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DOWNRIVER UTILITY
WASTEWATER AUTHORITY (DUWA)
From Advisory Role to
System Ownership
MWEA Wastewater Administrators Conference
January 2019 | Frankenmuth, Michigan
SPEAKERS & OUR AGENDA
I. Downriver Sewage Disposal System Overview (DSDS)
II. History: Major Milestones
III. DUWA Standup for System Transfer
IV. System Ownership
V. Lessons Learned
VI. Next Steps
2 Vyto Kaunelis, PE
Principal
Lambrina Tercala, PE
Project Manager
Downriver SewageDisposal System Overview
DOWNRIVER COMMUNITIES
4
Allen Park* Riverview
Belleville Romulus*
Brownstown Township* Southgate
Ecorse Taylor
Dearborn Heights* Van Buren Township*
Lincoln Park Wyandotte
River Rouge
* Denotes those Communities who are partially served by the Downriver System
SERVICE AREA
5
DUWA & THE SYSTEM
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• Constructed Downriver Sewage Disposal System (DSDS) in 1938
• DSDS’s service area includes more than 350,000 people
• Communities fund the system construction and O&M via rates and taxes
THEN NOW
DSDS ASSETS
7
• Downriver Wastewater Treatment Facility (DWTF)
• 38 acres, 30+ buildings
• 7 Interceptors (46 miles)
• Downriver Tunnel System (wet weather flow)
• Equipment including: pumps, inventory, rain gauges, etc.
FLOW CAPABILITIES
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• DOWNRIVER WASTEWATER TREATMENT FACILITY (DWTF)
• Flow, Avg = 50 MGD
• Flow, Peak = 125 MGD (full treatment)
• Wet Weather Capabilities = 225 MGD
• TUNNEL STORAGE
• 15 MG
TREATMENT SYSTEM
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• Influent Pumping (225 MGD)
• Preliminary Treatment
• Primary Treatment (150 MGD)
• Secondary Treatment (125 MGD)
(high-purity oxygen activated
sludge with secondary settling)
• UV Disinfection
• Dewatering by Centrifuges &
Belt Filter Presses
HISTORY: MAJOR MILESTONES
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• Late 1930s: Constructed & In Service
• Constructed under Federal Public Works grant; in service in 1939
• Serviced Wyandotte, Lincoln Park, Allen Park, Ecorse, and River
Rouge
• Sized @ 30 MGD
1930 1940 1950 1960 1970 1980 1990 2000 2010 NOW
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• Early 1960s: 50-Yr Service Agreement Approved in 1962
• Between Wayne Co. and Downriver Communities
• Wayne County managed System, but Communities were solely responsible for costs
• Each Community purchased maximum flow capacity
1930 1940 1950 1960 1970 1980 1990 2000 2010 NOW
13
• Late 1980s: Federal Consent Judgement
• U.S.EPA sues Wayne Co. alleging unlawful pollution of Detroit River by DSDS
• County successfully petitions Court to add all 13 Communities as Co-Defendants
• Must comply with 1972 Federal Clean Water Act
• Mid 1990s: Entered Consent Judgment
• Required >$250M in Capital Improvements
• Cost was fully financed by the Communities
1930 1940 1950 1960 1970 1980 1990 2000 2010 NOW
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• Early 2000s: Created Joint Management Committee
• Communities desired to oversee the management and administration of DSDS
• Provided a mechanism for Communities to give input on critical issues
• Such as, rates and budgets, financing of capital improvements, staffing, and
management issues
• Successfully performed CAMPP (Comprehensive Assessment and Master Plan
Project) to become competitive with private operations
• 2006: Capital Improvements Complete
• Consent Judgement terminated
1930 1940 1950 1960 1970 1980 1990 2000 2010 NOW
15
• 2010: 1962 Service Agreement Lapses
• Communities form DUWA to assist with negotiations with Wayne County on new
Service Agreement
• Negotiations led to development of tentative 20-year service agreement
• 2015: Wayne County Announced Phase Out of Wastewater Services
• Communities decide to purchase System from Wayne County and take over
responsibility for management and operation
• 2016: DUWA Issues Letter of Intent to Purchase DSDS
• DUWA issues intent to purchase, and Wayne County accepts purchase
1930 1940 1950 1960 1970 1980 1990 2000 2010 NOW
SYSTEM PURCHASE IS WIN-WIN
• Wayne County
• End Ownership & Operation
• Reduce Financial Exposure
• Reduce Debt
• Eliminate Liability Exposure
• Accommodate Local Desires
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• DUWA
• Manage Local Infrastructure
• Eliminate County Overhead Charges
• Pursue Desired Level of Service
• Control Liability Exposure
• No Legacy Costs or Judgement Levy
• Ensure Continued Optimal Operation
DUWA STANDUP FOR SYSTEM TRANSFER
GOVERNANCE & BOARD MEMBERS• DUWA is a public body corporate organized pursuant to Act 233
• Comprised of 13 primary representative members, consisting of Mayors or
Supervisors; primary members have alternate commissioners
• Members exercise all powers of DUWA
• Members meet once per month for Board meetings to discuss and agree or
vote on direction of Authority’s operations
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SYSTEM ORGANIZATIONAL CHART
19
TECHNICAL FINANCIAL
DUWA BOARD
LEGAL
OPERATIONSDNS FINANCIAL SERVICES
PURCHASE CRITERIA• Cost Implications: Goal is to be ‘Rate Neutral’ – this does not mean ‘no
rate increases’
• Rate Neutral to factor in:
• Deferred maintenance
• Personnel costs with depleted staff
• Pension & Health Care costs looming
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0%
1%
2%
3%
4%
5%
2018 2019 2020 2021 2022
6%
7%
RATE NEUTRAL
• Transactional Costs, and
• System Improvements
NEGOTIATED TRANSFER FEE
• Transfer Fee: $57,500,000
• Considerations included Pension, OPEB Liabilities, SRF capital debt
• DUWA acquiring ~$38M in reserves from Wayne County
• To be used by DUWA to:
• Finance Purchase Price of System
• Defease Wayne County’s 2007 Revenue Bond
• Fund Reserve Account
• Pay Cost of Issuance of Bond
21
MAJOR TRANSITION TASKS• 2016:
• Approved a Service Agreement & Sewer Use Regulations
• Selected Veolia as Contract Operator
• 2017: Secured System Manager
• 2018:
• Secured Veolia as Contract Operator w/ 20-yr Contract
• Resolved Financial Hurdles
• Sold Revenue Bond to generate cash for the purchase
• Transfer (limited) Debt from Wayne County to DUWA
• Adopted Rates & Charges
• Approved Definitive Transfer Agreement
22
SYSTEM TRANSFER OCCURRED ON
SEPTEMBER 27, 2018
23
LESSONS LEARNED
PATIENCE IS A VIRTUE
• It took 3 years to effectuate the deal. Why?
• Relationship between DUWA and Wayne County was weak; significant
distrust and skepticism in each other's abilities to perform
• Legal Agreements
• Historic site lacked adequate papers, especially regarding real estate
• Lack of Dedicated Resources
• Wayne County announced desire to leave WW business in 2015; Staff
numbers decreased since that announcement; remaining staff helped
achieve transfer
• Target closing assigned as September 27, 2018. This was assigned based
Wayne County on financial needs and CEO directive. Holding to the target
helped force action.25
IDENTIFY THE KNOWN UNKNOWNS
• Need to resolve ‘as is’ data gaps
• Condition Assessment of Wastewater Treatment Facility
• Inspections of Interceptors (3%) for ‘Due Diligence’
• Real Estate
• Collecting Easements
• Performing Boundary Survey/ Adjacent Drainage District facilities
needed to be ‘carved out’
• Phase I/II ESA
26
BE THE MASTER OF THEIR DESTINY
• Will the Communities be better off in the
future if the County owns and runs the system
or if they own it?
• County has stated if deal does not close:
• Private Operator will be hired and costs
passed along, and
• Pension & Health Care costs for retirees will
be factored into the rates
• Savings to come from good management and
prudent long-term decisions – strong technical
basis and foundation of trust27
Romulus Sink Hole
YOU CAN’T OVER COMMUNICATE
• Unanimity desired for approval of Service Agreement and Definitive
Transfer, however, bylaws only required Super Majority Vote
• Focused on educating communities on DUWA’s history, agreement on
transfer fee, and approach for future operations w/ Veolia
• Conducted a Town Hall Meeting
• Roadshow at Local Board or Work Group Meetings
• Tour of Treatment Facility open to Local Community Board Members
• Even skeptics had to concur there was no reasonable alternative
28
TEAMWORK MAKES THE VISION WORK
• Wayne County lacked deep bench of resources, but dedicated staff focused on
critical path items that effectuated the deal
• DUWA does not have employees. DUWA developed Legal, Technical, and
Financial teams to push transition forward
• Veolia participated in meetings for 2.5 years from selection to contract. Veolia
helped provide guidance based on their experience.
29
KNOW THE TRUE COST OF
DEFERRED MAINTENANCE• Wayne County staffing levels at Downriver Wastewater Treatment
Facility were very low. This caused:
• Deferred Maintenance
• Reduced sludge handling
• NPDES Permit Compliance:
• TSS Exceedance at Transfer Date
• Sludge hauling volumes down by 30% from previous year; too much
solids in process units
• The system realized increased reserves which transferred to DUWA,
but now system has several critical equipment procurements in process30
A CASE FOR PRIVATIZATION
• Veolia brought extensive experience to the process
• Strong resources brought in to handle problems uncovered during
transition
• 20-yr contract sets-up long-term focus for success
• Large network of resources
• Experience and standards based on many similar facilities versus single
facility
• Limiting Factor:
• Stigma of for-profit
company’s markup policies
31
CULTURE IS A STRATEGY
• Length of process most difficult on DWTF employees
• Skeleton crew remained (38 FTEs); Veolia Contract includes 48 FTEs
• Environment bred uncertainty
• Procurement process for maintenance parts stalled; couldn’t do the job
they desired to achieve
• Union negotiations were extensive; Contract Operator prevented from
recruiting existing staff until system transfer was eminent (<30 days)
32
DWTF PERFORMANCE PRE-TRANSFER
Flow Staffing Permit
YEAR MGY # violations
2014 20,158 50 10
2015 18,755 50 0
2016 19,280 45 2
2017 18,933 40 10
2018 (7 months) 13,789 38 10
• Ultimate authority for decision making is by the 13 member Board
• Unanimity is always the goal, but when that doesn’t occur, need to
respect the collective decision
• DUWA’s Mechanisms:
• Engage committees to help advised on specialized matters, including
legal and technical
• Note taking is key, as is collaborative forums
• Utilizing BaseCamp to log conversations & increase engagement
outside of meeting dates33
AGREE TO DISAGREE
KEEP CALM AND CARRY ON
• Bonding required ‘all hands on deck’ and ‘one voice’ to Board
• Challenges:
• Board membership turned over – hard to focus on forward
progression while getting new members up to speed on previous
decision making (ie negotiated transfer fee)
• DUWA lacked credit, even though communities always funded the
system’s expenses
34
NEXT STEPS
THE TRANSITION CONTINUES
• DUWA remain in Transition Stage
• Utility splitting
• Implement decentralization of SCADA
36
• Stand Up
• Develop Master CIP
• Assess rates
• Perform critical repairs
• Focus on AMP
FUTURE GOALS
• Make better decisions to control long-term costs
• Increase transparency to increase knowledge by the communities
• Focus on peer collaboration
• Address basement flooding proactively
37
OPEN FORUM
QUESTIONS, ANSWERS, DISCUSSION
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