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DOWNRIVER UTILITY
WASTEWATER AUTHORITY (DUWA)
From Advisory Role to
System Ownership
MWEA Wastewater Administrators Conference
January 2019 | Frankenmuth, Michigan
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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
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Downriver SewageDisposal System Overview
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DOWNRIVER COMMUNITIES
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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
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SERVICE AREA
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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
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DSDS ASSETS
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• 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.
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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
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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
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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
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• 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
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• 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
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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
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DUWA STANDUP FOR SYSTEM TRANSFER
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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
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TECHNICAL FINANCIAL
DUWA BOARD
LEGAL
OPERATIONSDNS FINANCIAL SERVICES
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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
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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
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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
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SYSTEM TRANSFER OCCURRED ON
SEPTEMBER 27, 2018
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LESSONS LEARNED
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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
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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
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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
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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
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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.
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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
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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
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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)
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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
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• 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
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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
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NEXT STEPS
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THE TRANSITION CONTINUES
• DUWA remain in Transition Stage
• Utility splitting
• Implement decentralization of SCADA
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• Stand Up
• Develop Master CIP
• Assess rates
• Perform critical repairs
• Focus on AMP
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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
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OPEN FORUM
QUESTIONS, ANSWERS, DISCUSSION