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HomeMy Public PortalAboutExhibit HBA 100 - First Discovery Request of Interveners Home Builders Association to MSD April 30, 2015Exhibit HBA 100 Wastewater and Stormwater Rate Change Proceeding — 2015 First Discovery Request of Intervenors Home Builder Association of St. Louis & Eastern Missouri BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Wastewater And Stormwater Rate Change Proposal By the Commission of the Metropolitan St. Louis Sewer District FIRST DISCOVERY REQUEST BY INTERVENORS HOME BUILDERS ASSOCIATION OF ST. LOUIS AND EASTERN MISSOURI Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer District (the "Charter Plan"), Operational Rule 3(2) and Procedural Schedule §§ I, 17 and 18 of the Rate Commission of the Metropolitan St, Louis Sewer District ("Rate Commission"), Intervenor Home Builders Association of St. Louis and Eastern Missouri ("HBA") request additional information and answers from the Metropolitan St. Louis Sewer District ("District") regarding the Rate Change Proposal dated February 26, 2015 (the "Rate Change Proposal"). The District is requested to amend or supplement the responses to this Discovery Request if the District obtains information upon the basis of which (a) the District knows that a response was incorrect when made, or (b) the District knows that the response, though correct when made, is no longer correct. The following Discovery Requests are deemed continuing so as to require the District to serve timely supplemental answers if the District obtains further information pertinent thereto between the time the answers are served and the time of the Prehearing Conference. DISCOVERY REQUEST 1, Exhibit MSD-1, Section 3.3 provides that the District's current SW funding structure will be replaced with a proposed uniform levy of the existing $.0197 to recover the cost of providing regulatory compliance services throughout the District's service area as well as a $.10 levy throughout the District's service area (except for properties served by a levee district) to provide a more uniform level of service throughout the District. Please provide a detailed explanation of the exception applied to properties served by a levee district. RESPONSE: 2, Exhibit MSD-1, Section 4.9 states that the District conducted a Study based on principles endorsed by the Water Environment Federation (WEF) to determine cost of service rates that achieve general fairness in the recovery of costs from various classes of customers. Please provide a detailed explanation of the analyses and processes performed in the Study, including the factors used in determining general fairness among classes of customers. RESPONSE: 3. Referring to Exhibit MSD-1, Table 5-2 — Stormwater Operating Expenses, please provide a variance analysis for each line on the table with projected sources and projected uses of funds versus actual sources and uses of funds from fiscal years 2011 through 2014 in electronic format with all formulas intact. PIease provide a detailed explanation for the difference in projected versus actual for each line item. RESPONSE: 4. Please provide a description of any alternative rate designs considered by Raftelis Financial Consultants Inc. (RFC) during the development of the Stormwater and Wasterwater rates contained in the Rate Proposal. Please provide an explanation of whether any program that provided credits of any sort to tax payers, such as credits for the installation of stormwater improvements, over detention, BMP facilities and improvements, or BMP maintenance, was considered by RFC. If a credit program of any sort was considered, please provide a detailed explanation regarding the reasons in favor of awarding credits and the reasons against awarding credits. RESPONSE: 2 5. During the "Technical Conference for Direct Testimony and Rate Setting Documents, Mr. Hoelscher testified (at page 17 of the transcript) that "for [the Metropolitan St. Louis Sewer District's] [Rate Change] proposal, we have not considered [a] credit program." Given that Exhibit MSD-1, Table ES-4 (the Stormwater Financial Plan) indicates that more than seventy percent (70%) of the projected tax revenue is directed to stormwater operations & management, why did the District not consider a credit program for property owners with Best Management Practices (BMPs) installed on their property considering such BMPs are privately operated and maintained by the property owner? RESPONSE: 6. During the Technical Conference for Direct Testimony and Rate Setting Documents, Mr. Hoelscher testified (at page 17 of the transcript) that "for [the Metropolitan St. Louis Sewer District's] [Rate Change] proposal, we have not considered [a] credit program." Given that Exhibit MSD-1, Table ES-4 (the Stormwater Financial Plan) indicates that more than seventy percent (70%) of the projected tax revenue is directed to stormwater operations & management, please provide a detailed explanation of how the proposed taxing methodology is fair and equitable when no credit program is provided to property owners already bearing the cost for operating and maintaining BMPs. RESPONSE: 7. Please state whether the District's Financial Advisor and/or Rate Consultant believe that a taxing methodology based solely on property value without consideration of impervious area or a stormwater credit program is fair and equitable? Please explain in detail why or why not. RESPONSE: 8. Does the District admit the possibility that equally valued properties may have different stormwater collection or management systems such that the different properties, while having equal values, may have dissimilar impacts on the quantity of stormwater runoff reaching the District's stormwater systems? Please explain in detail why or why not. 3 RESPONSE: 9. Does the District admit the possibility that equally valued properties may have different stormwater collection or management systems such that the different properties, while having equal values, may have dissimilar impacts on the quality of stormwater runoff reaching the District's stormwater systems? Please explain in detail why or why not. RESPONSE: 10. Given that two equally valued properties may have different stormwater collection or management systems in place, please explain how the District's proposed taxing methodology, based solely on property value, is related to the impact such properties have on the District's stormwater systems? RESPONSE: 11. Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch, states on page 17 that "onsite stormwater management is capital intensive yielding low return on investment, which in turn impacts the economics of engaging in onsite stormwater management." Given that onsite stormwater management, presumably including BMPs, is capital intensive with low returns on investment, please explain why the District did not consider a credit program for property owners with independently operated and maintained BMPs? RESPONSE: 12. Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch, states on page 17 that "onsite stormwater management is capital intensive yielding low return on investment, which in turn impacts the economics of engaging in onsite stormwater management." Given that onsite stormwater management, presumably including BMPs, is capital intensive with low returns on investment, please explain how the proposed taxing methodology is fair and equitable with respect to those property owners independently operating and maintaining BMPs. 4 RESPONSE: 13. Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch, states on page 17 that "stormwater credit serves a key role in enhancing the perception of `user fees' by affording the customers opportunities to reduce the magnitude of the user fees commensurate with [the] extent of onsite stormwater management." Given this finding, please explain why the District has not considered a credit program to reduce the magnitude of customer fees commensurate with the extent of onsite stormwater management, including BMPs? RESPONSE: 14. Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch, states on page 17 that "stormwater credit serves a key role in enhancing the perception of 'user fees' by affording the customers opportunities to reduce the magnitude of the user fees commensurate with [the] extent of onsite stormwater management." Given this finding, please explain how the proposed taxing methodology is fair and equitable if it does not consider a credit program that reduces the magnitude of customer fees commensurate with the extent of onsite stormwater management, including BMPs? RESPONSE: 15. Referring to Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch, Figure 38 indicates that forty-four percent (44%) of districts surveyed have a stormwater credit program. Did the District review and/or analyze any stormwater credit programs implemented in other districts to determine if such programs could be equitably implemented as part of the District's Rate Proposal? Please explain in detail why or why not. RESPONSE: 5 16. Please produce the underlying data used to compile the findings stated in Exhibit MSD-84G, the 2014 Stormwater Utility Survey conducted by Black & Veatch. RESPONSE: 17. Given that the stated purpose of the proposed Stormwater Funding Plan is to cover the cost of stormwater maintenance services, limited capital projects, and associated operations & maintenance (See Exhibit MSD-1, P.O. 2, Section 5), how does the District justify that the proposed taxing methodology is fair and equitable when it does not take into account the individual impact a property has on the District's stormwater system, including for example, factors such as volume reduction, peak flow reduction, or water quality control measures? RESPONSE: 18. The District has represented in their BMP Ownership and Maintenance Brochure that the maintenance costs associated with BMPs vary depending on the drainage area, storage volume, and type of BMP technology in place, predicting operations and maintenance costs to be ten -percent (10%) of total construction costs for BMPs costing $10,000 and five -percent (5%) for those costing $100,000. Given the costs associated with maintaining BMPs, which are required by the District to be installed in every new development, please explain why the District has not included a credit program in the Rate Proposal to offset the costs associated with the operations and maintenance of BMPs. RESPONSE: 19. The District has represented in their BMP Ownership and Maintenance Brochure that the maintenance costs associated with BM.Ps vary depending on the drainage area, storage volume, and type of BMP technology in place, predicting operations and maintenance costs to be ten -percent (10%) of total construction costs for BMPs costing $10,000 and five -percent (5%) for those costing $100,000. Given the costs associated with maintaining BMPs, which are required by the District to be installed in every new development, please explain how the proposed taxing methodology is fair and equitable. RESPONSE: 6 20. The District's BMP Ownership and Maintenance Brochure further asserts "it is important that BMP owners allot funds for maintenance." Please explain why the District has not included a credit program in the Rate Proposal to offset the reserves required to be maintained by property owners for the ongoing operation, maintenance and replacement of BMPs? RESPONSE: 21. The District's BMP Ownership and Maintenance Brochure further asserts "it is important that BMP owners allot funds for maintenance." Please explain how the proposed taxing methodology is fair and equitable considering it does not include any credit program to offset the reserves required to be maintained by property owners for the ongoing operation, maintenance and replacement of BMPs? RESPONSE: 22. The District requires that an Annual BMP Maintenance Report be submitted to the District for all commercial and residential homeowner association maintained BMP facilities. Please explain why the District did not include a credit program in the Rate Proposal to offset the costs associated with the inspection, maintenance, and submission of the required Annual BMP Maintenance Report? RESPONSE: 23. Please explain in detail how the District determined that the proposed taxing methodology was fair and equitable considering not all commercial and residential properties are subject to costs associated with the inspection, maintenance, and submission of the required Annual BMP Maintenance Report. RESPONSE: 7 24, Does the District contend that it is not being fully compensated for the costs incurred by the District in connection with its review and approval of MSD- pernvtted BMPs prior to construction, or its inspection of BMPs post -construction? RESPONSE: 8 Respectfully Submitted, SmithAmw sen LLC By: John Bra fly d Goss #362 Nicholas L. Burkhart #65816 120 S. Central Ave. Suite 700 Clayton, MO 63105 Ph 314-719-3702 Fax 314-719-3703 bgoss@salawus.com Attorneys for HBA St. Louis Wastewater and Stormwater Rate Change Proceeding --- 2015 First Discovery Requests of Intervenors HBA St. Louis CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to the following on this 30th day of April, 2015. Ms. Janice Fenton Office Associate Senior Metropolitan St, Louis Sewer District 2350 Market Street St. Louis, MO 63103 jfenton@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St, Louis Sewer District 2350 Market Street St. Louis, MO 63103 smyers@stlmsd.com Mr. John Fox Arnold Lashly & Baer, P.C. 714 Locust Street St. Louis, MO 63101 jfarnold@lashlybaer.com Ms, Lisa 0. Stump Lashly & Baer, P.C. 714 Locust Street St. Louis, MO 63101 lostump@lashlybaer.com Brandon W. Neuschafer Bryan Cave, LLP 211 N. Broadway, Suite 3600 St. Louis, MO 63102 John.kindschuh@bryancave.com 9 t: c