (DCC) and other organizations to put pressure on the landfills to accept biosolids.

Mayor Bill Bazzi (Dearborn Heights) stated that this year’s conference theme is focused on lead service line removal efforts as well as addressing water erosion in rivers and creeks and preventing the Asian Carp invasive species from making its way into the Great Lakes, which would negatively impact the fishing and water recreation industries.

 

11. NEXT BOARD MEETING DATE: THURSDAY, JUNE 13, 2024 (9:00AM; IN-PERSON)
Chairperson McLeod (Allen Park) reminded the Board that the next meeting would take place on Thursday, June 13, 2024 at 9:00 AM in-person at Taylor City Hall. Chairperson McLeod (Allen Park) wished everyone a happy Mother’s Day and happy Memorial Day.

 

12. ADJOURNMENT
There being no other business, Chairperson McLeod (Allen Park) announced that a motion to adjourn would be in order. Motion by Mayor Joseph Kuspa (Southgate) and supported by Mayor Bill Bazzi (Dearborn Heights) to adjourn the meeting. The motion passed unanimously at 10:58 AM.

 

Meeting Minutes Prepared by:
Mackenzie Johnson  |  OHM Advisors, DUWA System Manager

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

Attachments:

1. Meeting Agenda
2. April 11, 2024 DUWA Board Meeting Minutes
3. Monthly Legal Update (by Fausone & Grysko)
4. Fiscal and Rate Year Memo (by Fausone & Grysko)
5. System Manager Report for May 2024 (by OHM Advisors)
6. UV Disinfection Replacement Project Update (by OHM Advisors)
7. Biosolids Dryer Facility Project April 2024 Monthly Progress Summary (by Veolia CPM)
8. USP Proposal for Condenser Tower Hydrogen Peroxide Dosing System
9. Request to Purchase a Towbro Replacement (by Veolia OM)
10. Monthly Operating Report for March 2024 (by Veolia OM)
11. DWTF Unit Price Changes Summary (by Veolia OM)
12. Allen Park Overpayment Request (by Plante Moran/Doug Drysdale)
13. Draft FY2024-25 Rate Packages and Surcharge Rates (by Doug Drysdale)
14. Quarterly Financial Statement – 2024 Q1 (by Doug Drysdale)
15. Community Self-Reporting Status Log (by Doug Drysdale)
16. Aged Accounts Receivable Report, dated May 2, 2024 (by Doug Drysdale)
17. Invoice Register, dated May 2, 2024 (by Doug Drysdale)