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").
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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.
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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.
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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.
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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.
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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.
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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.
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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%
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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.
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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.
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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.
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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.
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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.
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(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
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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
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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
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