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HomeMy Public PortalAboutExhibit MSD 124A - MSD's Response to Supplemental Supporting Evidence provided by HBAEXHIBIT MSD 124A BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT MSD'S RESPONSE TO SUPPLEMENTAL SUPPORTING EVIDENCE PROVIDED BY HBA ISSUE: WASTEWATER AND STORMWATER RATE CHANGE PROCEEDING WITNESS: METROPOLITAN ST. LOUIS SEWER DISTRICT SPONSORING PARTY: RATE COMMISSION DATE PREPARED: JUKE 22, 2015 Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, Missouri 63103 On June 17, 2015 the Rate Commission granted the Home Builder's Association of St. Louis & Eastern Missouri's Motion for Leave to File Supplemental Supporting Evidence, see Exhibit HBA 124. With the granting of this motion, the Commission allowed the other parties an opportunity to provide a written response to the supplemental supporting evidence provided by HBA. The following is MSD's response to that evidence. 1. See. Exhibit HBA 124, first Paragraph 6 of the Motion, specifically "Given that the ultimate purpose of the stormwater tax is to promote water quality in the St. Louis region, ..." This statement best reflects what is possibly a misunderstanding of the purpose of the proposal that MSD staff has presented to the Rate Commission for their consideration. MSD's Rate Proposal for Stormwater is to provide a funding source, via a ten cent ad valorem property tax, for Operation and Maintenance (O&M) of the Public Stormwater System District -Wide. Any minimal funds that may be available after accounting for O&M of the Public Stormwater System District -Wide will be used for projects to address stormwater problems not involving the infrastructure of the Public Stormwater System, such as stormwater flooding and erosion. The purpose of the proposal is not to address water quality in the St. Louis region. The current stormwater funding source that addresses the issue of water quality is the existing District -Wide "two cent" ($.0197 per $100 of assessed value) ad valorem property tax that MSD is not proposing be changed. The need for additional regulatory funding, including addressing water quality issues, could be discussed in future rate cases if deemed necessary. This information has been presented in many ways through these proceedings, but specifically through MSD's Rate Proposal (Exhibit MSD 1) and the testimony and surrebuttal testimony of Brian Hoelscher (Exhibits MSD 3A and 115A), Rich Unverferth (Exhibits MSD 3C and 115B), and William Stannard (Exhibits MSD 3H and 115F). The reasons MSD has proposed ad valorem taxes as a way to impose a fair and reasonable burden on all classes of ratepayers is also discussed in these documents. In summary, MSD believes that the use of a voted on impervious system, could result in up to a 40% increase in cost to MSD's customers and fewer customers participating in the funding of the program when compared to the proposed "ten cent" ad valorem tax, for the same level of services. MSD believes this is a prime consideration in determining a fair and reasonable burden. 2. See Exhibit HBA 124, paragraph 9 of the Affidavit, regarding illustrative credit programs MSD appreciates the receipt of these documents. There is not a concept contained in any of these documents that MSD is not familiar with. In fact, many of these types of programs were considered when MSD proposed a comprehensive impervious fee system to pay for a larger and broader stormwater program in the 2008-2012 Rate Proposal. 3. See Exhibit HBA 124, paragraph 12(i) of the Affidavit, "reductions in runoff volume reducing the amount of runoff requiring treatment." MSD does not currently treat stormwater run-off with the O&M portion of funding for the Public Stormwater System. Therefore, MSD would not use the proposed taxes to treat stormwater runoff. Because it does not treat stormwater flows, MSD does not have any costs to credit. To attempt to apply a credit program to the costs for the O&M of the Public Stormwater System would simply cause other customers to pay the difference for those receiving a credit with no change in operational costs. 4. See Exhibit HBA 124, paragraph 12(ii) of the Affidavit, "increases in the quality of run-off allowing the District to more easily meet water quality standard requirements." The Rate Proposal being considered by the Rate Commission is only for the Operation and Maintenance of the Public Stormwater System. Water quality issues related to the stormwater program are currently fully funded by an existing "two cent" ad valorem property tax. No proposed change in the rate or structure of this "two cent" tax is being considered and therefore has not been presented to the Rate Commission for consideration. 5. See Exhibit HBA 124, paragraph 12(iii) of the Affidavit, "reducing the need for drainage infrastructure thereby reducing costs." This statement seems to imply that a reduction in stormwater volume reduces the cost for the Operation and Maintenance of the Public Stormwater System. Because MSD's Public Stormwater System works almost exclusively on gravity and because MSD does not treat stormwater, reductions in flows have almost no impact on costs. Developers are required to provide detention as part of their development not to reduce existing flows, but to ensure that they do not increase peak flows above existing conditions. This is required to protect downstream properties and streams. They are also required to install Best Management Practices to mitigate the pollutant load caused by these developments in compliance with environmental regulations. However again, allowing a credit when there is no change in cost to the District for the Operation and Maintenance of the Public Stormwater System would just transfer costs to other customers. 6. See Exhibit HBA 124, paragraph 120iv) of the Affidavit, "potentially increase tax revenues by increasing property values." MSD has seen no evidence that this is the case. We have experienced instances where property owners find green infrastructure a plus and other occasions where property owners find green infrastructure a detriment to their property.