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HomeMy Public PortalAboutExhibit MSD 93 Transcript August 24, 2011 Public Hearing 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 METROPOLITAN ST. LOUIS SEWER DISTRICT PUBLIC HEARING AUGUST 24, 2011 (Hearing start time, 6:02 p.m.) 2 INDEX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Introduction by Mr. Goss 5 Presentation by Mr. Theerman 9 Public Hearing Session 21 Conclusion 55 (No Exhibits Marked) 3 PUBLIC HEARING FOR METROPOLITAN ST. LOUIS SEWER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DISTRICT, produced and examined on AUGUST 24, 2011, between the hours of 6:02 in the evening and 7:13 in the evening of that day, at the Herbert Hoover Boys and Girls Club, 2901 North Grand, St. Louis, Missouri 63107, before Suzanne Zes, Certified Court Reporter. 4 APPEARANCES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For the MSD Rate Commission: Glenn Koenen West County Chamber of Commerce Eric Schneider Regional Chamber & Growth Association Brad Goss Home Builders Association of Greater St. Louis Paul Brockmann Missouri Botanical Garden George D. Tomazi The Engineers' Club of St. Louis Ralph Wafer Missouri Coalition for the Environment Also present: Jeff Theerman Karl Tyminski Pam Bells Lance LeComb Jan Zimmerman Jonathon Sprague Brian Hoelscher The Court Reporter: Suzanne Zes Midwest Litigation Services 711 North Eleventh Street St. Louis, MO 63101 314.644.2191 5 MR. GOSS: Good evening. My name is Brad 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Goss, I am a member of the Metropolitan Sewer District Rate Commission. I will be presiding over the public hearing this evening. With me tonight are the following MSD Rate Commission members, Mr. Paul Brockmann, Mr. Schneider, Mr. Glenn Koenen and Mr. George Tomazi. The charter plan of the District was amended at a general election on November 7, 2000 and established a Rate Commission to review and make recommendations to the District regarding changes in wastewater rates, stormwater rates and tax rates proposed by the District. The charter plan requires the MSD Board of Trustees to select organizations to ensure a fair representation of all users of the District services on the Rate Commission. The Rate Commission representative organizations are to represent commercial industrial users, residential users and other organizations interested in the operation of the District including organizations focused on environmental issues, labor issues, socioeconomic issues, community neighborhood organizations and other nonprofit organizations. The MSD Rate Commission currently consists of 14 members from organizations and institutions throughout St. Louis City and County. On May 10, 2011, the Rate 6 Commission received a rate change notice proposing 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 changes in the District's wastewater rates. The Rate Commission adopted operational rules and a procedural schedule to govern the proceedings on May 17th, 2011 and amended its procedural schedule of July 8th, 2011. Under the procedural schedule adopted by the Rate Commission, as amended, the MSD Rate Commission has until October 21, 2011, to review and make recommendations to the MSD Board of Trustees as to whether the proposed rate should be approved, not approved or modified with suggested changes and then approved. The MSD Rate Commission has engaged legal counsel and a rate consultant, independent of those used by the MSD staff. Under procedural rules adopted by the Rate Commission, as amended, any person affected by the rate change proposal had an opportunity to submit an application to intervene in these proceedings. Applications to intervene have been filed by Barnes Jewish Hospital, Covidien, Missouri Industrial Energy Consumers, Robert A. Mueller, AARP and Consumers Council of Missouri. These applications have been granted. Since May 10, 2011, the MSD Rate Commission has received testimony from MSD staff, intervenors and the rate consultant. The parties have also engaged in discovery requests. 7 Technical conferences were held on June 13th, 2011 and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 August 8th, 2011 and are planned for December 6th, 2011, where the participants and the Rate Commission are given an opportunity to ask questions of those submitting testimony. A prehearing conference for the purpose of identifying any issues raised by the rate setting documents and the prepared testimony previously submitted will be conducted on the record on September 15th, 2011. All persons submitting testimony may participate in the prehearing conference and each participant in the prehearing conference must submit on or before September 22, 2011, a prehearing conference report describing the issues raised by the rate setting documents and the prepared testimony, together with a brief description of such participants position, if any, on each issue and the rational therefore. Rate payers who do not wish to intervene are permitted to participate in these on the record public hearings conducted in six sessions beginning on August 16th, 2011 and concluding on September 26th, 2011. The Rate Commission published a public notice regarding these proceedings in the St. Louis Post Dispatch on May 20th, 23rd and 24th, 2011 and July 20th, 21st and 22nd, 2011. And in the St. Louis American on May 26th, 2011 and July 21, 2011. These 8 notices contain the time, dates and location of each 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of these conferences and hearings. The public hearing session tonight is for the purpose of permitting the District to present its wastewater rate change proposal and to permit any rate payer the opportunity to comment. We will begin with a presentation by the District followed by a public comment period. Those wishing to speak should sign in on the blue cards provided, the blue cards that were outside in the hallway and will be called on in the order of the names listed thereon. Each rate payer should identify themselves and any organizations represented by such rate payer. Just some housekeeping rules before we begin, if you do wish to present testimony, please again, sign the blue cards that are out in the hallway and then those need to be submitted to us. Speakers will be recognized in the order in which they sign up. Each rate payer will have a maximum of ten minutes to speak regarding the proposed rate change and as the presiding officer I can limit or expand the time, should I deem it necessary. And restrooms are located outside to the right, across from the sitting area. Are there any questions regarding the procedures for this evening? Seeing none, is the District ready to proceed? And I ask that you please step forward. 9 MR. THEERMAN: I am going to give a brief 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 presentation on the proposal we have submitted to the Rate Commission. Okay. First and foremost, MSD is two utilities in one. A stormwater utility that is charged with stormwater management and a wastewater utility that collects, treats and manages wastewater. We cover about 525 square miles. That is all the City of St. Louis and about 80 percent of St. Louis County out to about roughly Highway 109. We were originally chartered in 1954 and at that time we served an area out to roughly Lindbergh. And then in the late '70s the voters of St. Louis County voted to annex the District and that created the present boundaries or nearly the present boundaries of the District. We serve about 1.4 million customers, that is about 428,000 wastewater accounts. We are the combination of 79 different sewer systems. When MSD was created sewage treatment and management was handled by municipalities and by private companies throughout the region. Since that time those have all been placed under one umbrella, one utility. We are a governmental entity, we are not a profit-making operation, so we operate under a charter that was created under the Missouri constitution. There is no profit motive, there is no stakeholders of MSD, we are 10 a government. We have the fourth largest sewer system 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the United States and that is problematic for St. Louis because we are certainly not the fourth largest community. So we are behind New York, Chicago and L.A. Our sewer system is roughly the same length of miles of pipe as L.A. and with L.A.'s five plus million customers they have more people to pay for the upkeep and operation system than we do. System consists of really -- the wastewater system now is what we are talking about tonight. The stormwater system that exists outside in the county is not part of this rate proposal and I am going to cover that a lot in the presentation. The wastewater system we manage has about 6,700 miles of sewers and that breaks down into 1,800 miles of what's called combined sewers. And those are the sewers designed in the 1800s, one pipe system, stormwater and wastewater flows together in one pipe. And that was developed to get sewage out of the city into the rivers. So when it rains, the rainwater helps flush those sewers into the area's rivers. When we developed treatment plants in the '60s all the dry weather flows were routed to treatment plants instead of the river but there is still a problem of when it rains there is too much water for the system to handle and you have overflows 11 that I will talk more about here in a minute. There 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is also 4,700 of sanitary sewer. Now, that is a more contemporary design of sewers. There are two sets of sewers on the separate sanitary area. There is a wastewater set of pipes and a stormwater set of pipes. And again, there is 4,700 miles of that wastewater system outside of the combined sewer area. We operate seven treatment plants, they treat about 370 million gallons of water every day and that is hard to visualize. If you think of a box where the base is the size of a football field, the high end of that box to hold 370 million gallons would be taller than the Gateway Arch, so a lot of sewage in St. Louis, a lot being treated in our plants every day. There is also almost 3,000 miles of stormwater system, it's not part of our wastewater system and it's not part of this rate proposal. As I said earlier, this rate change proposal is a wastewater rate change only. We have a stormwater rate that we imposed in 2008. It was based on impervious area, we charged customers for about two years and then a court decided that was an invalid rate and we discontinued it. That is presently in appeal and we are not charging that rate today, instead we utilize a system of taxes and a small charge on a monthly bill for stormwater. So 12 stormwater service is inadequate in St. Louis. Right 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 now we are trying to work out the rate issues we have to properly fund it, so that we can have provide better stormwater service. It is not part of this rate proposal because it is in litigation. The rate plan we have submitted is a four year plan that stretches from July 1st, 2012 through June 30th, 2016. It envisions four rate increases. One in July of 2012 and then each year after that for four consecutive years. The current average monthly bill for a customer for wastewater service is $28.73. There are a number of things that are causing this rate change to be necessary and the first one is regulatory requirements and that is the primary reason for needing to do to this. I am going to talk in length about what that is. There is also the increase use of debt financing to build projects. MSD can borrow money if voters approve the use of debt and then that debt has to be retired with interest. So part of the rate change is about the interest payments necessary if you borrow. There is all also a small lack of loss of customer base that is accounted for in the rate proposal. There is some declining water usage related to water conservation and also there is the economic conditions that exist that play a role in 13 this. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The proposal includes a little over a billion dollars of capital improvements. 945 million of that would be debt financed in our proposal and all the bond proceeds would be used to finance capital improvements. We are not using debt, we are not issuing bonds to pay for day-to-day operation of the District. In that four year period there would also by approximately $634 million of operations and maintenance expense. That is the day-to-day operation of the District, the maintenance of the system, the operation of the treatment plants and about $359 million of debt service, again spread over four years. And that debt service is to cover debt we would issue in this proposal but also debt that is currently outstanding, we have already issued and we are paying back now. So the rate change is to a great extent required by regulatory requirements. In 2007 MSD was sued by the EPA and the State of Missouri for alleged violations of the Clean Water Act. And we have reached a settlement with the regulators to settle that lawsuit. That lawsuit, the settlement, results in a 23 year compliance schedule, an estimated cost of compliance of $4.7 billion and that is in today's dollars, it would address sanitary sewer overflows and 14 eliminate them, it will address the abatement of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 combined sewer overflows and I will talk more about both of those in just a second, additional maintenance and repair of the sewer system as time goes on to make it operate better, reduction of basement backups, and asset reinvestment or continuing to reinvest in the sewer system. So at the end of the 23 years we are not sitting in the very some place we are today. Also a driver, a regulatory requirement, that is not part of the Consent Decree or the settlement agreement, is additional treatment requirements. EPA has imposed additional treatment requirements at our treatment plants that we are going to have to comply with. And so, as those improvements get built there will be new operation and maintenance costs associated with turning those on. It's possible for the public to comment on this settlement, it is called a Consent Decree. You have to comment on the Department of Justice website and that comment period goes until September 9th. On the slide it shows a link to our website, www.stlmsd.com, and if you go there you can get a link to the Department of Justice website and see the entire settlement agreement and see how to comment if you desire. Commenting tonight will be very beneficial for the Rate Commission but it will 15 not be a comment to the Justice Department if that is 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 something you are interested in doing. So a little bit more about these overflow issues. The map is not intended to test your eyes. You have that map in your handout as well. There is a green area, a green shaded area, and that is all of the City of St. Louis and 23 neighboring municipalities and that is the combined sewer area or the area where the system is a lot older. And that combined area is where you have one pipe system that carries both wastewater and stormwater. During dry weather all the sewage goes to treatment plants and gets treated appropriately. In wet weather when there is more flow then there is capacity in the pipes, the excess water is discharged into neighboring rivers through what is called combined sewer overflows. So in that green shaded area are a 199 little green dots. Those are combined sewer overflows and they discharge in the Mississippi River, the River Des Peres and some of the other smaller creeks, Maylene Creek. Those overflows are not illegal, they are permitted by EPA but they do have to be abated. They discharge an average of about 50 times a year when it rains and that needs to be reduced. So we have developed a long-term control plan with lots of public input to address those 16 overflows. And it takes those overflows from fifty 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 times a year down to about four times a year for all of those dots except for the ones directly to the Mississippi River. That has a price tag of about $2 billion. Then the outside area, the area that is not shaded, is the separate sewer area and is the bounds of the county. That system has a wastewater system that is supposed to be just carrying wastewater but it has imperfections, it has deterioration that has gone on over time and lets water in. That water either comes from imperfections in our public system or it comes from inappropriate connections in the private system, so that can be downspouts that were connected. Now remember, in the city where there is combined sewer, a connection of downspouts is appropriate. But out here in the county where there is not a combined sewer, downspouts shouldn't be there and it should be just released to the green space. So if downspouts are connected inappropriately or sump pumps are there that shouldn't be pumping into the sewer system, it takes up capacity and causes overflows and causes basement backups. All those red dots are illegal. They all need to come out and that is the other half of the program. The elimination of the those red dots, roughly the other half. This is a summary of 17 the capital improvement costs for each year of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rate plan, about a quarter of a billion dollars or $250 million a year in capital improvements over that entire area. Now, this isn't all the detail that is available. We have given the Rate Commission all the projects and estimated costs behind this detail. So it's possible for the public as well, to see what all these projects are and see where they are going to be constructed. A little over a billion dollars of improvements in four years. These are our respective operating costs over that same period of time. You see our operating costs are escalating at 4 or 5 percent. For the most part, if it is more than 4 percent, it is because we are getting regulatory requirements from this settlement agreement that we'll do with our own work force and that is escalating some of our costs. There is also some one-time costs in the upward 14, 15 years, that persistent changes in the District's operating systems. This is the chart of the District's historical sewer bills and that is the blue bar charts. That is a monthly sewer bill for the average residential customer. The red line is a survey, nationally of sewer bills in lots of cities. And you can see that St. Louis' sewer bills are rising 18 similarly to the way they are in the rest of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 country and in the big utilities. Again, because of regulatory requirements that have to be complied with, so this is very similar story throughout the nation. Here is the proposed rate increase we have delivered to the Rate Commission. Again, starting at $28.73, this is a wastewater rate and then escalating each year. You should keep in mind that $28.73 rate is an average number, everybody's bill is different. If you live in the City of St. Louis your water provider is the city itself and we take the water data from the City of St. Louis for the winter quarter and apply that to calculate wastewater bills. The reason we use the winter quarter is because we are trying not to capture water use like lawn irrigation or washing cars that sort of thing. Now in the city, most residential customers do not have water meters. And you pay based upon the number of rooms and baths you have in the house. It is possible to get a water meter but most homes don't have that today. If you're living out in the county your water provider is either Missouri American Water or Kirkwood's water company and those are all meters, so we take again, winter quarter meter water consumption and apply it to the wastewater bill. That's how bills get calculated. 19 This slide is intended to show you the difference 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 between using debt and not using debt. On the left side is the proposal MSD has made to the Rate Commission. Again, a billion dollars of capital improvements, $945 million of debt and then the rates I have already discussed. And then the left side or actually your right side, shows you an example of where we fund the whole program in cash. That side has no debt but instead you have to raise the rates a lot to generate the 250 million or so a year to finance capital programs. So you see, in one year the rates jump to $73.35 and then after that you're at a place where you are generating the cash necessary to build the program and they just increase very slightly after that. We didn't recommend the right side because we felt like that is just really too big a jump for customers to be able to handle. Using debt, although your rates go up a lot, they didn't go up nearly as steeply as the cash financed approach. Our proposal is the left side. There are an infinite number of possibilities in between, you use different amounts of debt, cash to get to different places. The right side has the advantage of being the lowest overall costs because you're not paying interest payments. The left side tends to spread the cost of 20 the program over not only today's customers but future 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 customers because we are dealing with a system that has a really long life and that makes more sense to a lot of people. Okay, real quick, this is how we step through the future here. The Rate Commission will make a recommendation to our Board of Trustees in October of 2011, our board will do nothing with that except consider it for a 45 day period, there is a waiting period while they review the rate report. And they are charged with reviewing the rate report for compliance with our charter. After that, the board can act on it and if the rate report from the Rate Commission is compliant with the charter, our board is obligated to enact it. So that would look like a preliminary introduction in December and then a bond election, assuming the debt is involved in the rate report, in the winter or the spring. In Missouri, for municipal government to issue debt, it requires voter approval. So the voters wouldn't be voting on the rates per se, they would be voting on whether or not the District could use debt to finance the capital program. After the election is done, the board would have direction then, if the voters would have approved debt or not and they could finish the enactment of the 21 rate proposal. In our case, in our proposal, the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 first rate change would be July of 2012. So that is all I have and I will turn it back over to Mr. Goss. MR. GOSS: I am now going call the names of those who submitted speaker cards and ask that they would -- we'll bring a microphone to where you are and ask that you identify yourself by name and please make your comments to the Commission. And the first person is -- and I apologize in advance if I mispronounce people's name because I can't read handwriting or whatever. I believe it is Orde Logan or maybe Ora, I'm sorry. MS. ORA LOGAN: Yes. MR. GOSS: I'm sorry. MS. ORA LOGAN: I have a question about how you rate the sewer bill. I bought a two-family flat that has been vacant for a year and the tenants just moved in April and I got a bill for $700. I wrote to the Missouri Metro Sewer District but I have not received an answer yet. MR. THEERMAN: I am sorry, I don't know the specifics of your individual bill but our Director of Finance, Jam Zimmerman is here tonight. She is right in back there with her hand up and we would be glad to take a look at the bill and try to understand, try to 22 decipher for you, seems like a really big bill. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. ORA LOGAN: Yes, it is a shocker. MR. GOSS: Shayla McPeters? MS. ORA LOGAN: I am not a citizen of the City of St. Louis, I just live in St. Louis County in the unincorporated areas. I have been living in my home for a five years and my home is in a designated flood zone, so I have to carry flood insurance on my home. Behind my home is a creek and I know this is really not addressing to the stormwater issue, so I am assuming my problem really is with the stormwater issue, I have lost probably about 30 percent of my backyard to erosion. My neighbors have lost about 50 percent of their yard. They -- I am talking about all of my neighbors on my side of the street. I have contacted MSD on numerous occasions, you all have sent engineers out to me and basically told me that too bad, so sad, you're going to lose your yard. And my neighbors have, they have small children and I know none of you want your children or your grandchildren to play in your backyard when half of it is gone. You're asking us, as citizens of this city, to fund your project but when we have issues like this, you don't want to help us and right now I have no recourse. My fence in my backyard is gone, my 23 neighbor's fence is gone, I mean, eventually my house 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will be gone if this is not addressed. You have put up signs all along my backyard and all along the other the side of the creek saying we can't swim in it because there is wastewater mixed in with this creek. In 2008 when the major flood occurred because you all are trying to do some capital improvement and had the creek blocked up, the water couldn't go anywhere except into our homes. I want to know what MSD is going to do for my neighborhood for Sun Valley Estates, we are bordered by the creek that is at Lucas and Hunt and Halls Ferry and if necessary, my subdivision has sent me out here because I am the one that is always having something to say and will take action upon this. But if I don't hear something from you all that is going to address this issue and I know you're in litigation with the stormwater and you're wanting us to deal with this wastewater because obviously there is wastewater in it if your putting signs up, I would have them not vote for it and I will be a personal crusader to have people not vote for this if it means you are not going to fix the erosion issues that we have. Thank you. MR. GOSS: Just one comment, ma'am. I do want to clarify that the Rate Commission, these 24 members of the Rate Commission are independent of MSD. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We are volunteers that are appointed to review the Rate Commission proposal, so we are not MSD itself and Mr. Theerman might be capable of addressing your question. MR. THEERMAN: Well, first and foremost, the erosion issue is something we were trying to address when we implemented a stormwater rate in 2008, unfortunately that's in litigation. So we had every intention of trying to get at those erosion problems throughout the county. Now that it is involved in a lawsuit, we are somewhat held back for a time. The signs you're seeing in the backyard that have -- that state don't get in the creek because of sewer overflows, that is exactly what we are trying to get at with this program. So those red dots are leading to the installation of those signs. So that part of the issue is this particular rate case. MS. SHAYLA MCPETERS: Yes but even if you fix that, you take the sanitary issues out of it, we still have lost our property. I used to have 50 feet of land beyond my fence, I don't even have that any more, I barely have my fence, it is leaning. And every year, every time it rains, more and more of the land just washes away. So what is it, I mean, okay, 25 yeah, you want to fix this, great, take the sanitary, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 nobody wants to swim in that creek any way, we want our properties fixed. And you sending an engineer out to me and then sending me a letter, oh, yeah, we know about this problem but we are not going to fix it. What does that do for me? And I honestly feel that because of the neighborhood I live in, is why you all are really not taking it seriously. If I lived in Ladue or West County or somewhere else, you all would break your necks to get that fixed. MR. THEERMAN: I can tell you that is not the case. MS. SHAYLA MCPETERS: Oh right, okay. MR. THEERMAN: Please, we have -- we curved our stormwater effort to the level of revenue that we get and I can tell you we have provided little, if any, service out beyond Lindbergh because they don't pay hardly anything. I mean, it's about a 2 cent tax that we get there, so we have curved the stormwater services back to the revenue we receive and that's the way unfortunately we are funded until we can get this rate, this stormwater impervious charge fixed. MS. SHAYLA MCPETERS: Okay. So when you do get it fixed because it can't be in litigation forever, who are you going to go to first, are you 26 going to go to the people like in my neighborhood? I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 got five kids that live in the house two doors from me. They can't play in their backyard because their mother is too afraid their going to go out there and slip and fall. It is 50 feet to the bottom of that creek, it is not some little itty bitty creek, it is a huge creek and her land is not there, so now what? MR. THEERMAN: Well, we try to handle the very worst problems first. I am not familiar with your specific backyard. MS. SHAYLA MCPETERS: You all have some engineer named Sue, that works for you all and I am constantly in contact with her and she is constantly sending me letters basically telling me too bad, so sad for you. That is not good enough for us, we want something done, something needs to be addressed with this. MR. THEERMAN: Well, before you leave tonight let me hear where you live and we will get that written down. I will find out -- I am not sure which engineer is Sue but we can track her down. MS. SHAYLA MCPETERS: Thank you. MR. GOSS: Adolphus Pruitt? MR. ADOLPHUS PRUITT: My name is Aldolphus Pruitt, president of the St. Louis NAACP. I have a 27 couple of questions. I wanted to know first of all, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 if the pending litigation for the stormwater is appealed and if you win the appeal, then I take it the rate increase that you were trying to impose before the court, kicks in, am I right or wrong? MR. THEERMAN: The prior rate that we put in place, if we win our appeal through all the different potential appeals, then it could be reenacted. MR. ADOLPHUS PRUITT: My point is, if you win that litigation that rate kicks in, right? MR. THEERMAN: We should be able to reenact it, yes. MR. ADOLPHUS PRUITT: So I guess what my question is, we are talking about a rate increase now, that is separate and above that, so I am just wondering if the Commission is taking into consideration on a rate increase you are talking about imposing now, that it could be on top of another rate increase that has all ready been approved that is coming, it's just a matter of whether they are victorious in the court or not and through this appeal. Which means now that folks are looking at one separate increase based on the presentation but in actuality there may be a double whammy coming down the line. So I just wanted to know if they take that into 28 consideration. The other issue was -- my assumption 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is that based on the Consent Decree, does it include or prevent any federal funding from any federal sources or other public sources to address the matter outside of utilizing the rate increase? MR. THEERMAN: It doesn't prohibit us from utilizing federal funding if it's available. MR. ADOLPHUS PRUITT: Which means that I wonder if the Rate Commission has asked MSD for some sort of opinion as it relates to potential federal sources that develop now or may be developed in the future, that they have looked at -- have taken consideration as the opportunity to keep this rate increase from happening. So that is another thing I wanted to know, has the Commission took that into consideration also. And the last one was an issue as it relates to -- my card, I wrote all three of them down there. Oh, I know the consequences. MR. GOSS: Yeah, what are the consequences. MR. ADOLPHUS PRUITT: If you approve, as a commission, you approve the rate increase as it is proposed, the voters vote it down, what are the consequences as it relates to the citizens because if I am mistaken, if you approve it as a rate increase and the voters do not approve the bond issue, that 29 rate increase is still imposed on the citizens, am I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 right or wrong? MR. THEERMAN: I can tell you that the way we believe it would work is the rate or the bond election would be a question of using debt or not. So if the voters vote down the use of debt, we would be cash financing. MR. ADOLPHUS PRUITT: So that option you showed on there where it says 74, you can go back there, so that option on the right, 100 percent cash, I'm saying if this Commission approved this proposed rate increase and the voters, in disagreement, votes it down, the Commission is just imposed -- the rate increase is going to happen irregardless of whether the voters act in affirmative or negative in April or whenever that comes before the voters, simply because this Commission approved the rate increase; is that right? MR. THEERMAN: Except that the imposition of a rate is a matter for our Board of Trustees. The Rate Commission recommends to them but our board would be the one that imposes the rate change. MR. ADOLPHUS PRUITT: Let me put it differently. If they say yes, the voters say no, then the Commissioners can say well, we don't care what the 30 voters say, we are going to hit them with this 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 increase any way but it would not have to come back to them, am I right or wrong? MR. GOSS: That is not accurate, there is another step. The Rate Commission makes a recommendation to the Board of Trustees. And it's the Board of Trustees that actually sets the proposed rate, so we are simply a recommending body, if you want to put it in a zoning context, we are like a planning and zoning commission. Then it goes to the Board of Alderman, that would be an analogy. In our case, we don't make the decision. We make a recommendation to the Board of Trustees and the Board of Trustees is again, the one that sets the rate. And if they choose to fund that through debt, it is the debt that goes before the voters. MR. ADOLPHUS PRUITT: Mr. Chairman, I beg to differ with you just a little bit. If you, without you acting, the Trustees cannot impose a rate increase, am I right or wrong? MR. GOSS: Under the charter we have to make a recommendation. MR. ADOLPHUS PRUITT: So when you act, you just empowered them to impose a rate increase and now the decision is solely on them and no longer has to 31 come back to you, am I right or wrong? Once you act 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in affirmative on the rate increase, then the Trustees can then impose that increase on the citizens without having to come back to you and ask for permission whatsoever, am I right or wrong? UNIDENTITFIED SPEAKER: They don't understand what you're saying. Literally, what he's saying is MSD, as a private entity, can actually impose a rate increase automatically, even though they approved it and it fell by the voters. MR. ADOLPHUS PRUITT: You're almost right. MR. THEERMAN: I want to answer your question, Adolphus, it's just the mechanics of the way our charter is written is a little convoluted. This is how it works, they issue a rate recommendation, it can be what we proposed, it can be something else. If the board reviews that rate recommendation in the context of five tests in the charter and those tests are things like does it meet regulatory requirements, is it fair and equitable and a couple of other ones there. If the board, in reviewing their rate recommendation, determines that those tests are passed or satisfied, then they would implement the recommended rate, okay. Now, that's the rate and then the board would then put on the ballot, as Mr. Goss 32 said, the use of debt. And the voters are not voting 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on the rate per se, they're voting on whether or not to use debt. MR. ADOLPHUS PRUITT: We are saying the exact same -- again, I just want to make sure the citizens understand that this hearing today, when this body acts and says yes, we agree that you, the Board of Trustees, can impose a rate increase, that step empowers the board to make that decision irregardless of what happens in the election as it relates to us voting whether we use bonds or whether you impose the $73 a person. And I just want to make sure we understand and that's why I'm asking the Commission, before you give the Trustees that sort of power, that those questions I asked earlier, that one, you take into consideration, that if there is appeal in pending litigation, if they're successful, that what you're imposing now is going to be on top of something that is coming, that has already been through all the steps and just a matter of if they win the appeal or not. Two, whether MSD has seriously looked and took into consideration all other public sources, both federal and state, as potential sources to do this versus imposing it on the citizens. That is my concern that the Commission takes that into consideration before 33 given the Board of Trustees the power to do that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 because irregardless of what happens in the election, our voices no longer have any power because you have just empowered them to impose that rate increase, whether we vote for that bond issue or not. MR. GOSS: Aldophus, I don't know if that is a forgone conclusion or not. The issue of whether the debt is voted down if MSD has to bring that back to the Rate Commission for an evaluation at to whether the all cash option, which is what the default would be, would be fair and equitable and meet the five part test is another matter and that could be the consequence. I don't want to tell you the wrong thing tonight, so the answer may be if it is voted down it has to go back to the Rate Commission, back through the process but I don't want to tell you that's the case because I don't know that for a fact. MR. ADOLPHUS PRUITT: Now, I know you have some subsequent public hearings and it would be helpful if between now and the next public hearing, that that determination needs to be made. I want to make sure the citizens understand. MR. GOSS: Well, we'll ask counsel. We do have legal counsel on the Rate Commission and that truly is something we will know the answer to, I think 34 it is a great question. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ADOLPHUS PRUITT: Then last the comment, of course, with the downturn of the economy, we all know what is going on in people's lives individually and you can go anywhere and talk about the consequences of the downturn of the economy, especially on the African American middle class. You will find that that segment of the population has been hurt and hit more than any other segment of the population and those are the same folks we are looking to pay this rate increase. So I still have some concerns about imposing that without having any idea of what the economy is going to look like in the future. You have a very difficult task in front of you and I appreciate the fact that you are public citizens, you volunteered to deal with it but I also hope that you use that insight to take a look at people's lives out here and understand what these consequences of what you're going to do really imposes on them and their lives in the future. I appreciate your time. MR. SCHNEIDER: Anthony Bell? I believe it's Anthony but it could be Arthur. MR. ANTHONY BELL: How you doing? Generally, I think the brother here from the NAACP has 35 really addressed mostly everything I wanted to hear 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before the board and I understand you all are just the Commissioners. And another question I had concerning, if it was approved -- let's just say hypothetically, if it was approved even with the voters, after the Commission had already gave approval, how long would that last, is there a cutoff date for that increase? MR. THEERMAN: For the increase, the settlement with the EPA has a value of about 4.7 billion, so, no, that is not the end of the line and there would be subsequent rate increases. And we talked a lot in public about the fact that by the end of the decade we think sewer bills could be in the $80 a month range to fund this program. It doesn't go back and it doesn't stay still, it will have to continue to rise to build this EPA mandated program. MR. ANTHONY BELL: Okay. Another thing I was concerned about, you were saying, directed to the citizens concerns and I am one for myself, it really hits home, this would be hard hit, a hard hit, that increase I see on the board here. And another thing it would be really put senior citizens out of commission that are on a fixed income trying to live independently in their homes. A $74 increase, almost $75 increase on a sewer bill, they will almost be 36 forced to move into senior citizens' homes and lose 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 their independence and stuff like that. See, so this is something I wouldn't want to see happen on anybody in today's current -- with the economy the way it is right now, especially on the minority, us as a whole. That would be the worst thing that the Commission could approve. That is really what I wanted to say and find out how long it would last if it happened? Would it be a 20 year thing, would it cut off? MR. THEERMAN: The debt we would -- we probably use the majority of the 30 year debt, so you are talking about issuing this debt over lots of years and one's a 30 year duration, so this would be extending out over a long period of time to pay off all those capital improvements. What you're recognizing is really the reason why we suggested the use of a significant amount of bonds to try and keep those rates from not rising so dramatically. Of course, when you use debt you have to pay it off with interest, so there is that too. MR. ANTHONY BELL: Okay. That was basically the questions I had to ask and I don't want to take up too much of your guys' time. Let someone else say something here today that may be concerned but I am very concerned about it. I know how it feels to be 37 made a senior citizen and something like that and you 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on a fixed income, you can barely live from month to month already and stay independent in your own home. That is the worst case scenario that could happen right now. As far as this increase from the Commission, if you approve that, that would be the worst thing that can happen. And believe me, what happens to us, can happen to you. MR. GOSS: Sharon Sharp? MS. SHARON SHARP: Hello. I am one of those senior citizens, I'm on that fixed income, so if the rate goes up to like $75 a lot of people can't pay it, then, of course, you put a lien on their property and then you put interest on top of the monthly payments you couldn't make in the first place and you bury people in debt. Eventually I don't know what happens if you can't pay it off but what does happen? How can you expect people whose income have not increased in three years, to handle all of these public service increases? The gas, the electric, the water, all of that, how do you expect senior citizens or anyone with a fixed income to do anything? Your medical bills increase, you know, you're old now, so you have more health problems. This is something that even people who are not senior citizens -- water is free. What 38 are you doing to this water that we have to pay so 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 much for? Should we get westbound and put it out like we used to a long time ago or, you know, go dig a whole and bury it, well, you can't do that because it effects the ground water. But still why is it costing so much? It's sewer, I know it is sewer. I know our sewer system is old, it has been old for a long, long time. So now all at once you want to fix the sewer and everybody is coming at people with all utilities. Utilities have had to increase, at least with all utilities, at least 30 percent. 15 for that one, 17 for that, oh, we want another seven for that one, oh, we need six more for -- so everybody is increasing utilities. People cannot afford -- even working people cannot afford these constant increases of services that are necessary to live. We don't even have a choice whether we have these services, we need them, they're essential. So I understand you all had a problem but we cannot afford to take care of your problem when you're constantly -- you all salaries are not low, you know, I am not talking about -- you get your bonuses and we struggle with trying to make it with nothing. So I don't think you're -- and the Commission bless your heart, you can only recommend and I know that, so I'm not going to get mad at you. 39 You can only recommend, you can only do what you do. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But it seems like you keep still giving increases no matter what. That is all I have to say. MR. THEERMAN: I just want to cover one or two things, so everyone understands. One of the reasons, the primary reason this is the way it is, is because St. Louis, like a lot of other cities, didn't want to see rates go up. And we as an MSD, didn't raise rates in the '70s and '80s and then we got into lawsuits about rates and couldn't raise rates through late '80s and '90s and this is EPA coming in and saying you have to play catch up. One of the issues -- I mean, I hear what you're saying about where does this money have to go, it is just water but we are talking about rebuilding a sewer system and what has to be done to make it work properly and it's like anything else whether it's a road or a bridge, if you ignore it when you finally do get around to fixing it, it costs more if you have delayed. And so, that's really why it's as expensive as it is, we are playing catch up on this infrastructure. The only other thing I would tell you is nobody at MSD gets bonuses, so. UNIDENTITFIED SPEAKER: How would that effect an increase that you guys imposed back a year or so ago, a couple of years ago to repair the sewer 40 lines and most the, you know, (inaudible person has no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 mic) what happened to that money? MR. THEERMAN: Again, we imposed in 2008, a stormwater charge that was based on how much impervious area or how much pavement you have on your property. And that charge is no longer on your bill. It was struck down by a lawsuit, we are presently litigating an appeal, so you're not paying that bill right now. That is a charge to try and deal with stormwater issues like what was mentioned earlier, erosion problems in backyards and stormwater problems. This is a -- we are one utility but we have two different jobs and we collect two different rates, a stormwater and a wastewater rate and this is all about the wastewater side. MR. GOSS: Yvonne Harris? MS. YVONNE HARRIS: Hi, my name is Yvonne Harris and I do represent AARP and I know there is a lot of young faces here, so you may not belong to AARP but keep living and you will because we plan to stay around. I have some questions and I have been to some of these meetings and I know that pretty much what we stand up and say to you don't mean much more than a hill of beans because you're going to do what you're going to do anyhow. And I grew up at 320 South 41 Jefferson, I shared a backyard with the MSD, I can 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tell you that. So I have watched you grow and you weren't even but a one story building but I watched you grow from one story to what -- I don't know what you have now but I know it is a big building. And you know, you're still in the downtown area, so you still do know that the whole neighborhood has changed. You have what you have and you have made money. So you may say well, we didn't collect enough at first but that is not true because had you not collected enough at first, you wouldn't have the building that it is today. You would still be in a one story or two story building. So that is not true. I don't believe -- I wasn't here at the beginning and I apologize, you know, for not being here because I was trying to get here but I can tell you one thing there are people whose income is stagnant and if it is stagnant like that for three years and everybody -- every utility has gone up, the same as I heard everyone else say. Now, you're on the same commission or whatever it is, you handle water, you handle sewer, you handle electric, you handle gas, you handle it all, and you know good and well, that a poor person cannot afford to survive as is, then why are you saying okay, we can increase it on this and this and this, on six things, 42 six, seven things. Are you out of your mind, what is 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going on here? I mean, you have to have common sense. You cannot increase the rate on people when their wages does not increase. You can't get blood from a turnip, so all you're going to do is have a whole lot of lawsuits or a whole lot of empty, raggedy houses. You're going to put liens on the houses, take houses from families and throw them out on the street just like the electric company says turn on your air conditioning and then get our bill next month for $350 and we will work with you. By working with you means, we will turn you over to a collection agency and then you make arrangements with them who will take money out of your checking account every month because they want your checking account number and they're going to take your money. Now when they're taking their $75 to $80 out of your agreement for them to take it, you still have a bill you're neglecting. You can't pay for your trash, you can't pay for your car, your driving with no insurance, you're going to cut something. If you never been poor, you don't know what it feels like to be poor. If you always had -- if you always had something to fall back on but if you have never had anything or you're struggling to hang on to what you have, you don't have anybody to fall 43 back on. I remember one time I owed some money and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they told me to borrow it from my sister and brother. I'm black, they're black, we don't have it. How can I ask them to give to me what I don't have? I have never been a borrower, my mother never allowed me and I have never done it. I don't borrow from anybody. But I can tell you one thing I am hearing also, you're talking about the rate increase, what is our alternative, what can we do other than to flush water down into your sewer, where else can we take the water and stop using yours because I think you base your rates on the amount of water that we use. And if you base your rate on the water that we use, I can tell you one other thing you have done that is absolutely wrong. When you're sitting in front of the people and increasing their water rates -- let me tell you there are seniors who call our information center that cannot take their medication, cannot clean themselves as far as personally hygiene, cannot even flush the toilet because they don't have water. Because you guys would give water to a dog before you would give it to a human being and that is not right. It is not right and people call there crying, all of this technology, all of this technology, you don't consider the agent, you really don't. They hate telephones, 44 they hate voice messages, they hate ATMs and they have 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a TV box that the government bought for them for $50 and cannot even get the TV plugged in. They say baby, can you just talk to me. They're black, they're white, they're everything because AARP is about anybody and everybody who has aged. And I will tell you I have to talk to them while they cry and they say I just want to hear a voice. I say well, let me ask you this, did you get that box that the government gave you, oh, yeah baby but I am blind, I can't even hook it up or I have no legs or I have this huge TV which is sitting on the table that hasn't been moved in 60 years. How -- does anybody ever think about that there are other people besides young, bouncy people? Does anybody ever think about that? You understand computers and then you give these commercials, go to W-W-W, I say do you ever go to W-W-W, they say no, ma'am, I don't even know what W-W-W means. They don't know how go to W-W-W. Some of them still have dial-up telephones and these are white people that call from rural areas and they have dial-up phones, do you think they can afford that? And another thing about this sewer thing, when you say sewer district, what is your district, is it county and city, is it just city, is it county, what are we 45 talking about here today? Where is the sewer district 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that we are paying for in the city, that we don't now how many county people may be getting it or so many rural people, what is a district, where is your district? MR. THEERMAN: Serves all of St. Louis City and about 80 percent of St. Louis County. MS. YVONNE HARRIS: Okay. But -- MR. THEERMAN: Ma'am, if I may, to answer your question that you just asked, I know you came here late because you got stuck traffic, which, of course, is unfortunate. If you look at the handout that was given to you and I can see you're holding it and that Mr. Theerman went through in some detail before you got here, it does answer some of those questions about the District, the number of miles in the District, what the proposal is about, why MSD is proposing to spend the money that it is spending on it, it goes into those questions in detail. Just to clarify one item, you made some comments about other utilities, cable TV, electric, gas -- MS. YVONNE HARRIS: Yes. MR. GOSS: We have nothing to do with that ma'am. This commission only makes a recommendation in respect to stormwater and wastewater rates. In this 46 case, this hearing, is about wastewater rates and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 wastewater rate increases, that is all we are making a recommendation on. And we appreciate the testimony we receive, so we can take that into consideration. MS. YVONNE HARRIS: This is not a testimony, this is the truth. There is a big difference here, I am telling you what I hear and I don't doubt that these people are telling the truth because they have no reason to call just to say things that are untrue. MR. GOSS: All right. And we have heard the comments about cost and one of the reasons why in the rate proposal, which Mr. Theerman went through earlier, before you arrived -- MS. YVONNE HARRIS: Okay. MR. GOSS: -- was the difference between issuing debt as opposed to going to an all cash, pay as you go kind of proceeding. And the difference between that in the proposal that MSD is proposing would be to hold down the rate increase by using debt as opposed to not using debt and Jeff, maybe you want to go back through those numbers to address that question or just in brief because I think that might address your concerns about cost. MR. THEERMAN: We know this is steep. We are trying to do what we can, given the requirements 47 that EPA has imposed to do this as manageably as 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 possible. So I am going to cover a few things really quickly. MS. YVONNE HARRIS: Okay. MR. THEERMAN: On the left side of this chart is what our rate proposal is and it's steep. It is about $4.00 to $5.00 a year in increase over four years. It gets up to about -- the average customer right now pays about $28.00 a month and it steps up to about $47.00 by using a lot of borrowed money. We would go to the voters and seek approval of the use of debt. The left side, my side, just gives you an example of what happens if you try and fund the program that EPA wants us to build, with just cash financing. Instead of not using any debt, you are going to have to raise the rates dramatically, $73.35. We are trying to avoid something like that, like through the use of debt. A couple of other things you mentioned that I will just touch on. We have low income and fixed income assistance programs for both homeowners and for tenants and that information is out on the table out there and we need AARP's help in getting the word out on that. Because that is a difficult thing to get out to seniors and to those that are distressed with this sort of thing. There is 48 a program for those that qualify that cuts the bill in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 half. So we are sensitive to this issue and we are trying to build something that satisfies regulars but also doesn't strap those that are the least able to pay. So those are some things -- I didn't cover anything about low income assistance but this is what we talked about earlier. MS. YVONNE HARRIS: Okay. Well, then if you're able to assist people, then you obviously don't need that full increase. If you have the money to help someone, then you obviously do not need the percentage that you are asking. MR. THEERMAN: This increase has that program built into it, so that savings has already been taken. MS. YVONNE HARRIS: Oh, okay. MR. THEERMAN: We built in and we have shown the Rate Commission what we think would be the amount of money used by low income assistance and the fixed incomes, it's in our rate proposal. There is a whole lot of detail beyond what this slide presentation is. MS. YVONNE HARRIS: Okay. I only have one other thing I wanted to comment about. You said something about rebuilding infrastructure. Sure, St. Louis, now, if you work at the -- like I said MSD has 49 been around for a mighty long time, you knew before 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2011 that the streets were falling in. You knew before 2011 that those old pipes needed replacing. You knew -- why drop a huge bundle on people like this, why didn't someone have the foresight to start even if in the downtown area and move forward making those changes and replacing those pipes, why does there always have to be a catastrophe before anybody can see what is happening? I mean, you knew it. MR. THEERMAN: That is a great point. I'm not sure if you came in yet but we didn't raise rates in the '70s and '80s. And in the '80s we started getting involved in litigation over trying to raise our rates. And we litigated our rates for 15 years and weren't able to do much with rates in the late '80s and early '90s, all the way through the '90s. In 2000 that got basically cleared up. And since that time you have seen MSD raising rates and building programs. We spent a billion dollars correcting the overflows that have existed. We have eliminated over a hundred overflows in the in last eight years, building a program that is similar to what EPA wants us to build. I mean, we have been trying to get ahead but the trouble is it went on too long and the infrastructure got in too bad of shape and now we are 50 playing catch up. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. YVONNE HARRIS: You know, on the backs of poor people that is the sad part. MR. THEERMAN: Well, on the backs of a whole region, you're right. MS. YVONNE HARRIS: Well, everybody, yes, it is. That is very, very sad. Maybe there should be some reorganization in your organization where you should have some future thinking people, somebody that realizes what we do need and they are able to get a hold of the material that is needed that is going to last longer or be sufficient that doesn't cost as much. MR. THEERMAN: Some of what you're talking about is one of those bullets. It's the last one there in that first stack, it says asset reinvestment. What that really means is fixing them as they get older, don't let them fall apart. Sewers last a hundred years and you have to replace about 1 percent of them every year just to keep up and we haven't done that. So we are having to play some catch up, we are thinking forward and we are trying to do this in a way that is the lowest cost that meets requirements, that is mindful of people's ability to pay. I know this is steep and we are trying to do our very best not for it 51 to cost this much but we also want to the be very 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 honest with the community. MS. YVONNE HARRIS: Well, you're doing a good job of explaining it but some people don't make any more than $100 a week and when you're talking about $75 a month, you're taking away so much of their income, it is hard even to live. MR. THEERMAN: I understand. MS. YVONNE HARRIS: It is really horrible to me how the people up high don't give a care about the people they step on at the bottom. And it's just a horrible, horrible thing and maybe they never recognize until they are on the bottom and then they go, oh my god, people have been feet-stepping on me, then they feel the crunch. But this is the time of a recession. Why -- I understand the sewer lines are very, very old. I do understand that. I grew up in St. Louis and I can remember some of the stuff going on. And I know it is very, very old, trusting the material was different back then, it doesn't last as long. I understand all that. But the fact that you're going to impact a person's income as much as you are for a sewer, it just sounds just ridiculous to me. MR. THEERMAN: To be honest, we would have 52 used a longer schedule. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. YVONNE HARRIS: Schedule? MR. THEERMAN: We were sued by the EPA and the State to deal with these overflow issues and we negotiated for four years trying to reach a reasonable place to be. This was the best we could do and -- MS. YVONNE HARRIS: You said EPA? MR. THEERMAN: Yes, EPA. I mean, we think the work needs to be done but the schedule is really the best we could negotiate. MS. YVONNE HARRIS: So you're bringing jobs to St. Louis? MR. THEERMAN: We estimate for every billion dollars we spend on labor building this program, 28,000 jobs -- MS. YVONNE HARRIS: So you are trying to help the economy? MR. THEERMAN: I mean, that is the silver lining. We are not doing it to -- I mean, this is tough, we realize that. But if there is a silver lining beyond getting rid of overflows, it is potential to create jobs. MR. GOSS: Ma'am, thank you for your comments. MS. YVONNE HARRIS: Thank you. 53 MR. SCHNEIDER: I just want to add that AARP 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is an intervenor in this case. They have a gentlemen by the name of John Coffman who goes to every single one of these hearings and gives his opinion of what it means to be fair and reasonable, so I encourage you to call the leadership of AARP and get a hold of Mr. Coffman and tell the same story to Mr. Coffman, so he comes to the hearing and intervenes and this way his testimony includes your comments. MR. GOSS: Roosevelt Brown? MR. ROOSEVELT BROWN: I will be short. Now, if we aren't able to pay a sewer bill, you put a lien on the home and you take it, right? Now, another thing, you want to help, why won't your company CEO give back to the community, you know, to help. You know we only make -- I'm on social security, I haven't had a raise in three years. I am trying to make it, so it is very hard. So why don't you all contribute back to the community to help us instead of giving raises on your salaries all the time, help us too. We are all human, let's get together, okay, that is all I have to say. MR. GOSS: Do the Rate Commissioners have any questions or comments? I have no further speaker cards, was there anyone else in the audience who 54 wishes to speak? Seeing none, I would like to thank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -- yes, sir? We will need to get your name and we also need to have you fill out a speaker card. So if we could bring him a speaker card, so he can fill it out, I would appreciate that. Go ahead, sir. MR. AHARON SYKES: My name is Aharon Sykes, I am young actually, I don't really pay for bills as of yet, but I do have a grandpa, he's been paying bills on time, you know, he has been keeping up with everything but I just heard the rate increase on the news and just judging from his income, I mean, it is going to be a big hit. So I was just wondering, you know, I know you guys are the Commission, you make recommendations and all you do is recommend, I understand. I was wondering if MSD ever thought about maybe getting a team together like a committee to kind of assist with the consequences of these rate raises? Like the gentlemen said, you're going to do what you're to do, so it is going to happen either way. So I was wondering maybe if you guys were going to get a team together that can maybe deal with the consequences of the payers that have to deal with this, trying to get like resources together for them, so you can give it to them, so maybe it can kind of dampen the blow a little bit. 55 MR. THEERMAN: Up to now we try to work on 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 programs that help reduce the bill but we are certainly open to any ideas the public has about that the sort of thing. The program that we are building has a lot of features to it that will help the north side of the City of St. Louis. There is a program to deal with improvements in a green way that will help hold water back from the combined system and reduce the overflows that occur. And that program is intended to be done with a collaboration with the community, so, you know, in light of that, I think we would be very willing to talk about other ideas about how to help with the impacts of this program as it goes on, both financial and otherwise. MR. AHARON SYKES: Well, that is all I have to say. MR. GOSS: Thank you. I would like to thank everyone for their participation and coming here tonight. The next public hearing will be conducted on September 26th, 2011 at 9:00 a.m. at MSD's offices. Thank you. (Hearing concluded at 7:13 p.m.) 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF REPORTER I, Suzanne M. Zes, Certified Court Reporter, Notary Public within and for the State of Missouri, do hereby certify that the witness whose testimony appears in the foregoing deposition was duly sworn by me; the testimony of said witness was taken by me to the best of my ability and thereafter reduced to typewriting under my direction; that I am neither counsel for, related to, nor employed by any of the parties to the action in which this deposition was taken, and further that I am not a relative or employee of any attorney or counsel employed by the parties thereto, nor financially or otherwise interested in the outcome of the action. ______________________________ Certified Court Reporter