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HomeMy Public PortalAboutExhibit MSD 100A - MSD Response to First Discovery Request of Intervener HBAExhibit MSD 100A BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT APRIL 30, 2015 FIRST DISCOVERY REQUEST OF INTERVENERS HOME BUILDERS ASSOCIATION OF ST. LOUIS AND EASTERN MISSOURI Metropolitan St. Louis Sewer District Response ISSUE: WITNESS: SPONSORING PARTY: DATE PREPARED: WASTEWATER AND STORMWATER RATE CHANGE PROCEEDING METROPOLITAN ST. LOUIS SEWER DISTRICT RATE COMMISSION MAY 13, 2015 Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Wastewater and Stormwater Rate Change Proposal by the Rate Commission of the Metropolitan St. Louis Sewer District APRIL 30, 2015 FIRST DISCOVERY REQUEST OF INTERVENERS HOME BUILDERS ASSOCIATION OF ST. LOUIS AND EASTERN MISSOURI Metropolitan St. Louis Sewer District Response Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer District (the "Charter Plan"), Operational Rule 3(5) and Procedural Schedule §§ 17 (b)(i) and (ii) of the Rate Commission of the Metropolitan St. Louis Sewer District ("Rate Commission"), the Metropolitan St. Louis Sewer District ("District") thereby responds to the Rate Commission April 30, 2015 First discovery Request of Interveners Home Builders Association of St. Louis and Eastern Missouri for additional information and answers regarding the Rate Change Notice dated February 26, 2015 (the "Rate Change Notice"). 2 APRIL 30, 2015 FIRST DISCOVERY REQUEST OF INTERVENERS HOME BUILDERS ASSOCIATION OF ST. LOUIS AND EASTERN MISSOURI Metropolitan St. Louis Sewer District Response 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: To clam, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0. 24/$0. 18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. Pursuant to the MSD Charter, SECTION 3.020. Powers of the District - The District established under the provisions of this Plan shall have power: (7) To contract with municipalities, districts, other public agencies, individuals, or private corporations, or any of them whether within or without the District, for the construction, use, or maintenance of common or joint sewers, drains, outlets, and disposal plants, or for the performance of any service required by the District. Pursuant to statutory authority, the Levee Districts have taken responsibility for maintaining a system of public stormwater infrastructure that includes drainage ditches, pumping stations and other public stormwater infrastructure ("Stormwater System"). The Levee System and the Stormwater System function together to provide a system of flood protection and stormwater management that is subject to regulation by local, state and federal agencies including the City of Chesterfield, Missouri, St. Louis County, Missouri, MSD, the Missouri State Emergency Management' Agency, the Federal Emergency Management Agency and the United States Army Corps of Engineers. As required by the agencies regulating the Levee Districts, the Levee Districts have adopted guidelines and policies relating to operation and maintenance of the Levee System and the Stormwater System. 3 The Levee Districts are governmental entities that have the ability to be responsible for operations and maintenance of the entire System. MSD historically has recognized the unique function of the Levee District in providing stormwater management within the boundaries of the Levee District and MSD historically has deferred to the Levee District or related entities in most aspects of stormwater management, including but not limited to design criteria and plan review. The cost to construct, operate and maintain a vast majority of the System has been paid by property owners within the Levee District boundaries. Due to the unique nature of the Levee District's authority and responsibilities for flood control and stormwater management within the boundaries of the Levee District, the Levee District and MSD recognize that the Levee District is in a position to provide some stormwater services currently or planned to be provided by MSD within the Levee District boundaries. Based upon this, the parties seek to reach an agreement whereby MSD will contract with the Levee Districts to provide operations and maintenance of the Stormwater System, and to reach an agreement for MSD to continue to provide Regulatory obligated services within the Levee Districts. Property within the Levee District will continue to be subject to the Stormwater ad valorem property tax of $0.0197 per $100 assessed valuation, for the purpose of providing funding for the MSD services. Based upon the Levee District's ability to provide for the Operation and Maintenance Services within the Levee District boundaries, MSD shall not collect the proposed Stormwater ad valorem property tax of $0.1000 per $100 assessed valuation revenue from property within the Levee District boundaries, therefore, MSD will not perform O&M services in the levee district due to the levee district maintaining the storm system. 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: The Section of MSD-1 referenced here deals specifically with the Proposed Wastewater rates. The answer to this question is presented in the text and tables of MSD-1. There is not a WEF standard for stormwater cost of service. Section 4 of the Rate Change Proposal (Exhibit MSD 1) as well as the Rate Model (Exhibit MSD 79) provide the detailed explanation of the analyses and processes performed that were based on principles endorsed by the Water Environment Federation for determining wastewater rates. In general the factors used in determining general fairness among the classes of customers include volumes, strength, inflow/infiltration, commercial compliance costs, billing, and customer costs. 4 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. Please provide a detailed explanation for the difference in projected versus actual for each line item. RESPONSE: See Exhibit MSD 100B 4. Please provide a description of any alternative rate designs considered by Raftelis Financial Consultants Inc. (RFC) during the development of the Stormwater and Wastewater 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. No credits were considered since none of these factors would impact the cost of the services to be provided under the $0.10 ad valorem tax. 5 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: To clam, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0. 18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. Actually, 88% of the revenue proposed under the new $0.10 ad valorem property tax is directed towards the operation and maintenance of the public stormwater system. No credits were considered since none of these factors would impact the cost of the services to be provided under the $0.10 ad valorem tax. 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. 6 RESPONSE: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. Actually, 88% of the revenue proposed under the new $0.10 ad valorem property tax is directed towards the operation and maintenance of the public stormwater system. No credits were considered since none of these factors would impact the cost of the services to be provided under the $0.10 ad valorem tax and any credits would just result in other rate payers picking up the cost of the credits. Therefore, the District finds the proposed taxing methodology to be fair and equitable. 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: The District's rate consultant, Raftelis Financial Consultants (RFC), has determined this method is fair and equitable. MSD believes that an ad valorem property tax used to operate and maintain the public stormwater system within its municipal boundaries is fair and equitable for the following reasons: a. The use of property taxes to fund services and the maintenance of infrastructure is allowed under the Missouri Constitution and is used by MSD and other municipal entities in the area to pay for these kinds of services. b. The use of an alternative funding method such as impervious area, would cost the rate payers approximately $950 thousand/per year more to operate and maintain than an ad valorem taxing method c. The use of an alternative funding method, such as impervious area , may result in fewer people participating in funding these service compared to an ad valorem taxing method based on recent Missouri Supreme Court decisions and State Legislation. 7 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. RESPONSE: The District admits the possibility that equally valued properties may have different levels of stormwater quantity discharged from their properties just as it is possible that different properties with the same amount of impervious area may have different levels of stormwater quantity discharged from their properties. 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: The District admits the possibility that equally valued properties may have different levels of stormwater quality discharged from their properties just as it is possible that different properties with the same amount of impervious area may have different levels of stormwater quality discharged from their properties. 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: The District admits the possibility that equally valued properties may have different levels of stormwater quantity and/or quality discharged from their properties just as it is possible that different properties with the same amount of impervious area may have different levels of stormwater quantity and/or quality discharged from their properties. Also see answer to question 7. 8 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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. 9 RESPONSE: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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 fmding, 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0. 18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 10 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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: MSD did not examine a potential credit program. RFC is not aware of any system funded through property taxes that utilize a credit program. 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: The survey document is in in the public domain and MSD does not have the underlying data. 11 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: To clari, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$018 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. Actually, 88% of the revenue proposed under the new $0.10 ad valorem property tax is directed towards the operation and maintenance of the public stormwater system. No credits were considered since none of these factors would impact the cost of the services to be provided under the $0.10 ad valorem tax and any credits would just result in other rate payers picking up the total cost of the credits. 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. 12 RESPONSE: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0. 18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 19. 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 how the proposed taxing methodology is fair and equitable. RESPONSE: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 13 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMPs whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. 14 MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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. 15 RESPONSE: To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. MSD does not feel that it is fair or equitable for other rate payers to absorb the cost of these credits. BMP's, whether installed voluntarily by property owners or installed to meet current building code/development requirements of the developed property, do not impact the total cost of services. 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-permitted BMPs prior to construction, or its inspection of BMPs post -construction? RESPONSE: The Districts costs incurred in connection with review and approval of MSD permitted BMPs prior to construction and its inspection of BMPs post -construction are funded by fees collected, plus the $0.0197 ad valorem property tax due to the regulatory nature of this work An analysis of all fees for the review and inspection of private development projects (including BMP review and post -construction BMP inspection) within MSD indicates fees currently collected cover approximately 41% of the District's direct cost. The remaining costs are covered by District wastewater rate revenue and existing $0.0197 regulatory tax revenue. Therefore the District does contend that fees do not fully compensate for the costs incurred in connection with its review and approval of MSD permitted BMPs prior to construction, or its inspection of BMPs post -construction. To clarify, MSD is not proposing any changes in the rate or structure of the $0.0197 ad valorem property tax used to fund regulatory needs nor in the OMCI ad valorem property taxes, therefore the Rate Commission is not tasked with reviewing or making recommendations to these rates. MSD is submitting for review and recommendation a proposal to eliminate the $0.24/$0.18 per month stormwater charge and the $0.0682 ad valorem property tax collected in the District's original boundaries to provide operations and maintenance for the public stormwater system located in the District's original boundaries. MSD is also submitting for review and recommendation a proposal to institute a $0.10 ad valorem property tax on all properties in the District boundaries for the operation and maintenance of the public stormwater system District - wide with any remaining revenues to be used for projects to address stormwater issues District - wide. 16 Respectfully submitted, it Susan M. Myers METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 Fax: (314) 768-6279 17 CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to Janice Fenton, Office Associate Senior, Metropolitan St. Louis Sewer District; Lisa Stump, Counsel for the Rate Commission; Brad Goss, Counsel for Intervener Home Builders Association of St. Louis & Eastern Missouri, and Brandon Neuschafer, Counsel for Intervener Home Builders Association of St. Louis and Eastern Missouri on this 13th day of May, 2015. Lisa O. Stump, Esq. Lashly & Baer, P.C. 714 Locust Street St. Louis, MO 63101 lostump@lashlybaer.com Mr. Brad Goss Smith Amundsen, LLC 120 South Central Avenue, Suite 700 St. Louis, MO 63105-1794 bgossc salawus.com Brandon W. Neuschafer Bryan Cave, LLP 211 N. Broadway, Suite 3600 St. Louis, MO 63102 John.kindschuh@bryancave.com Susan M. Myers, General Coe1 METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 smyers@stlmsd.com Tel: (314) 768-6366 Fax: (314) 768-6279 18