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HomeMy Public PortalAboutExhibit MSD 114A - MSD Response to Fifth Discovery Request of the Rate CommissionEXHIBIT MSD 114A BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT JUNE 3, 2015 FIFTH DISCOVERY REQUEST OF THE RATE COMMISSION Metropolitan St. Louis Sewer District Response ISSUE: WASTEWATER AND STORMWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: RATE COMMISSION DATE PREPARED: JUNE 15, 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 JUKE 3, 2015 FIFTH DISCOVERY REQUEST OF THE RATE COMMISSION 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 June 3, 2015 Fifth Discovery Request for additional information and answers regarding the Rate Change Notice dated February 26, 2015 (the "Rate Change Notice"). 2 JUKE 3, 2015 FIFTH DISCOVERY REQUEST OF THE RATE COMMISSION Metropolitan St. Louis Sewer District Response 1. In response to Question 14 of the Third Discovery Request of the Rate Commission, the District states that: Ordinance No. 13856, adopted June 12, 2014, approved the current tax rates for general administration that is used for regulatory compliance (Section Two), operation and maintenance of existing public stormwater facilities (Section Three), and for the OMCI subdistricts (Sections Four through Twenty -One). Please identify the zone in which each of the following OMCI subdistricts is located: Coldwater Creek Trunk Subdistrict, Gravois Creek Trunk Subdistrict, Maline Creek Trunk Subdistrict, Watkins Creek Trunk Subdistrict, Subdistrict No. 88 (Fountain Creek, Subdistrict No. 89 (Loretta -Joplin), Subdistrict No. 342 (Clayton -Central), Subdistrict No. 366 (University City Branch of River des Peres Stormwater Subdistrict), Subdistrict No. 367 (Deer Creek Stormwater Subdistrict), Subdistrict No. 369 (Sugar Creek), Subdistrict No. 448 (Missouri River — Bonfils), Subdistrict No. 449 (Meramec River Basin M.S.D. Southwest), Subdistrict No. 453 (Shrewsbury Branch of River des Peres), Subdistrict No. 454 (Seminary Branch of River des Peres), Subdistrict No. 455 (Black Creek), Subdistrict No. 1 of the River des Peres Watershed (Creve Coeur-Frontenac Area), Subdistrict No. 4 of the River des Peres Watershed (North Affton Area) and Subdistrict No. 7 of the River des Peres Watershed (Wellston Area). RESPONSE: The following table notes the related stormwater zone each subdistrict noted above is located in, as well as the MSD fund number associated with each subdistrict. Also provided as Exhibit MSD 114B is a stormwater zone map identifying the locations of each subdistrict by fund number. 3 SUBDISTRICTS AND RELATED ZONES ZONE: Green Yellow Red MSD FUND SD # OMCI SUBDISTRICT # SD-342 CLAYTON-CENTRAL 5563 X SD- COLDWATER CREEK 5564 X SD-1 CREEE COEUR-FRONTENAC 5565 X SD-367 DEER CREEK 5566 X SD-88 FOUNTAIN CREEK 5569 X SD- GRAVOIS CREEK 5571 X SD-89 LORETTA-JOPLIN 5574 X SD- MALINE CREEK 5576 X SD-4 NORTH AFFTON AREA 5579 X SD-369 SUGAR CREEK 5583 X SD-366 UNIVERSITY CITY - RDP 5584 X SD- WATKINS CREEK 5587 X SD-7 WELLSTON 5589 X SD-448 MISSOURI RIVER-BONFILS 5590 X SD-449 MERAMEC RIVER BASIN 5591 X SD-453 SHREWSBURY- RDP 5592 X SD-454 SEMINARY BRANCH - RDP 5593 X SD-455 BLACK CREEK 5594 X Note: Missouri River Bonfils & Meramec River Basin are Sanitary Subdistricts. 2. The Stormwater CIRP Project List in the Rate Change Proposal identifies projects scheduled for completion in FY2017 through FY2023. See Exhibit MSD Appendix 7.5.2. Figure 5-2 in the Rate Change Proposal describes the Stormwater Capital Improvement & Replacement Program for FY2015 through FY2020. In response to Question 10 of the Third Discovery Request of the Rate Commission, the District states: Projects identified within the Rate Changes proposal and within each zone (Red, Yellow, Green) were prioritized by planning the projects with the highest benefit cost ratio project within each Zone independently based on funding availability. Generally the projects identified in Green and Yellow zones have equal benefit cost ratios. Generally the projects within the Red Zone have a higher cost benefit ratio than those being done in the Green and Yellow zones. There are no projects to be completed in the Red zone with a lower benefit cost ratio than the Green and Yellow zones. 4 Please identify each CIRP project to be completed (a) (i) in the Red Zone, (ii) the Green Zone, and (iii) the Yellow Zone; and (b) in each OMCI subdistrict. RESPONSE: MSD has provided Exhibit MSD 114C - Stormwater 17 to 23 Project Listing with zone and OMCI designation. This exhibit provides the stormwater CIRP project list in a table with the respective Zone noted, as well as the Fund Number for the project; fund numbers are specific to a certain OMCI, and identifies which OMCI subdistrict the project is in and funded by (please see the fund number / OMCI reference list contained in the answer to #1 above). 3. In response to Question 6 of the Fourth Discovery Request of the Rate Commission, the District states that its CIRP financing plan is built to achieve a certain balance of PAYGO and debt financing and to maintain AA -category ratings based on expectations communicated by the rating agencies in their rating reports. Please describe in detail the "expectations" communicated by each of the rating agencies in their rate reports. RESPONSE: The rating agencies' reports, in their entirety, are Exhibits MSD 48-50. Each agency does a thorough evaluation of the District's governance, management, and financial strength but ultimately highlights specific factors that influenced the rating decision and that could drive changes in ratings. Below are excerpts from the reports that summarize drivers of current ratings and identify specific circumstances that could lead to a change in the ratings. This is how the rating agencies communicate their "expectations" in the ratings reports. STANDARD & POOR'S Rationale: The rating reflects our assessment of the district's: Strong and diverse service area economy covering the City of St. Louis and St. Louis County; Large, diversified customer base; Moderate rates not subject to outside regulation; Strong financial operations, with strong pro forma debt service coverage; and Strong management policies and planning capabilities. Coverage could decrease following this additional debt issuance, but as the district addresses implementation additional rate increases for the period beyond fiscal 2016, we expect coverage to remain at least as good, in our view. Beyond the current planning horizon for the district's CIRP that goes through fiscal 2016, annual debt service coverage could decrease further in the absence of additional rate increases. However, we do expect the district to increase rates sufficiently to maintain at least its good coverage levels. 5 Outlook: The stable outlook reflects Standard & Poor's expectation that MSD will adjust rates as necessary to maintain strong debt service coverage as it issues additional debt, as well as to generate at least good net revenues to support its large capital program. The strength of the district's service area provides additional rating stability, as does the district's ability to adjust rates as needed. While not expected during the current two year outlook period, we copuld lower the rating if the district is not able to maintain at least its good financial position, particularly as it begins to address its capital needs with additional debt. Beyond the outlook period, any trend of deteriorating finances could pressure the rating. MOODY'S Summary Ratings Rationale Assignment of the Aa1 rating and stable outlook reflects the system's large and diverse service area that encompasses the City of St. Louis (general obligation rated Aa3/stable outlook) and most of St. Louis County (general obligation rated Aaa/stable outlook). The rating assignment is also based on the district's demonstrated willingness and ability to raise rates at regular intervals; declining but still sound debt service coverage; debt levels that will significantly increase to fund extensive capital improvements needed to address long term CSO and SSO issues; and satisfactory legal covenants. What Could Change the Rating — Up -Significant and sustained improvement of debt service coverage levels -Ability to phase in planned borrowing for necessary capital improvements without adversely affecting financial operations, debt service coverage, balance sheet strength, and/or voter support What Could Change the Rating — Down -Regional economic pressures, including population loss, that lead to substantial reductions in billable flow -Declines in debt service coverage FITCH RATINGS Key Rating Drivers Weakened but Still Good Coverage Margins Projected Escalating Debt Burden - Very Good Liquidity Adequate Rate Flexibility Stable and Diverse Economy Rating Sensitivities REDUCED FLEXIBILITY; INCREASED DEBT: Long-term projections which forecast debt levels and/or financial margins inconsistent with the AA+' rating median levels would likely result in negative rating action. 6 Credit Profile REDUCED BUT STILL SOUND FINANCIAL METRICS Due to the planned borrowings associated with the CIRP and consent decree, total coverage on all outstanding and anticipated debt is projected to be in the 1.7x - 1.8x range and coverage on senior lien debt is projected to be in the 2.4x - 2.9x range for fiscals 2014 - 2016. Fitch's rating incorporates the weaker DSC, although any deterioration in financial performance beyond projected levels could result in negative rating action. Fitch notes, however, that a reduction in liquidity levels below historical norms would likely pressure the rating unless balanced with increased DSC. 4. In response to Question 4 of the Fourth Discovery Request of the Rate Commission, the District states that: The District and its financial advisor used experience and statements from the rating agencies in developing the funding plan for the District in an effort to maintain AA -category ratings. With respect to the financial planning model, debt capacity is based on several interdependent variables such as amount of revenues, amount of operating expenses, desired debt to PAYGO ratios and capital improvement plan amounts and spending timing. As any one of these ratios change, debt capacity is impacted. Please identify (a) the source of each of the "statements from the rating agencies" relied upon to "maintain AA -category ratings"; (b) each of the "several interdependent variables"; and (c) state for each of July 1, 2017, and June 30, 2020, the following criteria: (i) debt ratio to operating income; (ii) debt ratio to operating revenue; (iii) annual debt service coverage; (iv) total outstanding long-term debt per customer; (v) total outstanding long-term debt per capita; and (vi) projected long-term debt per customer; (vii) the projected total debt per capita; (viii) days of cash on hand; (ix) days of working capital; (x) individual average monthly residential bill ($); (xi) individual average annual bill as % Median Household Income (MHI); and (xii) average annual projected rate increases (%). RESPONSE: a. The rating agencies' reports, in their entirety, are Exhibits MSD 48-50. Each agency does a thorough evaluation of the District's governance, management, and financial strength but ultimately highlights specific factors that influenced the rating decision and that could drive changes in ratings. Please refer to the response to Question 3. 7 b. The key interdependent variables are listed in the District's statement referenced in the question: - Revenues — magnitude of revenue requirement increases • Operating expenses — spending levels and growth assumptions - Debt to PAYGO ratio CIRP — project amounts and spending schedule Credit metrics are another key variable to consider. The two credit metrics targeted for the purposes of developing the District's funding plan were debt service coverage and days cash on hand. Expected spend levels and financial metric targets influence the revenue requested in the proposal. Revenues available after operating expenses are available for debt service, PAYGO, maintaining/improving reserves and other projects. Furthermore, the level of these revenues impact debt service coverage and other financial metrics. Consequently, changes in the levels of any spend category change the amount available to the other categories and impact financial metrics at the same time. c. July 1. 2016* June 30.2020 (i) Debt to Operating Income (funds available for debt service) 9.1 7.9 (ii) Debt to Operating Revenue 4.0 4.6 (iii) Annual Debt Service Coverage 1.79 1.86 (iv) Total outstanding long-term debt per customer $ 2,968 $ 4,972 (v) Total outstanding long-term debt per capita $ 953 $ 1,586 (vi-1) projected debt per customer (4 years out), bonding FY21-24 $ 4,972 $ 6,605 (vi-2) projected debt per customer (4 years out), no bonding FY21-24 $ 4,972 $ 4,700 (vii-1) projected debt per capita (4 years out), bonding FY21-24 $ 1,586 $ 2,097 (vii-2) projected debt per capita (4years out), no bonding FY21-24 $ 1,586 $ 1,492 (viii) days of cash on hand 600 550 (ix) days of working capital (x) individual average monthly bill $ 44.72 $ 60.86 (xi) individual average annual bill as a % of Median Household Income 1.0% 1.4% (xii-1) avg annual projected rate increases (%) next 4years, bonding FY21-24 10.6% 10.5% (xii-2) avg annual projected rate increases (%) next 4years, no bonding FY21-24 10.6% 17.6% * Items (i) - (viii) are based on the full 12 month period prior to July 1, 2016 in order to establish metrics at beginning of FY17-20 rate cycle. ** Working capital is generally defined as current unrestricted assets minus current liabilities payable from unrestricted assets, divided by operating expenses less depreciation, divided by 365. The District does not create long-term projections for current assets and current liabilities so does not have a working capital projection to provide. 8 5. In response to Question 16 of the Fourth Discovery Request of the Rate Commission, the District states that: The US Census Bureau reports that the MHI (Median Household Income) for St. Louis City (2009-2013) is $34,582 and St. Louis County (2009-2013) is $58,910. Approximately 21% of MSD customers live in the City and 79% live in the County. These data correspond to a weighted average MHI of $53,801 for the MSD service area. Assuming no increase in these MHI values, the wastewater bills as a percentage of MHI on July 1, 2017, would be 1.11% if the $900 million bonds were authorized and 1.65% without bond authorization. Please state the average wastewater bill as a percentage of MHI on June 30, 2020, (a) if the $900 million bonds were authorized; and (b) if the $900 million bonds were not authorized. RESPONSE: Using the same MHI numbers as noted in the question, the annual bill as a percentage of MHI on June 30, 2020 is (a) 1.36% with the $900 million bond authorization; and (b) 2.14% if the $900 million in bonds are not authorized. Median Household Income MSD Service Area $ 53,801 With $900M Bond Authorization June 30, 2020 Typical Customer Bill (per month) $ 60.86 x 12 months 12 Annual Wastewater Bills $ 730.32 Annual Bill as % of MHI 1.36%^ Median Household Income MSD Service Arm $ 53,801 Without $900M Bond Authorization June 30, 2020Typical Customer Bill (per month) $ 96.01 x 12 months 12 Annual Wastewater Bills $ 1,/52,12 Annual Bill as % of MHI 2.14% 9 6. The Stormwater Rate Change Proposal states that: The District is proposing, and will seek voter approval, to assess a District -wide SW tax to replace the current SW O&M Tax and flat rate charges. The proposed District -wide tax rate is $0.10 per $100 of assessed property value. The subdistrict specific OMCI taxes will be eliminated as part of this Rate Proposal as well; however, the regulatory tax will remain in place. (emphasis added.) See Section 5.4, Proposed Funding Methods, p. 5-9, Exhibit MSD 1. In response to Questions 1, 4, 5, 6, 11, 12, 13, and 14 of the First Discovery Request of Home Builders Association of St. Louis and Eastern Missouri, the District states that: To clarify, the District 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. (emphasis added.) These statements are contradictory. According to these additional statements in the Discovery Response, the statement in the Rate Change Proposal is not correct. Please restate as an addendum to the Rate Change Report Section 5.4, Table 5.1 and Table 5.3 and other provisions as necessary to reflect the Rate Change Proposal. RESPONSE: The above paragraph, which appears in the Rate Change Proposal, Section 5.4, has been rewritten to clarify the administrative approach associated with setting the OMCI tax rate to zero dollars, as indicated in the addendum marked as Exhibit MSD 1D. 10 7. In response to Question 7 of the First Discovery Request of Home Builders Association, the District states the District's rate consultant, Raftelis Financial Consultants (RFC), has determined that [the use of ad valorem taxes to fund stormwater improvements and services] is fair and equitable. William Stannard, the President and CEO of Raftelis Financial Consultants, testified that whether the Rate Change Proposal is fair and reasonable should be determined by examining the Rate Change Proposal and the testimony filed in support of the District's Rate Change Proposal as well as information provided by the Commission's Rate Consultant, and other parties, including the Interveners. See Direct Testimony of William Stannard, Exhibit MSD 3H, p. 5, 11. 18-23. The Rate Consultant and consultants for each of the Interveners have testified that the use of ad valorem taxes to fund stormwater services is not equitable. See Rebuttal Testimony of Pamela R. Lemoine, Exhibit RC 101, p. 20, 11. 4-10; Michael P. Gorman, Exhibit MIEC 102, p. 23, 11. 12-18; p. 24, 11. 1-25; Michael Boerding, Exhibit HBA 103, p. , 11. 96-125. Please (a) provide any analysis prepared by Raftelis Financial Consultants which determines that the Stormwater Rate Change Proposal is (i) fair and reasonable and (ii) fair and equitable; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports these conclusions; and (c) describe the rationale for such conclusions. RESPONSE: As discussed in William Stannard's Surrebuttal Testimony, Exhibit MSD 115F, p. 2, 11. 5-15, he believes a reasonable nexus is present in linking the benefit of the stormwater service to the value of the property and that this is an equitable approach to the recovery of MSD's costs for stormwater service. In RFC's work in preparing and analyzing the revenue requirements for the stormwater operations and CIRP expenditures, as discussed in William Stannard's Direct Testimony, Exhibit MSD 3H, pp. 18-19, he believes that the level of expenditures to be funded from the proposed revenue is fair and appropriate. 11 8. Susan M. Myers states in Direct Testimony that the Rate Change Proposal (including the Stormwater Rate Change Proposal) imposes a fair and reasonable burden on all classes of ratepayers. See Exhibit MSD 3B, p. 4, 11. 6-8. The District states in response to Question 13 of the First Discovery Request of the Rate Commission that when the Rate Change Proposal was developed, the District retained the same methodology as used since 1993. No prior Rate Change Proposal has included the levy of a tax to support stormwater services. Please (a) describe the analysis that was performed to determine that the Stormwater Rate Change Proposal imposes a fair and reasonable burden on all classes of ratepayer; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: The reference to Susan Myers' Direct Testimony and the response to question 13 of the First Discovery Request of the Rate Commission both refer to the wastewater portion of the Rate Change Proposal. The fairness and reasonableness of the Stormwater Rate Change Proposal has been discussed at length in Brian Hoelscher's Direct Testimony, Exhibit MSD 3A and Bill Stannard's Surrebuttal Testimony, Exhibit MSD 115F. 9. Susan M. Myers states in Direct Testimony that the Rate Change Proposal (including the Stormwater Rate Change Proposal) is consistent with constitutional, statutory or common law as amended from time to time. See Exhibit MSD 3B, p. 5, 11. 22-24. The District states in response to Question 14 of the First Discovery Request of the Rate Commission that it analyzed Article VI Section 30(b) of the Constitution and Section 3.020(20) of the Charter Plan along with Article X Section 22(a) of the Constitution when developing the Stormwater Rate Change Proposal. Please state (a) whether Zweig v. Metro. St. Louis Sewer Dist., 412 S.W.3d 223 (Mo. 2013) (en banc) was analyzed specifically in determining whether to utilize an ad valorem tax or impervious area fee; and (b) whether the District believes there is any legal impediment to the use of a voter approved impervious area fee to fund stormwater improvements and services. 12 RESPONSE: a. Yes, Zweig v. MSD, 412 S. W.3d 223 (Mo. Banc 2013) was analyzed b. The District believes there may be a legal impediment to the implementation of a voter approved impervious area fee applicable to all properties based upon our reading of the Zweig opinion. In Zweig the court determined merely that the stormwater charge was not a user fee, but really did not determine that the stormwater charge was a tax. Rather, the court determined that the charge was a tax only because it was not a user fee. In prior cases the court described what was or was not tax in various ways. They did not do that in Zweig. 10. In response to Question 7 of the First Discovery Request of Home Builders Association, the District states that an ad valorem property tax used to operate and maintain the public stormwater system within its municipal boundaries is fair and equitable because 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. Please identify (a) each such provision of the Missouri Constitution authorizing the use of a tax levy to pay for stormwater services; and (b) each municipal entity using property taxes to pay for stormwater services. RESPONSE: a. Article X, Section 1 of the Missouri Constitution limits the taxing power of political subdivisions to those powers authorized by statute. The Missouri Supreme Court held in Dalton v. The Metropolitan St. Louis Sewer District, 275 S. W. 2d 225 (1955) ("Dalton') that Article VI, Section 30(b) of the Missouri Constitution, that authorized establishment of MSD and its Plan, included a grant of legislative power to "provide for taxation of all tangible property for general purposes and obligations of the district." Article VI, Section 30(b) of the Missouri Constitution provides that MSD 's Plan "shall provide for the assessment and taxation of real estate in accordance with the use to which it is being put at the time of assessment, whether agricultural, industrial or other use, giving due regard to the other provisions of this constitution." The provisions of Article VI, Section 30(b) mean that even though MSD is a political subdivision (per the Dalton case), MSD derives its power to tax from the Constitution and, therefore, does not need to rely on a statute for taxing power. MSD's power to impose taxes on real property is constitutional. The express constitutional power to tax real and personal property is "codified" in the MSD Plan. 13 Article VI, Section 30(b) of the Missouri Constitution further provides that MSD's Plan is the "organic law of the territory therein defined, and shall take the place of and supersede all laws, charter provisions and ordinances inconsistent therewith relating to such territory." The Dalton court recognized this broad constitutional grant of power to MSD under its voter - approved Plan. ("The apparent intent is to give the freeholders, with the approval of the voters, power to do whatever the Legislature could ordinarily do with respect to the creation, organization and authority of such district. ") b. Note that the response to Question 7 of the First Discovery Request of Home Builders Association refers to the use of ad valorem property tax by municipal entities to fund services and the maintenance of infrastructure. There is no question that municipalities use ad valorem property taxes to pay for these services in much the same way MSD is proposing to use ad valorem taxes to pay for its services and maintenance of infrastructure. With regard to municipal entities using property taxes for stormwater services, MSD is aware that many municipalities within MSD's municipal boundaries collect a Parks and Stormwater property tax. MSD has no way of knowing how much other ad valorem property tax revenue municipalities use for stormwater services. 11. In response to Question 7 of the First Discovery Request of Home Builders Association, the District states that an ad valorem property tax used to operate and maintain the public stormwater system within its municipal boundaries is fair and equitable since the use of an alternative funding method, such as impervious area, may result in fewer people participating in funding these services compared to an ad valorem taxing method based on recent Missouri Supreme Court decisions and State Legislation. Please identify (a) the recent Missouri Supreme Court decisions and State Legislation to which reference is made; and (b) identify those persons who would not be subject to (i) an impervious area charge; and (ii) an ad valorem tax to fund stormwater services. RESPONSE: a. See Surrebuttal Testimony of Brian Hoelscher, Exhibit MSD 115A, answer to question 3, parts one and four. b. (i.) The more than 3400 customers who fall under the provisions of R.S.Mo. Section 204.700 which does not allow the collection of an impervious fee from residential customers who do not receive wastewater service and whose stormwater run-off does not enter the public storm sewer system, customers who fall under any similar additional future legislation such as R.S.Mo. Section 204.700, and potentially all entities who are not required to pay ad valorem property taxes. 14 (ii.) All entities who are not required to pay ad valorem property taxes. 12. In response to Question 7 of the First Discovery Request of Home Builders Association, the District states that an ad valorem property tax used to operate and maintain the public stormwater system within its municipal boundaries is fair and equitable because the use of an alternative funding method, such as impervious area, would cost the ratepayers approximately $950 thousand/per year more to operate and maintain than an ad valorem taxing method. Please (a) describe the analysis that was performed to reach this conclusion; (b) provide copies of any memorandum, report, work paper, summary, analysis, or schedule that supports this conclusion; and (c) describe the rationale for such conclusion. RESPONSE: The details regarding operations and maintenance costs associated with an impervious area funding method can be found in the surrebuttal testimony of Richard L. Unverferth, Exhibit MSD 115B, question # 2. 13. Has the District, or any entity engaged by the District, conducted a poll or survey of voter attitudes concerning additional stormwater improvements and services to be undertaken by the District, or funding mechanisms which might be utilized to pay for such additional stormwater improvements and services within the last five years? If so, please provide a copy of the results of such poll or survey. RESPONSE: No 15 Respectfully submitted, an M. Myers METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 Tel: (314) 768-6366 Fax: (314) 768-6279 16 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 Missouri Industrial Energy Consumers on this 15th day of June, 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 bgoss@salawus.com Brandon W. Neuschafer Bryan Cave, LLP 211 N. Broadway, Suite 3600 St. Louis, MO 63102 John.kindschuhabrvancave. com /0?/ usan M. Myers, General Counsel METROPOLITAN ST. LOUIS SEWER DISTRICT 2350 Market Street St. Louis, Missouri 63103 smyers@stlmsd.com Tel: (314) 768-6366 Fax: (314) 768-6279 1