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HomeMy Public PortalAboutExhibit MSD 127 - Transcript of Third Technical Conference June 17, 2015 Surrebuttal TestimonyPage 1 1 2 3 4 5 6 MEETING OF THE RATE COMMISSION 7 OF THE 8 METROPOLITAN ST. LOUIS SEWER DISTRICT 9 10 11 2015 WASTEWATER & STORMWATER RATE CHANGE PROCEEDING 12 13 14 15 TECHNICAL CONFERENCE 16 JUNE 17, 2015 17 18 19 20 21 22 23 24 25 Page 2 1 I N D E X 2 WITNESSES: PAGE 3 Mr. Michael Boerding 28 4 Mr. Brian Hoelscher 29 5 Mr. Richard Unverferth 57 6 Mr. Jonathan Sprague 84 7 Mr. Tim Snoke 86 8 Ms. Theresa Bellville 91 9 Mr. William Stannard 104 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 3 1 TECHNICAL CONFERENCE FOR THE METROPOLITAN ST. 2 LOUIS SEWER DISTRICT, produced and examined on June 3 17, 2015, between the hours of 9:00 in the forenoon 4 and 12:16 in the afternoon of that day, at the 5 Metropolitan St. Louis Sewer District Offices, 2350 6 Market Street, Room 109, St. Louis, Missouri, before 7 Suzanne M. Zes, a Certified Court Reporter of the 8 State of Missouri. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 4 1 A P P E A R A N C E S 2 The Chairman: 3 Mr. Russell Hawes 4 The Rate Commission: 5 Mr. Mark Schoedel, Ms. Nancy 6 Bowser, Mr. Chan Mahanta, Mr. George Tomazi, Mr. Paul Brockmann, Mr. John Stein, 7 Mr. Kennard Jones, Mr. Steve Chodes, Mr. Steve Mahfood. 8 9 For the Rate Commission: 10 Ms. Lisa O. Stump and Mr. John Fox Arnold Lashly & Baer, P.C. 11 714 Locust Street St. Louis, Missouri 63101 12 314.621.2939 314.621.6844 Fax 13 lostump@lashlybaer.com jfarnold@lashlybaer.com 14 15 For the Missouri Industrial Energy Consumers: 16 Mr. Brandon Neuschafer BRYAN CAVE, LLP 17 211 North Broadway, Suite 3600 St. Louis, Missouri 63102 18 314.259.2317 314.552.8317 Fax 19 bwneuschafer@bryancave.com 20 For MSD: 21 Ms. Susan Myers 22 23 For the Home Builders Association: 24 Mr. Brad Goss 25 Page 5 1 P R O C E E D I N G S 2 MR. CHAIRMAN: I would like to call this 3 meeting of the Rate Commission of the Metropolitan 4 St. Louis Sewer District Wastewater and Stormwater 5 Rate Change Proceeding to order. 6 First of all, I would like to do roll call. 7 Nancy Bowser? 8 MS. BOWSER: Present. 9 MR. CHAIRMAN: Paul Brockmann? 10 MR. BROCKMANN: Present. 11 MR. CHAIRMAN: Steve Chodes? 12 MR. CHODES: Here. 13 MR. CHAIRMAN: Lori Kelling? John 14 Stein? 15 MR. STEIN: Present. 16 MR. CHAIRMAN: Eric Schneider? Leonard 17 Toenjes? George Tomazi? 18 MR. TOMAZI: Here. 19 MR. CHAIRMAN: Mike O'Connell? Mark 20 Schoedel? Kennard Jones? 21 MR. JONES: Here. 22 MR. CHAIRMAN: Steve Mahfood? 23 MR. MAHFOOD: Here. 24 MR. CHAIRMAN: Otis Williams? Chan 25 Mahanta? Page 6 1 MR. MAHANTA: Here. 2 MR. CHAIRMAN: Very good. Thank you. 3 First of all, we have on the agenda 4 procedural matters. I'm going to start by reading a 5 statement for the Technical Conference June 17 6 through 18, 2015. 7 My name is Russ Hawes and I'm the chairman of 8 the -- vice chairman of the Rate Commission of the 9 Metropolitan St. Louis Sewer District and will serve 10 as chair of this proceeding. 11 Present are Nancy Bowser, Paul Brockmann, 12 Steve Chodes, Jack Stein, George Tomazi, Kennard 13 Jones, Steve Mahfood Chan Mahanta, delegates of the 14 Rate Commission. 15 The Charter Plan of the District was approved 16 by the voters of St. Louis and St. Louis County in a 17 special election on February 9th, 1954 and amended 18 at a general election on November 7th, 2000. The 19 amendment of the Charter Plan established the Rate 20 Commission to review and make recommendations to the 21 District regarding changes in wastewater rates, 22 stormwater rates and tax rates proposed by the 23 District. 24 The Charter Plan requires the Board of 25 Trustees of the District to select organizations to Page 7 1 name delegates to the Rate Commission to ensure a 2 fair representation of all users of the District's 3 services. The Rate Commission representative 4 organizations are to represent commercial-industrial 5 users, residential users and other organizations 6 interested in the operation of the District 7 including organizations focusing on environmental 8 issues, labor issues, socio-economic issues, 9 community-neighborhood organizations and other 10 nonprofit organizations. 11 The Rate Commission currently consists of 12 representatives of Associated General Contractors of 13 St. Louis, St. Louis Regional Chamber and Growth 14 Association, the Engineers' Club of St. Louis, 15 League of Women Voters, Missouri Botanical Garden, 16 Education Plus, Missouri Industrial Energy 17 Consumers, Mound City Bar Association, the St. Louis 18 County Municipal League, the St. Louis Council of 19 Construction Consumers, Lutheran Senior Services, 20 West St. Louis County Chamber of Commerce, North 21 County Incorporated, Greater St. Louis Labor Council 22 and Missouri Coalition for the Environment. 23 Upon receipt of a Rate Change Notice from the 24 District, the Rate Commission is to recommend to the 25 Board of Trustees changes in wastewater, stormwater Page 8 1 or tax rates necessary to pay, one, interest and 2 principal falling due on bonds issued to finance 3 assets of the District; two, the cost of operation 4 and maintenance; and three, such amounts as may be 5 required to cover emergencies and anticipated 6 delinquencies. 7 Further, any change in the rate recommended 8 to the Board of Trustees by the Rate Commission is 9 to be accompanied by a statement that the proposed 10 Rate Change is consistent with constitutional, 11 statutory or common law as amended from time to time 12 and enhances the District's ability to provide 13 adequate sewer and drainage systems and facilities 14 or related services and is consistent with and not 15 in violation of any covenant or provision relating 16 to any outstanding bonds or indebtedness of the 17 District, does not impair the ability of the 18 District to comply with applicable federal and state 19 laws or regulations as amended from time to time and 20 imposes a fair and reasonable burden on all classes 21 of ratepayers. 22 The Rate Commission received a Rate Change 23 Notice from the District on February 26, 2015. 24 Under the Procedural Schedule adopted by the Rate 25 Commission any person affected by the Rate Change Page 9 1 Proposal had an opportunity to submit an application 2 to intervene in these proceedings. 3 Applications to intervene have been filed by 4 the Home Builders Association of St. Louis and 5 Eastern Missouri and Missouri Industrial Energy 6 Consumers. These applications have been granted. 7 The Rate Commission originally had until 8 June 26, 2015 to issue its report on the proposed 9 Rate Change Notice to the Board of Trustees of the 10 District. The Rate Commission requested an 11 additional 45 days to issue its report and on May 12 14, 2015 the District Board of Trustees granted the 13 Rate Commission's request. The Rate Commission must 14 now issue its report on or before August 10, 2015. 15 On February 26, 2015 the District submitted 16 to the Rate Commission prepared direct testimony of 17 Brian L. Hoelscher, Susan M. Myers, Richard 18 Unverferth, Jonathan Sprague, Tim Snoke, Bethany 19 Pugh, Theresa Bellville, and William Stannard. 20 On March 17, 2015 the Rate Commission 21 submitted its first discovery request to the 22 District. On March 27, 2015 the District filed its 23 responses. 24 On March 30, 2015 the Rate Commission 25 submitted its second discovery request to the Page 10 1 District, which the District responded to on 2 April 7, 2015. 3 On April 3rd, 2015 the Rate Commission 4 submitted its third discovery request to the 5 District to which the District responded on 6 April 13th, 2015. 7 On April 8th, 2015 a Technical Conference was 8 held on the record regarding the Rate Setting 9 Documents and the direct testimony filed with the 10 Rate Commission by the District. The purpose of the 11 Technical Conference was to provide the District an 12 opportunity to answer questions propounded by the 13 members of the Rate Commission, then by any 14 intervener and, finally, by Lashly & Baer, legal 15 counsel to the Rate Commission. 16 On April 10th, 2015 intervener Missouri 17 Industrial Energy Consumers submitted its first 18 discovery request to the District to which the 19 District responded on April 20th, 2015. 20 On April 27, 2015, the Rate Commission 21 submitted its fourth discovery request to the 22 District to which the District responded to on May 23 7th, 2015. 24 On April 27, 2015 intervener Missouri 25 Industrial Energy Consumers submitted its second Page 11 1 discovery request to the District, which the 2 District responded to on May 27, 2015. 3 On May 1st, 2015 intervener Home Builders 4 Association submitted its first discovery request to 5 the District to which the District responded on May 6 13th, 2015. 7 On May 12th, 2015 the Rate Commission 8 consultant and intervener Missouri Industrial Energy 9 Consumers submitted rebuttal testimony. On May 10 13th, 2015 the intervener Home Builders Association 11 submitted rebuttal testimony. 12 On May 18th, 2015 the District submitted its 13 first discovery request to intervener Missouri 14 Industrial Energy Consumers and on May 28th, 2015 15 intervener Missouri Industrial Energy Consumers 16 submitted its response. 17 On May 21st, 2015 the District submitted its 18 first discovery request to intervener Home Builders 19 Association and on June 2nd, 2015 intervener Home 20 Builders Association submitted its response. 21 On June 3rd, 2015 the Rate Commission 22 submitted its fifth discovery request to the 23 District and on June 15th, 2015 the District 24 submitted its response. 25 On June 5th, 2015 the District submitted Page 12 1 surrebuttal testimony. 2 The Technical Conference will be held on the 3 record regarding the rebuttal testimony of Michael 4 Boerding and then the surrebuttal testimony of 5 representatives of the District. 6 Each person submitting surrebuttal testimony 7 shall answer questions propounded by the members of 8 the Rate Commission, the interveners and finally by 9 our legal counsel. 10 Ratepayers who do not wish to intervene are 11 permitted to participate in a series of 12 on-the-record public hearing sessions which began on 13 May 18th. 14 Who is here on behalf of the Metropolitan St. 15 Louis Sewer District? 16 MS. MYERS: Susan Myers. 17 MR. CHAIRMAN: And who is on here on 18 behalf of the Home Builders Association? 19 MR. GOSS: Brad Goss. 20 MR. CHAIRMAN: Who is here on behalf of 21 the Missouri Industrial Energy Consumers? 22 MR. NEUSCHAFER: Brandon Neuschafer. 23 MR. CHAIRMAN: Also present is Pamela 24 Lemoine of Black & Veatch, consultant to the Rate 25 Commission and John Fox Arnold and Lisa Stump of Page 13 1 Lashly & Baer, legal counsel to the Rate Commission. 2 Under the Rate Commission's Operational 3 Rules, no person shall be required to answer 4 questions for a total period of more than three 5 hours and the time shall by evenly divided among all 6 the participants desiring to ask questions. 7 Following questions by members of the Rate 8 Commission, I will attempt to allocate the time 9 equally among the participants and our legal 10 counsel. To the extent the District, one of the 11 interveners or legal counsel has not completed the 12 questions at the expiration of that person's 13 allotted time and to the extent that time remains, 14 such person will be permitted to propound additional 15 questions until the three hours has expired. 16 Are there any procedural matters? 17 MR. ARNOLD: Mr. Chairman, if I may? 18 MR. CHAIRMAN: Yes, sir. 19 MR. ARNOLD: Mr. Chairman, members of 20 the Commission, good morning. Following our last 21 proceeding Mr. Goss, as counsel for the Home 22 Builders Association, contacted me and inquired 23 about the procedure for providing some additional 24 information to the Commission. This was following 25 the filing of the rebuttal testimony of Mr. Boerding Page 14 1 and following the receipt and response of a 2 discovery request propounded to the Home Builders by 3 the District. 4 I advised Mr. Goss that the application 5 should be addressed to the Commission and, following 6 some discussions with Mr. Goss and Ms. Myers, you 7 have before you an application by the Home Builders 8 to permit the introduction into the record of the 9 affidavit of Emily Schwartze Post. Perhaps if you 10 could hear from Mr. Goss and Ms. Myers. As your 11 counsel we have no objection to the addition of this 12 material. 13 MR. CHAIRMAN: Do I hear a motion to 14 that effect? 15 MR. TOMAZI: So moved. 16 MR. BROCKMANN: Second. 17 MR. CHAIRMAN: All right. Let's hear 18 from Mr. Goss. 19 MR. GOSS: Mr. Chairman, members of the 20 Commission, thank you for considering our motion. 21 We have asked that we be allowed to introduce some 22 additional information to the Commission for 23 consideration in their deliberations on the proposed 24 rate related to the stormwater tax. 25 The questions that were asked of -- or the Page 15 1 questions that were asked of Mr. Boerding in 2 rebuttal from the District went to whether he had 3 administered a stormwater tax credit program or not, 4 which made us believe that he will be asked to 5 provide some information regarding how stormwater 6 tax credit programs work. 7 As you know, it has been our position that a 8 stormwater tax credit program would be beneficial 9 and, in fact, necessary in order to make this a fair 10 and equitable rate and, in fact, help further the 11 purposes of the District in implementing better 12 stormwater quality control and reduction of 13 stormwater volume. 14 So, to that end, we are asking that Emily 15 Schwartze Post be allowed to introduce or offer her 16 testimony, which we submitted an affidavit to you. 17 You have that at your desk. We have also submitted 18 that electronically and also some examples of some 19 stormwater credit programs that have been 20 implemented around the United States from places as 21 varied as Fernandina (ph) Beach, Florida; Baltimore, 22 Maryland; Seattle, Washington; Richmond, Virginia; 23 Lynchburg, Virginia, and Minneapolis, Minnesota. 24 Those are just a few of the stormwater taxing credit 25 programs that have been implemented around the Page 16 1 country and we thought that that information would 2 be useful to the Commission in its consideration of 3 this rate and, in particular, whether it be a fair 4 and equitable rate. 5 Ms. Schwartze Post is here today in order 6 that you might ask her any questions that you might 7 have or the District might ask her any questions. 8 So I would ask that the Commission please favorably 9 consider the introduction of that testimony. 10 MR. CHAIRMAN: Any comments? Well, a 11 motion first I guess. 12 MR. MAHANTA: I think this is very good 13 material that you have submitted. I wish to 14 consider it. 15 MR. GOSS: Thank you. 16 MR. CHAIRMAN: Further comments? 17 Comments from the District? 18 MS. MYERS: Thank you, Commission. The 19 District would like to take this opportunity to 20 oppose the motion by HBA based upon the grounds that 21 HBA did not file any surrebuttal testimony. The 22 Procedural Schedule, which was adopted by this 23 Commission, has laid out a very fair and efficient 24 schedule of providing testimony and then making 25 those witnesses available for -- to testify in Page 17 1 person. 2 The District received HBA's motion this past 3 Monday, which was June 15. The discovery that 4 Mr. Goss has spoke about was delivered to the HBA on 5 May 21st. The District received their response on 6 June 1st -- well, no, actually we received their 7 response on June 2nd, which was a day after it was 8 due on June 1st. So it's the District's position 9 that the HBA then had ample opportunity to submit 10 surrebuttal testimony on June 5th, which would have 11 been in compliance with the Procedural Schedule that 12 has been set out. 13 With just receiving the motion on Monday, the 14 District has not had time to research or adequately 15 prepare to respond to the information. The District 16 has not seen the examples that I understand Mr. Goss 17 has passed out to you all today. We received the 18 motion and we received the affidavit but we did not 19 receive any of the other information. 20 By granting this motion the District feels 21 that it really compromises the integrity of the fair 22 process that you all have worked so hard to set out 23 throughout this process. So we are in opposition of 24 you granting the motion. 25 If the Commission does feel that it's in the Page 18 1 best interest of the Commission to grant the motion 2 the District requests that the other parties be 3 allowed to submit written evidence to refute the 4 information that's being provided with the motion 5 and I would ask to get a copy of the information 6 that has been provided with the motion. 7 The District also requests direction from the 8 Rate Commission as to the future procedure and rules 9 for submitting additional or supplemental 10 information and responses. I think we're kind of 11 going off the rails here of our Procedural Schedule 12 that has been outlined, so we would like to have 13 some direction on, you know, how you all would like 14 to proceed from here on out. I know we have a 15 couple more meetings and a Prehearing Conference and 16 submission of evidence and a few other things left 17 procedurally to take care of in this process. 18 So, with that being said, I would support the 19 Commission opposing the motion. If not, then please 20 provide us direction going forward. Thank you. 21 MR. CHAIRMAN: Further discussion? 22 MR. BROCKMANN: Mr. Goss, why was the 23 material not submitted previous to this time period? 24 MR. GOSS: Because we had no idea that 25 the District was asking us to have Mr. Boerding Page 19 1 supply evidence regarding whether he had 2 administered a tax credit program. The District, 3 back in 2007, had actually proposed a credit program 4 as part of the then proposed stormwater tax 5 proposal, so the idea that the District doesn't 6 understand what credits are and how they would be 7 administered was surprising to us. We didn't think 8 that was something that we were going to need to 9 supply to them to educate them but once we received 10 their inquiry, realized they would like us to supply 11 that information, so we did so. But it wasn't 12 something initially we felt we were going to have to 13 supply. 14 We -- in terms of our approach to this 15 credit, we haven't tried to dictate or suggest 16 there's any one way this credit needs to be 17 administered by the District. We just believe that 18 a credit that allows people to offset the stormwater 19 tax for the BMPs that they're putting in, that the 20 stormwater tax is designed to pay for, is a fair and 21 reasonable thing to do. 22 And what we are offering now is information 23 that we think is useful for the District, as well as 24 useful for the Commission in considering how a 25 credit program may work. So we really were trying Page 20 1 to pull this together fairly quickly once we saw the 2 question that was directed to us and so we -- that's 3 the reason really. We were trying to get the 4 information as quickly as possible to the District 5 and trying to put together a fairly representative 6 sample of the various programs that were out there. 7 MR. BROCKMANN: Thank you. 8 MR. TOMAZI: I would like to direct a 9 question to our legal counsel. Does the Rate 10 Commission have the authority to get involved with 11 things like tax credits, et cetera, is that within 12 our purview? 13 MR. ARNOLD: Commissioner, the answer is 14 probably yes. Keep in mind, that the roll of the 15 Rate Commission, with respect to the three criteria 16 which the Chairman identified earlier this morning, 17 is to review that material and make recommendations 18 to the trustees about the administration of a Rate 19 Change Proposal and then you have the five factors 20 upon which you must deliberate and make a 21 determination that the Rate Proposal, either as 22 submitted or as you adjust, meets each of those five 23 criteria. 24 MR. TOMAZI: Okay. Thank you. 25 MR. ARNOLD: You have a really rather Page 21 1 broad role. 2 MR. MAHANTA: I appreciate Ms. Myers' 3 comments regarding procedures and submittal in a 4 timely manner and so forth, but considering the 5 material that is submitted I think these are very 6 beneficial and progressive measures and it is good 7 for the public to actively participate in this 8 process of stormwater management and practicing 9 sustainable ways of dealing with it. And, 10 considering that, I submit that we should consider 11 this package carefully and accept it. 12 MR. CHAIRMAN: Any further discussion? 13 MR. MAHFOOD: Yes. 14 MR. CHAIRMAN: Yes, sir, Mr. Mahfood? 15 MR. MAHFOOD: I tend to agree with Chan. 16 I think that the -- I respect the legal timelines 17 and I know what we're under, I know it's under a lot 18 of pressure on all sides, but given the long-term 19 impact of these rate changes I think it's really 20 necessary to consider all options. It will be up to 21 us to determine how we're going to go forward 22 because it's very fair to say we need to give MSD 23 guidance if we're going to accept this new 24 information. It might not be easy to do that but I 25 think it's worth the effort. Thanks. Page 22 1 MR. CHAIRMAN: Yes, sir? 2 MR. SCHOEDEL: Mr. Chairman, not having 3 a chance to look at this real closely but it starts 4 bringing up some issues, just looking at it briefly, 5 back to the impervious area question. It's not just 6 about credits but as you look at the examples it 7 gets into that impervious question, which is 8 something we've all had something about and it 9 sounds like it may be a more fair and equitable way 10 to have stormwater charges and things like that. 11 Within our current mandate and what we have 12 to do to comply with the Consent Decree is there 13 potential that this is going to push off any rate 14 change at this point and could put us in jeopardy 15 with complying with the Clean Water Act and the 16 Consent Decree? Because this really injures the 17 whole back to the discussion of the impervious fee. 18 It's not just providing credits because it gets down 19 to how you're going to track that and how you're 20 going to monitor that and is there time enough to 21 come up with the analysis for that in our current 22 process and rates that we need to do to comply with 23 the Consent Decree. 24 MR. CHAIRMAN: John? 25 MR. ARNOLD: Mr. Chairman, if I may, Page 23 1 members of the Commission, with respect to Ms. 2 Myers' observation about the timeline and all, she 3 and I had discussed this yesterday afternoon and I 4 suggested for her consideration and I will suggest 5 it for your consideration, that if the Commission 6 undertakes to permit the admission of this exhibit 7 that any response by the District be submitted prior 8 to the date of the Prehearing Conference. 9 And, further, with response to the question 10 Ms. Myers raised a few moments ago, any other 11 material by any other intervener or the District or 12 your counsel, be admitted -- or be submitted with 13 the same time frame so that by the time of the 14 Prehearing Conference we will have before you all of 15 the issues that when we meet to permit the 16 introduction of all the exhibits and for final 17 argument you will have had a chance to consider, in 18 some length, the issues which need to be resolved. 19 MR. CHAIRMAN: The Prehearing 20 Conference, as I remember, is the 26th of this 21 month, so it's nine days from today. Is there 22 sufficient time, do you feel, for those types of 23 responses and so forth? Is nine days sufficient? 24 MR. ARNOLD: My first job was in the 25 Army. That's a lifetime. Page 24 1 MR. CHAIRMAN: Okay. Do you feel that's 2 appropriate, Ms. Myers? 3 MS. MYERS: I do feel that is 4 appropriate and I would like to take the opportunity 5 to clarify one thing. The discovery requests that 6 the District sent to HBA on May 21st was asking only 7 about their expert's experience and whom he had done 8 that work for. We did not ask for any examples of 9 credits or any of I'm guessing the information that 10 you all have in front of you because I haven't seen 11 it yet. 12 The other thing I would like to clarify is in 13 terms of the stormwater proposal, that the District 14 is making in this rate process, is about taxes. The 15 one back in 2007 was about an impervious fee. 16 There's a difference there and I know a lot of you 17 already know that but I'm not sure everybody in this 18 room is clear on that. 19 So I just wanted to take the opportunity to 20 clarify those two points and the District would be 21 happy to submit a written refute to the HBA's 22 material by prior to the Prehearing Conference, if 23 that's what the Rate Commission wishes. 24 MR. CHAIRMAN: Okay. Thank you, Ms. 25 Myers. Page 25 1 Yes, sir? 2 MR. JONES: Ms. Myers, you're using the 3 word "refute." Do you anticipate opposing the 4 stormwater proposal or you may even agree with it? 5 MS. MYERS: Well, from what little 6 information the District has seen about the 7 stormwater credit proposal being proposed by HBA, 8 we -- that is the plan we are proposing to take at 9 this time. Like I said, we have not seen all of the 10 information so that may change things but based upon 11 what we've seen to date, yes. 12 MR. CHAIRMAN: Mr. Tomazi? 13 MR. TOMAZI: At the risk of doing 14 something out of a line I would like to propose that 15 we accept the information as presented today, take 16 no action on it, that we give the District a chance 17 until June the 26th to respond and give you an 18 opportunity, Mr. Goss, to -- for 30 minutes or so to 19 make your case on the 26th. If that presses you on 20 time, I'm sorry but, you know, we are getting late 21 in the cycle now and we have an obligation to get a 22 report to the Board of Trustees on a certain date. 23 So that would be my suggestion. 24 MR. CHAIRMAN: Mr. Arnold, is it 25 possible to take it as information only and not Page 26 1 admit it as evidence? 2 MR. ARNOLD: Mr. Chairman, I believe it 3 would be appropriate to accept it, assign an exhibit 4 number so that it may be considered by the members 5 of the Commission between now and the 26th so that 6 you have that as well as the District's information 7 and any subsequent information which may be 8 provided. 9 MR. CHAIRMAN: Okay. 10 MR. MAHFOOD: Do you need a motion for 11 that? Did you move, George? 12 MR. CHAIRMAN: Yeah, I think that was a 13 motion. 14 MR. TOMAZI: So moved. 15 MR. MAHFOOD: Second. 16 MR. SCHOEDEL: Is there a previous 17 motion? 18 MR. CHAIRMAN: No, I don't think a 19 motion ever came up. We went directly into 20 discussion. Did anybody move anything prior? I 21 don't think so. So this is the only motion on the 22 table. 23 MR. SCHOEDEL: Would you repeat the 24 motion, please? 25 MR. CHAIRMAN: As I understand it -- Page 27 1 MR. TOMAZI: I'll repeat. 2 MR. CHAIRMAN: I'll let Mr. Tomazi. 3 MR. TOMAZI: I move that we accept the 4 affidavit from the Home Builders Association as 5 presented this morning, take no action on it and put 6 it on our agenda for the June 26th meeting, which 7 hopefully will give the District an opportunity to 8 respond to it. That's my motion. 9 MR. CHAIRMAN: Do we have a second? 10 MR. MAHFOOD: I second. 11 MR. CHAIRMAN: Discussion? 12 MR. BROCKMANN: Does this affidavit, I 13 haven't read this particular one here, does this 14 specifically refer to all the attachments so we can 15 include the attachments in the exhibit? 16 MR. GOSS: Yes, it does. 17 MR. BROCKMANN: Okay. Thank you. 18 MR. CHAIRMAN: Any further discussion? 19 All those in favor? 20 RATE COMMISSION: Aye. 21 MR. CHAIRMAN: All opposed? Hearing 22 none, it passes. 23 All right. That being no further procedural 24 matters, Mr. Goss, are you ready to present persons 25 for whom you have filed rebuttal testimony on behalf Page 28 1 of the Home Builders Association? 2 MR. GOSS: Yes, I am. 3 MR. CHAIRMAN: All right. Thank you. 4 Please proceed. 5 MR. GOSS: Mr. Chairman, members of the 6 Commission, I would present Michael Boerding to 7 respond to the questions from the District in his 8 rebuttal testimony. We have answered the District's 9 question in terms of his experience and submitted 10 that in writing and Mr. Boerding is here to answer 11 any questions that may be asked. 12 MR. CHAIRMAN: All right. Mr. Boerding, 13 please, take a seat up here. 14 Mr. Boerding, is the testimony you're about 15 to give the truth, the whole truth, and nothing but 16 the truth? 17 MR. BOERDING: Yes. 18 MR. CHAIRMAN: All right. Does any 19 member of the Rate Commission have any questions for 20 Mr. Boerding? No? All right. 21 Ms. Myers, do you have any questions for 22 Mr. Boerding on behalf of the District? 23 MS. MYERS: We do not. 24 MR. CHAIRMAN: Okay. Mr. Neuschafer, do 25 you have any questions for Mr. Boerding on behalf of Page 29 1 Missouri Industrial Energy Consumers? 2 MR. NEUSCHAFER: We do not. 3 MR. CHAIRMAN: Mr. Arnold, do you have 4 any questions for Mr. Boerding? 5 MR. ARNOLD: No, sir. 6 MR. CHAIRMAN: All right. Mr. Goss, do 7 you have any questions for Mr. Boerding? 8 MR. GOSS: Unfortunately I don't, no. 9 MR. CHAIRMAN: Hearing no questions, I 10 think you're relieved, Mr. Boerding. Thank you very 11 much. 12 Ms. Myers, are you ready to present those 13 persons for whom you have filed surrebuttal 14 testimony on behalf of the District? 15 MS. MYERS: We are. 16 MR. CHAIRMAN: All right. Please 17 proceed. 18 MS. MYERS: Our first witness will be 19 Brian Hoelscher. 20 MR. CHAIRMAN: Mr. Hoelscher, is the 21 testimony you are about to give the truth, the whole 22 truth, and nothing but the truth? 23 MR. HOELSCHER: Yes, it is. 24 MR. CHAIRMAN: Does any member of the 25 Rate Commission have any questions for Mr. Hoelscher Page 30 1 right now? 2 Mr. Neuschafer, do you have any questions on 3 behalf of the Missouri Industrial Energy Consumers 4 for Mr. Hoelscher? 5 MR. NEUSCHAFER: I do. 6 MR. CHAIRMAN: Please come forward. 7 BRIAN HOELSCHER, having been duly sworn, 8 testified as follows: 9 QUESTIONS BY MR. NEUSCHAFER: 10 Q. Thank you, Mr. Hoelscher. I'm going to 11 apologize in advance for paper shuffling but I've 12 got a number of things I'm looking at here. I would 13 like to start by looking at the surrebuttal 14 testimony that you filed, particularly Page 2, 15 approximately Lines 13 through 19 where you state 16 that MSD is required to update its estimate of 17 volume projections for unmetered customers; is that 18 correct? 19 A. Yes. 20 Q. Okay. Can you can describe the efforts 21 that MSD undertook to document or verify volumes 22 used by unmetered customers? 23 A. The information is included primarily -- 24 well, there's an appendix within our Rate Proposal 25 that gives a full description of the process to Page 31 1 determine the appropriate adjustments and I believe 2 there's testimony by Mr. William Stannard that 3 addresses the issue directly. 4 Q. I'm going to see if I can find that 5 appendix real quick. 6 MEMBER OF MSD STAFF: 7.1.4. 7 Q. (MR. NEUSCHAFER) 7.1.4. Okay. There 8 it is. Unmetered calibration. 9 Would you agree that generally unmetered 10 customers don't have the same economic incentive to 11 install water conservation devices as metered 12 customers? 13 A. Yes. 14 Q. And that's because metered customers can 15 get economic savings, bill reductions when their 16 volume is reduced but unmetered customers don't get 17 those same savings? 18 A. Primarily, yes. 19 Q. Has MSD measured an actual change in the 20 amount of wastewater pumping over the last several 21 years? 22 A. Yes, we have information on the changes 23 in pumping volumes, yes. 24 Q. Do you know is that in the Rate Proposal 25 or elsewhere in the record, do you know? Page 32 1 A. It's in the record somewhere as 2 information. 3 Q. Has MSD made an effort to measure actual 4 volume waste for unmetered customers? 5 A. Not volume waste for unmetered 6 customers, other than the comparison in the analysis 7 that was done in the Rate Proposal. 8 Q. And so I believe MSD estimated that the 9 wastewater for unmetered customers would drop by 10 over 9 percent between -- or in Fiscal Year 17 over 11 Fiscal Year 16. Do you know the basis for that, for 12 that assumption? 13 A. That was not MSD's position. I think 14 MSD's position was since the flows per attribute 15 were first accrued by the court in 1992 and 16 originally calculated in 1956 there has been a 17 reduction and we're reflecting that reduction in 18 this Rate Proposal. 19 Q. Okay. I would like to talk about volume 20 just a bit here. 21 So I have got some copies of portions -- so 22 these are exhibits that are in the record already. 23 These are MSD's annual financial reports and I 24 believe they're Exhibits 22, 23, 24 and 25. So 25 that's what I have got to show you here because I Page 33 1 want to look at some numbers. 2 The first one that I have, I have a few extra 3 copies, is fiscal year -- for Fiscal Year 2011. 4 This should be Exhibit 22 in the record. Take a 5 look, I've just got a couple pages to show you but 6 most importantly I'm looking at the average flow for 7 Fiscal Year 2011 and that is reflected as 8 370.6 million gallons a day; is that right? 9 A. Yes. 10 Q. I'm going to go through just kind of the 11 same reports for the subsequent years. 12 MR. NEUSCHAFER: Susan, I have extra 13 copies here if you want. 14 MS. MYERS: Okay. 15 MR. NEUSCHAFER: It's exactly what I'm 16 handing Brian. This is for 2012. There's one for 17 you, one for Susan. 18 MR. HOELSCHER: Okay. 19 Q. (MR. NEUSCHAFER) Feel free to look at 20 it as long as you need but the table I'm looking at 21 there in the second page of the handout shows the 22 average flow for Fiscal 2012 is 300.05 million 23 gallons a day; is that correct? 24 A. Yes, sir. 25 Q. Okay. For Fiscal Year 13, one for you, Page 34 1 one for Susan, second page there shows the average 2 flow for Fiscal Year 2013 at 326.7 million gallons a 3 day? 4 A. Yes, sir. 5 Q. Reflects not quite a 10 percent increase 6 over the prior year? 7 A. Yes. 8 Q. And the last one, which reflects the 9 average flow for Fiscal Year 2014, at 273.8 million 10 gallons a day, correct? 11 A. Yes. 12 Q. This last one for Fiscal Year 2014, we 13 understand from the Rate Proposal that this number 14 could be an anomaly because of some modifications 15 that Missouri American Water Company made to its 16 practices; is that correct? 17 A. That would a very minor part of the 18 reason for differences. 19 Q. Can you help me understand how minor? 20 A. Very minor. You have given us the 21 average daily flows for all of the treatment plants 22 located throughout the District. The unmetered 23 customer issue only has to do with those folks who 24 are in our combined sewer system, primarily within 25 the City of St. Louis. They flow just to our Page 35 1 combined sewer plants, be it the Bissell treatment 2 plant or the Lemay treatment plant. 3 The primary drivers of any differences in the 4 average flow of those plants are inflow during dry 5 or wet weather through groundwater or other 6 instances. River stage has a huge impact on that as 7 far as infiltration coming into the system depending 8 on what the river stages in the Mississippi River 9 are or the River Des Peres. 10 There are also incidences of recycled potable 11 water that's continuously entering our system off 12 and on through lakes and stuff like that. Those 13 have a -- are a much larger driver, as far as the 14 impact of flows, than any changes from Missouri 15 American Water. 16 Matter of fact, the water bill for those 17 folks who are in those treatments plants actually 18 comes from the City of St. Louis and not Missouri 19 American Water. 20 Q. Okay. So if we were to try to 21 account -- let me -- so you have the Rate Proposal 22 there in front of you. Turn to Page 4 dash 8. The 23 top paragraph there, the last two sentences are 24 where MSD references discontinuities in data 25 experienced by Missouri American Water. You have Page 36 1 suggested to me just now that those discontinuities 2 in data are minor. Can you quantify how minor those 3 are? 4 A. It was a one-time -- understand I'm 5 going off the top of my head, it was a one-time dip 6 of approximately $9 million worth of billing for 7 those entities that are serviced by Missouri 8 American Water. MSD is in the process of, now that 9 we have actual data, trying to go back and recover 10 some of those costs. With the actual numbers we're 11 going through the process of recovering those costs 12 from those who received the service. 13 Q. So the 273.8 million gallons a day that 14 were treated in 2014, how does that compare to 15 future projections? 16 A. I'm not sure we put a projection 17 anywhere since, again, some of the primary drivers 18 are -- the major drivers are river level, other 19 inflow sources. There are things we're taking care 20 of such as stormwater connections in the separate 21 sanitary system that do go to our other plants like 22 the Bissell and Lemay but the driver of that number 23 is primarily river stage and other inflow sources 24 that aren't necessarily controlled by MSD. 25 As far as what those projections are, I'm Page 37 1 sure we made some projection I would just have to go 2 through the documents. I'm not, off the top of my 3 head, familiar with what the projections are for 4 flows. 5 Q. Okay. If there was an anomaly in 6 billing in 2014 associated with changes made by 7 American Water Company, does that also indicate or 8 does that suggest that the volume numbers are 9 incorrect as well? 10 A. It would -- it indicated -- I'm not sure 11 what the magnitude of it was. I would have to check 12 with Theresa Bellville. But I believe we resolved 13 the issue after we submitted the Rate Proposal, so 14 the actual usage numbers might be slightly less than 15 what they actually were I believe. Again, I'm 16 mentioning whether we had -- I don't know that we 17 had time to do that before the Rate Proposal. I 18 would have to check with staff. 19 Q. Okay. These annual reports that I 20 showed you, there is one other thing I would like to 21 look at in those and if we begin on the 2011 report, 22 we go to the second page -- let's see, I'm sorry, 23 third page. Again, my apologies for the shuffling 24 of paper. 25 What I'm looking at is the number of Page 38 1 connection permits, so that is Page 5 and it shows 2 the number of connection permits issued being 1,883; 3 is that correct? 4 A. Yes. 5 Q. So if we go to '12, 2012 -- 6 A. Okay. 7 Q. -- number of connection permits issued 8 is 802? 9 A. It's showing how many? 10 Q. 802 for the number of connection permits 11 issued. 12 A. Correct. 13 Q. Okay. And '13, number of connection 14 permits issues is 1345? 15 A. Yes. 16 Q. You see that. And in '14 connection 17 permits issued are 1764? 18 A. Yes. 19 Q. So other than a dip in the year 2012, 20 those connection permits that have been issued -- or 21 the number of connection permits issued has been 22 increasing from 1183 in 2011 to 1764 in 2014? 23 A. Correct. 24 Q. Okay. And in the Rate Proposal, if you 25 look at Table 4 dash 2 on Page 4 dash 4, Line 13 Page 39 1 shows the percent change in total customer accounts. 2 If you look at Fiscal Year 2014 you see that there 3 was actually an increase by about .33 percent in the 4 total number of customer accounts over the prior 5 year? 6 A. Yes. 7 Q. So we've got increasingly more 8 connection permits issued year over year for the 9 most part? 10 A. Well, only one year, Fiscal 14. 11 Previous years it shows a decrease. 12 Q. Right. So I'm going back to connection 13 permits. 14 A. Correct. 15 Q. Okay. So just the connection permits, 16 based on the numbers we looked at in the annual 17 reports, the trend is that those are increasing year 18 over year? 19 A. Well, in construction permits -- and 20 permits don't mean new customers necessarily. They 21 could mean connect/reconnect I believe of existing 22 customers or a decrease of homes where two homes are 23 torn down to be replaced by one there's actually a 24 decrease in the customer base. So that would be a 25 combination of all those numbers. Page 40 1 Q. How often does that latter happen? 2 A. Now, as many folks here know, infill 3 building happens a lot right now. There's not a 4 whole lot of new redevelopment land and a lot of the 5 work we're seeing is where one or two homes are torn 6 down, put a larger home in. 7 I will tell you it is a large number. I 8 don't have the exact number off the top of my head. 9 Q. Okay. So, nonetheless, there are more 10 connection permits being issued now? 11 A. Yes. 12 Q. The trend is increasing or has been 13 increasing? 14 A. And along with what you point out with 15 the customer accounts, in fact, the customer 16 accounts, except for one year, have been going down 17 is kind of reflective of the issue I was presenting. 18 Q. But you also anticipate, looking at the 19 projected years 2015 to 2020, year over year it 20 remains relatively flat? 21 A. I think we're projecting a decrease of 22 .1 percent in customers, yes. 23 Q. And then going back just a little bit, 24 13, Fiscal Year 13 there was a .19 percent decrease 25 but that is significantly less, roughly half of the Page 41 1 prior year? 2 A. And more than 2008, 2009, yeah. 3 Q. We're looking at the more recent trends 4 here, is what I'm considering. 5 A. Okay. So, yeah, it goes up and down 6 with the economy and, you know, whatever type of 7 infill or whenever people see economic opportunity 8 it will go up and down every year. 9 MR. NEUSCHAFER: I think that's all I 10 have. Thank you. 11 MR. CHAIRMAN: Thank you, 12 Mr. Neuschafer. 13 Mr. Goss, do you have any questions on behalf 14 of the Home Builders? 15 MR. GOSS: I do not have any questions 16 of this witness. 17 MR. CHAIRMAN: All right. Very good. 18 Mr. Arnold, do you have any questions on 19 behalf of the Rate Commission? 20 MR. ARNOLD: Yes, sir, I do. 21 MR. CHAIRMAN: Please come forward. 22 MR. ARNOLD: Thank you. 23 QUESTIONS BY MR. ARNOLD: 24 Q. Good morning, sir. 25 A. Good morning. Page 42 1 Q. If I may touch briefly on two other 2 issues. Initially calling your attention to your 3 testimony on Page 4. 4 A. The surrebuttal, sir? 5 Q. Yes, sir. I'm sorry. I would love to 6 go back to the other but Susan won't let me. 7 A. We spent enough time on that previously. 8 Q. And in this page you're trying to point 9 out four reasons, four differences to support a tax 10 system rather than an impervious system. And in 11 Paragraph No. 1 particularly Line 7 beginning, the 12 right-hand column, "With," could you read the 13 balance of that paragraph for me? 14 A. "With the recent ruling by the Missouri 15 Supreme Court in Zweig versus MSD," with cites, 16 "regarding MSD's proposed impervious fee, MSD is 17 unsure that not-for-profits entities would 18 participate in a voted on impervious fee." 19 Q. Mr. Hoelscher, what's the basis for your 20 unease? 21 A. I guess the one that we've always had is 22 the wording in the Supreme Court decision and I hope 23 I'm getting this right and I'll be very high level 24 with this, they indicated the impervious fee needed 25 to be voted on, not that it is a tax. I think that Page 43 1 wording is primarily our biggest concern. 2 Probably -- since then, you know, looking at 3 what's going on through the rest of the industry, in 4 a meeting recently a month ago with Mr. Terry Leeds, 5 who is my equivalent in Kansas City, Missouri, based 6 on that ruling they have started offering 7 not-for-profits to opt out of their voted-on fee. 8 They're asking them to voluntarily pay it but they 9 are allowing those entities to opt out and no longer 10 pay a voted on impervious fee primarily as a result 11 of the ruling by the Supreme Court. 12 Q. Same page, Line 16, this is Paragraph 13 No. 4. 14 A. Yes. 15 Q. If you could read your testimony for me 16 at the bottom of the page. 17 A. Sure. "Finally, after the passage of 18 the previous impervious fee, the Missouri General 19 Assembly passed a law, known as House Bill 661 which 20 exempted approximately 3500 customers from 21 participating in the fee because they were residents 22 not receiving wastewater service and their 23 stormwater run-off did not enter any part of MSD's 24 public storm sewer system. This law went into 25 effect on August 28, 2009, and was codified," per Page 44 1 the cite. "There is nothing to prevent further 2 legislation being passed that exempts even more 3 residents for similar reasons. The property tax 4 method would be protected from such legislation by 5 the Missouri Constitution." 6 Q. If I may, already in the record MSD 7 Exhibit 84L. 8 A. Yes. 9 Q. All right, sir, and this is Missouri 10 Revised Statute 204.700. Is this the statute to 11 which you just referred? 12 A. Yes, it is. 13 Q. All right. May I call your attention to 14 Line 3, but essentially, "No person be assessed" -- 15 and I'm going skip some words here -- "be assessed 16 any fee, charge, or tax for stormwater management 17 services if the district does not provide sanitary 18 sewer services and if the stormwater runoff for such 19 person's property does not flow, or is not otherwise 20 conveyed, to a sewer maintained by such district." 21 A. Yes. 22 Q. That presupposes that you do not provide 23 wastewater services? 24 A. This particular legislation, yes. 25 Q. That presupposes that any stormwater is Page 45 1 not connected to the system administered by MSD? 2 A. Correct. 3 Q. What's the problem? 4 A. If anybody in this situation were to 5 attend this meeting today they would benefit from 6 the maintenance of the stormwater infrastructure we 7 maintain within our municipal boundaries. The 8 primary purpose of that municipal stormwater system 9 is to take water off of roads, take water off of 10 properties, prevent flooding, those types of things. 11 The folks who are currently in this situation 12 are taking advantage and benefiting from the 13 infrastructure provided within our municipal 14 boundaries and are not taking part in paying for it. 15 That is the problem with this legislation. 16 Q. Even if, as the statute requires, the 17 stormwater runoff does not flow or is not otherwise 18 conveyed to a sewer maintained by the District? 19 A. In the same way that somebody didn't 20 call the fire department this year or the police 21 this year or any other tax-supported information. I 22 don't think we want to get in a place of trying to 23 measure exactly when somebody benefits or uses an 24 internal infrastructure. It makes more sense to 25 make the stormwater a tax-based revenue source and Page 46 1 that's why we have that. 2 Q. Then you say there is nothing to prevent 3 future legislation from being adopted that exempts 4 even more residents? 5 A. Yes. 6 Q. Okay. Now, in your testimony you also 7 refer to the Missouri Constitution and identify 8 Section 30A -- 9 A. Yes. 10 Q. -- which is the authorization for the 11 creation of the District? 12 A. Yes. 13 Q. Now, I have got two more pieces of 14 paper. 15 A. Three of the same thing? I just want to 16 make sure we didn't miss something. 17 Q. Now, I have marked what I believe are 18 the provisions to which you refer the people of the 19 County of St. Louis have the power to establish a 20 metropolitan district and the power so given be 21 exercised by the vote of the people; is that 22 correct? 23 A. Yes. 24 Q. All right. If I may return to Section 25 204.700, the limitation is for any fee, charge or Page 47 1 tax for stormwater; is that correct? 2 A. Yes. 3 Q. All right. Have you been advised about 4 the provision in the Missouri Constitution which 5 effectively makes that statute an anomaly? 6 A. For the tax related to property taxes, 7 yes. 8 Q. All right. And, again, the paper 9 shuffling continues. 10 All right. Article 10 Section 6.1 of the 11 Constitution provides for property which may be 12 exempted property -- property which is exempt from 13 taxation and I've marked the not-for-profit section. 14 So those entities are clearly exempt but nowhere 15 does it describe any exemption from tax for someone 16 who pays for wastewater, stormwater; is that 17 correct? 18 A. It's just exemption for property 19 taxation. 20 Q. And further down I've marked in yellow 21 beginning "All laws exempting." Would you read that 22 for me? 23 A. "All laws exempting from taxation 24 property other than the property enumerated in this 25 article, shall be void." Page 48 1 Q. So this statute, to the extent it 2 relates to the payment of stormwater services by 3 tax, is void; is that correct? 4 A. Restate the question. 5 MR. ARNOLD: Could you read that back 6 for me? 7 (The requested portion of the record was 8 read back by the court reporter.) 9 THE WITNESS: Could you read it back one 10 more time? 11 (The requested portion of the record was 12 read back by the court reporter.) 13 THE WITNESS: To make sure I understand 14 the question, my answer would be we believe a 15 stormwater property tax to pay for the 16 maintenance -- operation and maintenance of the 17 public storm sewer system is allowable under this 18 Article. 19 MR. ARNOLD: Thank you. 20 THE WITNESS: And I guess I would add, 21 which is one of the reasons why the 2-cent-wide 22 property tax has been in place. Even upon passage 23 of this law we maintain that property tax 24 District-wide under that provision. 25 Q. (MR. ARNOLD) And to date no one has Page 49 1 challenged that? 2 A. No, they haven't. 3 Q. And to date you have not challenged 4 Section 204.7? 5 A. Correct, we have not challenged it. 6 Q. Now, changing subjects, if I may, 7 referring to your testimony on Page 5, Question 4, 8 Line 5, what type of revenue collection method do 9 you see in the future, could you read your response, 10 just Line 6 through 8? 11 A. "If in the future MSD's ratepayers 12 decide that they wish to consider paying for 13 additional services beyond what is being considered 14 in this rate cycle, I would consider it appropriate 15 at that time to consider all potential methods of 16 raising the needed revenue." 17 Q. As far as with your permission, I do not 18 believe the other documents -- the questions I'm 19 about to put to Mr. Hoelscher deal with what Charter 20 provisions and the Charter is already in the -- 21 A. Yes. 22 Q. Okay. So let's go through the laundry 23 list of the powers granted to the District under the 24 Charter Plan for raising revenue. 25 All right. And under Section 3.020 Section Page 50 1 14 -- and I'm going to shorthand this, please if I 2 overstep let me know. 3 A. Okay. 4 Q. "To provide for the borrowing of money 5 in anticipation of the collection of taxes and 6 revenues for the fiscal year," so called tax 7 anticipation obligations? 8 A. Yes. 9 Q. Have you been advised of any legal 10 impediment to implementing this provision growing 11 out of the Zweig decision? 12 A. No, we have not. 13 Q. Section 15, "To meet the cost of 14 acquiring, constructing, improving, or extending all 15 or any part of the sewer or drainage facilities," 16 first, through the issuance of bonds for that 17 purpose. 18 Have you been advised of any legal impediment 19 to the implementation of this provision growing out 20 of the Zweig decision? 21 A. No, we have not. 22 Q. Then, same section, this is C, "Through 23 the issuance of bonds for that purpose, payable from 24 special benefit assessments." 25 Have you been advised of any legal impediment Page 51 1 to the implementation of this provision growing out 2 of the Zweig decision? 3 A. No. Were you going to ask me about D, 4 because I was going to wait for a summation. I 5 would tell you internally our processes are as 6 stated here, however, we have taken into account the 7 requirements of the Hancock Amendment after 1980. 8 So we do require voting in addition to the 9 requirements that you've listed here. We do require 10 a vote for those. 11 Q. Thank you, sir. Next, again Section 12 3.020 Section 20, "To levy, assess, and collect 13 taxes." 14 There's no impediment there so long as it's 15 submitted to a vote of the people under Hancock? 16 A. Correct. And there is one addition to 17 that in 20, in that taxation for the purpose of 18 operation and maintenance cannot exceed 10 cents on 19 the hundred dollars assessed valuation. 20 Q. We talked about that last time. 21 A. True. Yes, I'm sorry. I agree. 22 Q. Section 21, "To fix, levy, and collect 23 special benefit assessments for the construction and 24 improvement." 25 Have you been advised of any legal impediment Page 52 1 to the implementation of this growing out of the 2 Zweig decision? 3 A. No, we have not. 4 Q. Finally, Section 9.020 authorizes the 5 improvements in subdistricts if the owners within 6 the boundaries of the subdistrict granted the 7 opportunity to vote, design and construct 8 improvements paid for through the issuance of 9 special tax bills. 10 Have you been advised of any impediment to 11 the implementation of this provision growing out of 12 the Zweig decision? 13 A. No, we have not. 14 MR. ARNOLD: Thank you, sir. And I hope 15 I don't see you again for another four years. 16 MR. CHAIRMAN: Thank you, Mr. Arnold. 17 Does any Commission member have any further 18 questions for this witness? 19 Yes, Ms. Bowser? 20 MS. BOWSER: I'm unclear on one point. 21 The Zweig decision said that -- invalidated the 22 impervious rate because it was not voted on; is that 23 correct? 24 MR. HOELSCHER: And, again, as long as 25 I'm not getting it wrong, it was invalidated and I Page 53 1 think the question was: Did the Zweig case 2 invalidate the previous impervious rate because it 3 wasn't voted on? And, yes, I believe that's the 4 statement that was made by the Supreme Court. They 5 wouldn't go further in describing other than a need 6 to be voted on. 7 MS. BOWSER: In other words, it did not 8 go into the question of tax versus fee? 9 MR. HOELSCHER: No. In layman's terms 10 it even made it a little fuzzier, kind of the 11 existing case law that was in place as to how you 12 would determine that. 13 MS. BOWSER: Thank you. 14 MR. CHAIRMAN: Yes, sir? 15 MR. MAHFOOD: Just brought up a point to 16 over simplification, Brian, but in your mind and in 17 the District's thinking, could you have an 18 impervious surface fee tax, however you want to 19 define it under Zweig, if it was voted on do you 20 feel that is possible? 21 MR. HOELSCHER: Yes, we believe it's 22 possible. I think the question becomes, as in the 23 rest of my testimony, what are the additional costs 24 and made reference to what it is exactly we're 25 providing as to how you would pay for it. I know Page 54 1 there's, for instance, in the last motion that there 2 was a statement that the only purpose of the 3 stormwater tax is to promote water quality in the 4 St. Louis Region. That is not the purpose of the 5 tax. The purpose is solely for the operation and 6 maintenance of the public storm sewer system. Water 7 quality issues are funded in a different tax that 8 hasn't been presented to the Rate Commission. 9 So, in the future, as things get different, 10 I'll kind of quote the policy statement here, we 11 have a need to be -- I, in my mind, as a policy 12 decision make sure it is crystal clear that we 13 establish something to take care of this issue today 14 without legal entanglements of whatever kind. 15 In the future, if we do other things, if 16 regulatory requirements become larger, if we want to 17 actually dedicate a revenue towards addressing other 18 stormwater issues outside of the public storm sewer 19 system such as erosion, flooding, all of the kind of 20 things that are going on, I would be willing to 21 consider any other kind of possible system that 22 might equitably represent the appropriate 23 contribution for those improvements. Just for the 24 very specific, narrow surface we're discussing here 25 I don't think taking that chance is appropriate for Page 55 1 what we're proposing. 2 MR. MAHFOOD: I appreciate your 3 response. 4 MR. HOELSCHER: Thank you. 5 MR. CHAIRMAN: Yes, sir, Mr. Tomazi? 6 MR. TOMAZI: I just -- pulling back on 7 my memory here, Mr. Hoelscher, about the 8 responsibility that you have through the United 9 States Environmental Protection Agency as to the 10 quality of water in our navigable riverways and, in 11 particular, no matter how it gets there whether it's 12 a stormwater discharge that picks up pollutants even 13 though it does not go through your system, yet you 14 can -- you're required, I believe, to monitor those 15 waterways and indirectly may be responsible for 16 stormwater runoff that carries pollutants into, 17 let's say, the Missouri or Mississippi Rivers; is 18 that correct? 19 MR. HOELSCHER: Yeah, it's kind of the 20 whole crux of what we have here. The system is 21 viewed as two parts, both for a legal purpose as 22 well as for funding. The contributions of our 23 wastewater system and how it reacts to the 24 environment, those issues are being addressed in the 25 Consent Decree and they're being paid for through Page 56 1 the wastewater rates. 2 As far as the impact on local creeks and 3 streams with regard to pollutant load that comes 4 from stormwater runoff, MSD is a -- we have a permit 5 that addresses that part of the Clean Water Act. 6 It's called our MS4 Municipal Separate Storm Sewer 7 System permit. It is not MSD's permit. It's the 8 area's permit. 9 Us, MSD, and 60 other municipal entities 10 throughout our municipal boundaries are a part of 11 that permit and there are -- I'm going to get this 12 wrong -- six actions I think that have to be taken. 13 MSD is responsible for a portion of those, various 14 municipalities are a responsible for a portion such 15 as not oversalting roads and putting in animal -- 16 domestic animal waste pickup for when they do their 17 business, those types of things. 18 So that plan, in cooperation with all 19 permittees, that is submitted to MDNR. It is 20 currently under what you call "Best Management 21 Practices," that is implementing those to see what 22 kind of impact that has on the water quality. 23 So MSD is a part of that and I will tell you 24 right now we are able to use 60 other co-permittees. 25 What future permits may look like, I will guarantee Page 57 1 you MSD will always be responsible for a large 2 portion of it, probably a major portion of any of 3 the future costs for any changes in what's 4 acceptable to meet those regulations. 5 MR. CHAIRMAN: Further questions? Ms. 6 Myers? 7 MS. MYERS: I don't have any questions. 8 MR. CHAIRMAN: Thank you, Mr. Hoelscher. 9 MR. HOELSCHER: Thank you. 10 MR. CHAIRMAN: I would like to entertain 11 to take a little break here maybe for six minutes or 12 so. 13 (A break was taken.) 14 MR. CHAIRMAN: All right. We're going 15 to continue with surrebuttal testimony. I see 16 Richard Unverferth is directly in front of me here 17 and I would like to administer the oath. 18 Is the testimony you are about to give the 19 truth, the whole truth, and nothing but the truth? 20 MR. UNVERFERTH: Yes, it is. 21 MR. CHAIRMAN: Thank you, 22 Mr. Unverferth. 23 MS. MYERS: Could we take care of a 24 procedural matter first? 25 MR. CHAIRMAN: Please. Page 58 1 MS. MYERS: Okay. The two exhibits that 2 the Rate Commission used in Brian Hoelscher's 3 testimony need to have an exhibit number assigned to 4 them. So upon the granting of the Home Builders 5 Association's motion earlier in the meeting, that 6 motion along with the information that's attached to 7 it will be given a permanent exhibit number. It was 8 given a temporary exhibit number upon your all's 9 action today. 10 So the motion will be given HBA Exhibit No. 11 124 and then the Rate Commission -- the first 12 exhibit will be Rate Commission No. 125 and that 13 will be Article 6 of the Constitution and then 14 Article 10 of the Constitution will be given Rate 15 Commission Exhibit No. 126. 16 MR. CHAIRMAN: Thank you, Ms. Myers. I 17 appreciate that. 18 MR. GOSS: Mr. Chairman? 19 MR. CHAIRMAN: Yes, sir. 20 MR. GOSS: The Exhibit 124, that will 21 include the various credit programs as part of that 22 exhibit along with the affidavit, is that right, 23 those will not be given a separate -- 24 MR. CHAIRMAN: As I understand it, yes. 25 MR. GOSS: Okay. Page 59 1 MS. MYERS: Correct. But the District 2 needs to get a copy of that. 3 MR. GOSS: We understand that. 4 MS. MYERS: Okay. 5 MR. CHAIRMAN: Very good. Thank you. 6 Mr. Unverferth -- does any Rate Commission member 7 have any questions for Mr. Unverferth? 8 Okay. Mr. Neuschafer, do you have any 9 questions for Mr. Unverferth? 10 MR. NEUSCHAFER: Yes. 11 RICH UNVERFERTH, having been duly sworn, 12 testified as follows: 13 QUESTIONS BY MR. NEUSCHAFER: 14 Q. Okay. Thank you. I hope to make this 15 brief with a little less paper shuffling than with 16 Mr. Hoelscher. 17 You have your surrebuttal testimony there in 18 front of you? 19 A. Yes. 20 Q. If you could look at Page 2. You 21 disagree here in your testimony with the adjustment 22 Mr. Gorman made to waste hauler revenues in Fiscal 23 Year 17 to Fiscal Year 20 period; is that correct? 24 A. That is correct. 25 Q. And you state that -- on Lines 6 through Page 60 1 10, I believe it is, that MSD experienced a 2 significant decline in waste hauler revenues because 3 of a private waste hauling station was installed in 4 the St. Louis area? 5 A. Yes, that is correct. 6 Q. Okay. And because of this alternative 7 waste hauling station you state that MSD's other 8 revenues would decrease from around 1.4 million 9 actually realized in Fiscal Years 10 and 11 down to 10 about 660,000 during the forecast period? 11 A. Yes, that is correct. 12 Q. Okay. I'm going to show you, this is a 13 portion of the 2014 Fiscal Year Financial Report. I 14 believe it's MSD Exhibit 25 already in the record. 15 MS. MYERS: Is it the same portion? 16 MR. NEUSCHAFER: It's a different 17 portion than what I had earlier but I have an extra 18 copy here for you. Here is one for you and one for 19 Susan. 20 Q. (MR. NEUSCHAFER) If you look at the 21 second page, which is actually Page 9 of the entire 22 report and we've got a paragraph that's highlighted 23 there, could you read that into the record for me, 24 please? 25 A. "Total revenue increased by 27.2 million Page 61 1 or 10.1 percent. Sewer service charges increased 2 11.5 million or 4.8 percent and the provision for 3 doubtful accounts decreased by 9.9 million or 4 371.6 percent as explained above. Licenses, permits 5 and other fees increased 3.8 million or 6 140.3 percent due primarily to an increase in waste 7 haul permits." 8 Q. So there it states that MSD's license 9 permits and other fees increased by 140 percent or 10 3.8 million due to an increase in the waste haul 11 permits in Fiscal Year 13 over 14; is that correct? 12 A. Yes, that's what it says. 13 MR. NEUSCHAFER: Okay. That's all I've 14 got. Thank you. 15 MR. CHAIRMAN: Thank you, 16 Mr. Unverferth. 17 Mr. Goss, do you have any questions on behalf 18 of the Home Builders Association? 19 MR. GOSS: I do. 20 QUESTIONS BY MR. GOSS: 21 Q. Good morning. 22 A. Good morning. 23 Q. I had just one set of questions. If you 24 look at your surrebuttal testimony relating to 25 impervious fees, which is on Page 3, Lines 5 through Page 62 1 24 and then continues over through Page 4 and a 2 small carryover onto Page 5, do you see that? 3 A. Yes. 4 Q. In that testimony you described in great 5 length the cost to maintain and charge an impervious 6 fee and various engineering and finance department 7 functions; is that correct? 8 A. That is correct. 9 Q. So isn't it correct that the District is 10 calculating impervious surfaces and runoff with 11 respect to various parcels throughout the District 12 as part of its functions? 13 A. We do that to utilize for our own 14 engineering staff, we fly, but we do not update the 15 data we get from our flyovers and things like that 16 to the extent that's required for impervious 17 calculations. 18 Q. Well, if I look at your testimony you've 19 testified that there's a significant amount of labor 20 expended to assign and then maintain that impervious 21 area for approximately all of their 500,000 22 stormwater accounts. That's an accurate statement 23 in your testimony, isn't it? 24 A. Yes. 25 Q. And then you go on to say that MSD makes Page 63 1 adjustments to customer impervious information for 2 billing purposes based on customer petitions, 3 correct? 4 A. Yes. 5 Q. And as part of that you also do GIS 6 updates, correct? 7 A. Yes. 8 Q. And you're also going out and doing 9 field visits as well? 10 A. Not without -- right now we do not. 11 Well, in the advent of an impervious rate that was 12 part of our process at that time when we were doing 13 an impervious rate because we had to have that kind 14 of accuracy. As it is now, you do flyovers and you 15 end up with impervious data that is just 16 generalized. In other words, it doesn't -- it 17 doesn't stop at a property line or anything like 18 that or doesn't stop at the right-of-way or things 19 like that. Those are the things, the added work 20 that needs to be done for the impervious area. 21 Q. Right. So when a project comes to the 22 District there's a runoff calculated for that 23 particular project so that you know how much 24 stormwater that project will generate, correct? 25 A. Right, but it's throughout a watershed. Page 64 1 It doesn't get down to the minutia of 435,000 2 accounts. 3 Q. But that particular project you're going 4 to analyze the stormwater flow from that project in 5 order to determine the stormwater needs of that 6 project, are you not? 7 A. Yes. Pervious versus impervious. 8 Q. So you're going to know on any given 9 project what the stormwater burden is associated 10 with that project so that you can appropriately deal 11 with it, isn't that true? 12 A. Right, to utilize for the design of the 13 project. 14 Q. And also to design BMPs for that 15 project, correct? 16 A. Well, if it includes BMPs. 17 Q. Well, isn't that a part of the 18 District's regulations now or do you not know that? 19 A. I do know that. And the question is: 20 Do we utilize that? Yes, that data is utilized. 21 Any kind of impervious area data or any kind of data 22 that -- for future development you indicate what's 23 going to be impervious at that time and you design 24 storm sewers, BMPs, quantity detention basins and 25 whatnot. Page 65 1 Q. And the District has a set of 2 specifications with respect to BMPs that developers 3 are required to use, is that not true? 4 A. Yes, that is correct. 5 Q. And the District approves those BMP 6 systems before they're installed, is that not true? 7 A. That is correct. 8 Q. And the District also inspects those 9 after they are installed in order to ensure they 10 meet the requirements of MSD? 11 A. Right, the requirements of MSD and our 12 MS4 permit, as Mr. Hoelscher indicated. The 13 District -- that is one or our major 14 responsibilities is to enforce the water quality 15 regulations as part of that MS4 permit since we are 16 the regulating agency for the St. Louis area. 17 Rather than pass that all into the individual 18 municipalities MSD takes on that task as part of our 19 services. 20 Q. And to the extent that the BMPs are 21 reducing the stormwater flow off of a parcel of 22 property then the burden on the overall system is 23 reduced, is that not true? 24 MS. MYERS: I would like to object to 25 this line of questioning. I mean, this is outside Page 66 1 of the surrebuttal testimony that Mr. Unverferth has 2 provided. His testimony was about the cost required 3 for the implementation of an impervious fee. 4 MR. GOSS: Mr. Chairman? 5 MR. CHAIRMAN: Yes? 6 MR. GOSS: Will you direct the witness 7 to answer or are you going to sustain that 8 objection? 9 MR. CHAIRMAN: Well, I'm trying to 10 determine whether you're out of bounds with what 11 we're trying to consider here. 12 MR. GOSS: I think it's my last question 13 as far as that goes, if that helps. 14 MR. CHAIRMAN: Okay. Just keep the line 15 of questioning within his purview. 16 MR. GOSS: Sounds like you can answer. 17 MR. UNVERFERTH: Well, you'll have to 18 repeat the question. 19 MR. GOSS: Could you read it back, 20 please? 21 (The requested portion of the record was 22 read back by the court reporter.) 23 MR. UNVERFERTH: No, that is not 24 necessarily true. 25 Q. (MR. GOSS) Is it true in any instance? Page 67 1 A. Yes, water quality features do have a 2 component of flow reduction depending on the type of 3 BMP that's constructed. 4 MR. GOSS: Thank you. I have nothing 5 further. 6 MR. STEIN: Can I ask a question? 7 MR. CHAIRMAN: Please. 8 MR. STEIN: Mr. Unverferth, I would like 9 to ask just a couple questions about this private 10 waste hauling station that you mentioned in your 11 testimony. 12 Can you tell me who operates it, where it is 13 and what's the ultimate fate of the material that 14 goes there? 15 MR. UNVERFERTH: Well, generally it's 16 used for reuse. In other words, there's some form 17 of reuse that that company gets out of that whether 18 it's through burning it or combusting it and using 19 the energy from it, I don't know the specifics. I 20 can't -- and I don't necessarily know the name. I 21 do know it came into existence in the 2011 time 22 frame. We were aware that it reduced our burden to 23 the District. I could get those. I just don't know 24 those off the top of my head. 25 MR. STEIN: Is it liquid waste? Page 68 1 MR. UNVERFERTH: It's primarily septic 2 tank waste and grease waste from grease traps and 3 when you get into the grease waste and the ability 4 to do things with that, that's the use. In other 5 words, there's some benefit to that company by 6 having that. 7 MR. STEIN: So this station turns this, 8 let's take septic tank waste, which is largely 9 fluid, does all the water go up into the air, is it 10 evaporated, does nothing go into MSD's system? 11 MR. UNVERFERTH: I don't really know to 12 comment on what their -- the process is at that haul 13 waste station but, I mean, obviously it's regulated 14 just like the District is. 15 MR. STEIN: My point is if it were a 16 pretreatment station and they were let's say 17 removing some of the solids or metals -- 18 MR. UNVERFERTH: It would send it back 19 to us? 20 MR. STEIN: -- you would still be 21 getting all of the residual liquid after it had been 22 purified and treated. 23 MR. UNVERFERTH: Again, I don't know 24 enough details about that process to answer the 25 question about that specific haul waste station. Page 69 1 MR. STEIN: So how -- again, help me, 2 how is the existence of this station impacting MSD? 3 MR. UNVERFERTH: It gives the waste 4 haulers another option to dispose of their waste. 5 In other words, where they all came to us 6 previously, now they can go to this station and 7 based on the amount that it costs them, their fee 8 could be equal to or less than, it may be more 9 convenient to them, but it reduced the amount of 10 flow that was coming to our hauled waste, in other 11 words, by the haulers. 12 MR. STEIN: Do you regulate it? 13 MR. UNVERFERTH: Not that I'm aware of. 14 MR. STEIN: Is it within the District's 15 boundaries? 16 MR. UNVERFERTH: It's within the 17 District boundaries. 18 MR. STEIN: My long ago study of the MSD 19 ordinances said that if anyone treats waste within 20 the District's boundaries they can only do so as a 21 pretreatment facility. Anything that discharges to 22 the streams or anything of that nature is 23 prohibited. In other words, if you treat waste 24 within MSD's boundaries, the affluent has to go to 25 MSD ultimately or -- Page 70 1 MR. UNVERFERTH: And, again, I'm not 2 sure -- I'm not sure of the process for this 3 particular one. I mean, I could get that and 4 provide that information with regard -- and I said 5 we don't regulate it but my guess is -- and, again, 6 I'm not our pretreatment, I don't handle -- it's 7 underneath me but I'm not totally familiar with it 8 but my guess is it's probably part of our industrial 9 pretreatment, so I would have to discuss that with 10 them and find out the specifics on it. I apologize. 11 MR. STEIN: Thank you. 12 MR. CHAIRMAN: Thank you, Mr. Stein. 13 Further questions? 14 MR. TOMAZI: Just one quick question. I 15 realize we're probably getting a little off the 16 subject here but do you know who licensed this 17 landfill, this pretreatment facility? Is this 18 licensed by the state, the county, or federal 19 government? 20 MR. UNVERFERTH: I cannot answer that. 21 I don't know. 22 MR. TOMAZI: I have more than a passing 23 interest in that whole landfill operation. 24 MR. UNVERFERTH: I can get you that 25 information. I did not prepare for that question. Page 71 1 MR. TOMAZI: Okay. Thank you. 2 MR. CHAIRMAN: Further questions? 3 MR. SCHOEDEL: Yeah, several follow-up 4 for both of those with respect to this waste now 5 that is going outside of the MSD District then you 6 would not have control over it even though it might 7 have been produced within the MSD District, if it 8 goes to one of these collection stations and hauled 9 into another area then you would not have control 10 over it and thus your hauling fees would have 11 reduced; is that correct a statement? 12 MR. UNVERFERTH: Could you repeat that? 13 Our fees, our collection was reduced when that came 14 into service. 15 MR. SCHOEDEL: Correct. 16 MR. UNVERFERTH: Yes. 17 MR. SCHOEDEL: And so I think there was 18 a comment of do you still have control over that 19 waste and you would not if it's hauled outside of 20 your District, is that correct? 21 MR. UNVERFERTH: Right, if it leaves the 22 District boundaries we would not have control over 23 it. 24 MR. SCHOEDEL: Even though it was 25 produced in your boundaries? Page 72 1 MR. UNVERFERTH: Yes. 2 MR. SCHOEDEL: Okay. And a follow-up 3 question on the impervious fees. Currently MSD 4 requires all new development to have some type of 5 BMPs, which does include some hard impervious area. 6 Has MSD started a database of that, in case we ever 7 would go to an impervious fee, that could be 8 included in any type of credits as part of the 9 overall impervious fee and not just using aerial 10 photography or something along those lines? 11 MR. UNVERFERTH: Yes, we have an entire 12 database. There's a maintenance agreement that's 13 signed with every BMP that's constructed. We have 14 that. We've kept that. It's actually part of our 15 MS4 permit to do that, to follow up, inspect on 16 annual or over a certain period of time to 17 inspect that. 18 But, keep in mind, the basins that are 19 actually constructed are water quality features to 20 deal with the increase in runoff caused by that 21 development, so with regard to some type of a credit 22 program you would take that and the fact that 23 they're meeting the requirements of the development. 24 About anything above and beyond that may be 25 something we would consider for a credit. Page 73 1 MR. SCHOEDEL: My specific question is 2 related to more of the hard impervious areas, that 3 if you're using aerial photography to determine 4 pervious and impervious area you have a way to 5 account for that? 6 MR. UNVERFERTH: Yes, we do. 7 MR. SCHOEDEL: Okay. Thank you. 8 MR. CHAIRMAN: Further questions from 9 the Commission? Hearing none, thank you, 10 Mr. Unverferth. 11 Oh, Ms. Myers. I'm sorry. Ms. Myers, do you 12 have any questions? 13 MS. MYERS: I don't have any questions. 14 MR. CHAIRMAN: Thank you, Mr. 15 Unverferth. And Mr. Arnold. Mr. Arnold, I'm sorry. 16 MR. ARNOLD: Thank you, sir. 17 QUESTIONS BY MR. ARNOLD: 18 Q. Good morning, sir. 19 A. Good morning. How are you? 20 Q. I'm fine. Thank you. And you? 21 A. Good. 22 Q. You have your testimony, how about Page 23 5 on Line 6 you have a question and on Pages 5 and 6 24 you provide some information about the O&M and OMCI 25 and subdistricts and I would like to inquire a Page 74 1 little bit about that. 2 I'm going to hand you, and forgive me, 3 Ms. Myers, I only have one copy of Ordinance 13856, 4 which is MSD Exhibit 86E, which is an ordinance 5 which the District trustees consider annually to set 6 the regulatory tax and the O&M. 7 Mr. Unverferth, my understanding is Section 2 8 sets the regulatory tax and that is paid into the 9 District's stormwater fund and that tax is leveed 10 against every property owner within the District; is 11 that correct? 12 A. Yes, that is correct. 13 Q. All right. Now, there's also the O&M or 14 operation and maintenance and that's Section 3. And 15 that tax is paid into the operations and maintenance 16 fund and am I correct that this area is largely the 17 City of St. Louis? 18 A. It is actually the original MSD 19 boundaries, which is the City of St. Louis and what 20 we refer to as the near St. Louis County or within 21 the 270, so it meanders. If you recall the map it's 22 -- we call it the "yellow area" if you seen it in 23 the public hearings and the presentation, so it 24 actually extends beyond that. So it overlaps the -- 25 what you're going to talk about next, the OMCI. Page 75 1 Q. Got it. All right. We're on the same 2 track. But the yellow area pays the regulatory tax 3 and also pays the O&M tax? 4 A. That is correct. 5 Q. And there are OMCI subdistricts in that 6 Section 4 and there are about 20 of them? 7 A. Yes. 8 Q. All right. And these subdistricts pay 9 not only the regulatory tax, they pay O&M and they 10 pay for capital improvements? 11 A. Yes, that is correct. 12 Q. All right. Now, each year when the 13 trustees consider this, does each subdistrict get a 14 levee? 15 A. Yes, it does individually. 16 Q. All right. 17 A. I believe they're all set at the same -- 18 or no, it's based on the maximum that's allowed. 19 Q. Okay. All right. Now, in a response to 20 a discovery request, I believe you or one of your 21 colleagues said all of these subdistricts were 22 organized prior to 1980? 23 A. I believe so. 24 Q. So this is pre-Hancock, so no vote is 25 required for this annual levee of the tax. Page 76 1 Now I want to refer to a conversation we had 2 before when we talked about operation and 3 maintenance sometimes including what you called 4 "asset management projects." 5 A. Correct. 6 Q. Okay. Now, remind us what is an asset 7 management project? 8 A. It's maintaining the existing sewer 9 system to provide excess life to it. In other 10 words, maintaining that asset to provide greater 11 life. 12 Q. All right. You're not building 13 something new but you're expending capital funds to 14 maintain, as you just said, the life of a particular 15 facility? 16 A. Yes. 17 Q. Okay. Now, in the Rate Change Proposal 18 there was a map and in the response to the last set 19 of discovery requests, which was MSD Exhibit 114B, 20 you also added that. This is the same map that's in 21 -- 22 A. Yes. 23 Q. Okay. 24 A. Yes, it is. 25 Q. All right. Now, in your testimony, Page 77 1 Lines 10 through 15, you describe what happens to 2 the OMCI taxing districts. Could you read your 3 testimony from Lines 10 through 16? 4 A. "In that portion of the district covered 5 by the existing OMCI taxing districts (the "Green 6 Area"), taxing revenue from the OMCIs (both existing 7 balances and revenue to be collected in FY16) shall 8 be used to fund the capital improvements noted in 9 the project list. Tax revenue generated in a given 10 OMCI, must be spent only on work within that OMCI. 11 Of the total project list, 64 projects constituting 12 24 million in capital work is to be funded in the 13 Green Area from existing OMCI taxing district 14 revenue during the rate period." 15 Q. Okay. Now, when you refer to the 16 "project list," that's the capital improvements list 17 which you've provided as an exhibit both in the Rate 18 Change Proposal and in your response to this last 19 discovery request? 20 A. That is correct. The original list 21 provides the details of the project. We expanded on 22 that list in the last discovery list that actually 23 identifies which of the three areas that the project 24 falls in, whether it's red, yellow or green. 25 Q. All right. Then your testimony, Line 17 Page 78 1 through the end of the page and going forward to 2 Page 6, refers to the yellow area. Now, the yellow 3 area you've described as the original District? 4 A. That is correct. 5 Q. All right. And in the yellow area the 6 tax levees have paid for operation and maintenance 7 and these asset management projects? 8 A. That is correct. 9 Q. All right. Now could you on Page 6 at 10 Line 5 beginning, "Of the total project list," read 11 to the end of the paragraph? 12 A. "Of the total project list, 47 projects 13 constituting 17 million in capital work is to be 14 funded in the Yellow Area from this offset during 15 the rate period." 16 Q. All right. What does "from this offset" 17 mean? 18 A. The yellow area we collect -- or we have 19 collected and then at the end, as part of the Rate 20 Proposal, that tax will be zero. 21 Q. All right. 22 A. And there's a balance remaining in that 23 account or that fund to fund operation and 24 maintenance. In our proposal we're proposing to 25 continue to use that for operation and maintenance Page 79 1 and take the 10 cent tax to operate and maintain 2 that area to perform some capital work that has been 3 neglected in this area. Did that make sense? 4 Q. Well, I believe so. There will be a 5 balance in the yellow area fund, when the 10 cent 6 levee begins, the balance in that fund can be used 7 for operation and maintenance and capital 8 improvements? 9 A. It's specific for operation and 10 maintenance. 11 Q. So it could just be for operation and 12 maintenance, which would be asset management 13 practices? 14 A. Correct. 15 Q. But no new capital improvements? 16 A. The way I understand that tax, that is 17 correct. 18 Q. All right. So that the $17 million has 19 to come from the new tax levee? 20 A. That is correct. 21 Q. Okay. Now, we then talk about the red 22 area and the red area pays only the regulatory tax, 23 they didn't pay any O&M, they didn't pay any asset 24 management, they didn't pay any capital improvement; 25 is that correct? Page 80 1 A. That is correct. 2 Q. All right. And so there has been no 3 previous funding for these capital projects and you 4 refer, Lines 12 through 13, to 59 projects 5 constituting $7 million in capital work? 6 A. Yes. 7 Q. All right. I will hand your counsel a 8 document which I represent to be Page 8 from the 9 third discovery response of the District, which is 10 Exhibit MSD 86A, and I have marked at the bottom of 11 the page Paragraph B, your response to describe the 12 improvements in the public stormwater system. 13 A. What is the question? I'm sorry. 14 Q. I'm going to ask you to read it. 15 A. Oh, okay. "Stormwater improvements to 16 the public system would consist of asset renewal 17 and/or small additions that would improve the life 18 and/or functionality of a stormwater system. 19 Examples would include such things as storm sewer 20 rehabilitation or adding an additional inlet and/or 21 piping to improve drainage within a system. In 22 addition, improvements can be made to the stormwater 23 system as a whole to protect structures and property 24 from flooding or erosion. Examples would include 25 such things as the construction of new storm sewer Page 81 1 systems, providing increased capacity to storm sewer 2 systems, channel rehabilitation, and channel 3 stabilization to provide erosion protection." 4 Q. Thank you. Now I'm going to ask you to 5 read your testimony on Page 6 beginning at Line 15, 6 the word "because." 7 A. "Because there are existing funds in the 8 yellow and green areas to address the highest 9 priority projects in those areas, the red area 10 projects generally have the highest remaining 11 priority thus resulting in all new revenues 12 available for capital projects being spent in the 13 red area for Fiscal Years 2017 through 20. In the 14 future, the entire District will be considered for 15 projects funded from any remaining revenues 16 available to be used for capital projects." 17 Q. All right. The red area projects have 18 the highest remaining priority and all new revenues 19 available will be spent in the red area during the 20 rate period? 21 A. And by "all new revenues" it's the 22 revenues that are generated by the new 10 cent tax 23 above and beyond our operational and maintenance 24 needs. 25 Q. Okay. So the green area has paid for Page 82 1 capital, regulatory and O&M for 35 years, the yellow 2 has paid for regulatory and operation and 3 maintenance, including asset management, for 35 4 years, the red area hasn't paid anything and all new 5 revenues will be spent in the red area for Fiscal 6 Year 2017 to 2020, is that your testimony? 7 A. Yes. 8 MR. ARNOLD: Thank you. I appreciate 9 it. 10 MR. CHAIRMAN: Questions of members? 11 Members of the Commission? Ms. Myers? 12 MS. MYERS: Yeah, I believe we have a 13 question. Kind of a follow-up to the last question 14 that was asked. 15 Rich, would you please explain what 16 percentage -- or what level of the new tax rate 17 would be used in the red area for capital projects? 18 MR. UNVERFERTH: It is a follow-up to 19 what Mr. Arnold just asked, the funds that will be 20 utilized in the red area for capital improvements 21 are the remaining funds minus the operation and 22 maintenance funds that are being used throughout the 23 District. 24 The District -- this is an area where we have 25 a lot of issues that are identified problem areas. Page 83 1 Again, throughout the District because there have 2 been no projects done there similar to the area, the 3 yellow area where there have not been projects done, 4 right now the District, being responsible to address 5 those issues, has chosen as part of their proposal 6 to address those issues with those remaining funds 7 over that four-year period. 8 Once the funding has been spent down, even 9 throughout the next rate cycle, there may not be any 10 funds available to do that depending on where 11 operation and maintenance costs go. At that point, 12 we're essentially at a clean slate to address 13 stormwater issues throughout the District and 14 obviously we want to address the highest priority 15 issues. 16 We prioritize our projects based on cost 17 benefit. They have benefits based on flooding, 18 homes flooding, erosion issues where homes are in 19 danger and then we look at the cost for that 20 solution and we weigh those across. And 21 fortunately, for those in the green area, because 22 there is funding available, we have been able to 23 address those. And from a District standpoint to go 24 and continue to do less projects that have less 25 impact on our customers as a whole and neglecting Page 84 1 where we do have projects, that's why we proposed 2 the funding that we did. 3 MR. MAHANTA: In the red area here, the 4 ones that you get with the taxing, after O&M, 5 whatever is left over would be used for capital, 6 however, that may or may not be adequate to take 7 care of all the projects that are necessary in the 8 red area? 9 MR. UNVERFERTH: It will not come close. 10 MR. CHAIRMAN: Further questions from 11 the Commission? Thank you, Mr. Unverferth. 12 MS. MYERS: The District would like to 13 call our next witness as Jonathan Sprague. 14 MR. CHAIRMAN: Mr. Sprague, is the 15 testimony you are about to give the truth, the whole 16 truth, and nothing but the truth? 17 MR. SPRAGUE: Yes, it is. 18 MR. CHAIRMAN: Thank you. Does any 19 member of the Rate Commission have questions at this 20 time of Mr. Sprague? 21 Mr. Neuschafer, do you have any questions on 22 behalf of the Missouri Industrial Energy Consumers? 23 MR. NEUSCHAFER: I do not. 24 MR. CHAIRMAN: Mr. Goss, any questions 25 on behalf of the Home Builders Association? Page 85 1 MR. GOSS: No questions. 2 MR. CHAIRMAN: Mr. Arnold, questions on 3 behalf of the Rate Commission? 4 MR. ARNOLD: No, sir. 5 MR. CHAIRMAN: Ms. Myers, do you have 6 any questions? 7 MS. MYERS: No, sir, I do not. 8 MR. CHAIRMAN: Thank you, Mr. Sprague. 9 MR. TOMAZI: May I ask a question? In 10 Mr. Unverferth's testimony we heard about these two 11 private treatment centers that opened up in and 12 around the Richmond area landfill and apparently one 13 of these, according to this, does some pretreatment 14 from some of the leaching from the landfill, which 15 then whatever material comes out of there is 16 transferred to the Bissell Point treatment plant for 17 further treatment. 18 Do you monitor that leaching for any 19 radioactive activity? 20 MR. SPRAGUE: The monitoring is done by 21 our division of environmental compliance, which 22 falls under Rich, so that's -- I'm not responsible 23 for the monitoring but I do know that when they do 24 do the tests they do do some radioactive testing, 25 yes. Page 86 1 MR. TOMAZI: Thank you. 2 MR. CHAIRMAN: Anything further? Thank 3 you, Mr. Sprague. Ms. Myers? 4 MS. MYERS: The District's next witness 5 is Tim Snoke. 6 MR. CHAIRMAN: Mr. Snoke, is the 7 testimony you are about to give the truth, the whole 8 truth, and nothing but the truth? 9 MR. SNOKE: Yes, it is. 10 MR. CHAIRMAN: Thank you. Any members 11 of the Rate Commission have questions for Mr. Snoke? 12 Mr. Neuschafer, do you have any questions on 13 behalf of Missouri Industrial Energy Consumers? 14 MR. NEUSCHAFER: Yes. 15 MR. CHAIRMAN: Please come forward. 16 MR. NEUSCHAFER: Thank you. 17 TIM SNOKE, having been duly sworn, 18 testified as follows: 19 QUESTIONS BY MR. NEUSCHAFER: 20 Q. Good morning, Mr. Snoke. 21 Just a few questions, if you could pull out 22 your surrebuttal testimony. As you can see we got a 23 copy there. 24 On Page 2 I'm going to start out, Question 1 25 you take issue with some of the conclusions made by Page 87 1 Mr. Gorman in his rebuttal testimony, so I want to 2 look at Lines 8 and 9 first. Mr. Gorman stated 3 that, "Ameren Missouri's projected growth in its 4 cost of service is largely tied to its rate base 5 investments." 6 Do you disagree with that premise? 7 A. I think based on the analysis we did we 8 saw that the costs that we are being charged were 9 roughly almost double of how we saw the rate base 10 increase for Ameren Missouri. 11 Q. Okay. That is reflected in the Exhibit 12 MSD 115D1 that you submitted? 13 A. Yes. 14 Q. And, in particular, that's the numbers 15 in the bottom right-hand of that exhibit as far as 16 what MSD is being charged, the 37.1 percent and then 17 4 percent, is that -- am I looking at the right 18 numbers? 19 A. That's one factor. So there's a list of 20 factors throughout the exhibit. They range from 21 four to four and a half percent average annual 22 increases since June 2007 versus -- so that four to 23 four and a half percent range, there's a range of 24 factors versus what we saw the rate base growth of 25 about 2.3 percent. Page 88 1 Q. Okay. And those are historical numbers? 2 A. Those are historical numbers. 3 Q. As opposed to projections? 4 A. Correct. 5 Q. So getting back to the statement of -- 6 with respect to projected growth, do you disagree 7 that Ameren Missouri's projected growth and its cost 8 of service is largely tied to its rate base 9 investments? 10 A. I would expect -- I don't have any 11 reason to expect that future increases would not 12 move at least similarly to how they have done in the 13 past. 14 Q. Let's look at the next clause in that 15 same sentence where it says, "Ameren projects to 16 grow at a CAGR of 2 percent from Fiscal Year 14 to 17 Fiscal Year 19." That's what that says right there? 18 A. Yes, correct. 19 Q. Do you disagree with that statement? 20 A. I do not disagree that that is what 21 Ameren says they project growing. 22 Q. Okay. So based upon what evidence does 23 MSD disagree with Ameren's own projections? 24 A. I disagree with utility expense 25 escalation factor of 3 percent every other year, Page 89 1 which would actually be less than an annual 2 2 percent increase when history shows that our -- 3 that the increase in rates that we experience is 4 actually higher by almost double what Ameren's 5 historic rate increase -- rate base increases have 6 been. 7 Q. Okay. So that's Mr. Gorman's proposal? 8 A. Correct. 9 Q. And what I'm asking about is Ameren's 10 projections of a 2 percent increase over Fiscal Year 11 14 to Fiscal Year 19. 12 A. I have no basis to disagree that 13 Ameren's projecting their rate base to increase by 14 2 percent a year from 14 through 19. 15 Q. Okay. So let's talk about Mr. Gorman's 16 proposal, which is 3 percent every other year. 17 Looking at just the time period covered by 18 this Rate Proposal, do you think there's a 19 significant difference between 3 percent growth 20 every other year versus 2 percent every year? 21 A. I think it's less than 2 percent every 22 other year. 23 Q. Do you think it's significantly less 24 than 2 percent? 25 A. It's a little bit less. I mean, I'm Page 90 1 basing this on historically our increases have been 2 almost double the increase. His proposal is to 3 actually factor in that increase that's less than 4 Ameren's projected growth. 5 Q. And I understand the historical numbers. 6 I think we're -- we're trying to work with Ameren's 7 own projections here, is what we're looking at. 8 So does MSD have a -- you know, other than 9 historical numbers, you know, historical amounts 10 that MSD has been paying, is there any other 11 evidence that you have to support that Ameren's 12 2 percent projection is not accurate? 13 A. No, we did not analyze whether or not 14 their projection of their rate base growth was 15 accurate. 16 Q. Okay. Do you know, as far as MSD's 17 overall utility expense, what percentage of that is 18 tied to electrical costs? 19 A. It's most of it but I'd have to ask 20 operations probably. I don't know exactly. 21 MR. NEUSCHAFER: Okay. All right. 22 That's all I've got. Thank you. 23 MR. CHAIRMAN: Thank you, Mr. 24 Neuschafer. 25 Mr. Goss, do you have any questions on behalf Page 91 1 of the Home Builders Association? 2 MR. GOSS: I do not, Mr. Chairman. 3 MR. CHAIRMAN: Mr. Arnold, any questions 4 on behalf of the Rate Commission? 5 MR. ARNOLD: No, sir. 6 MR. CHAIRMAN: Questions from the 7 Commission itself? 8 Ms. Myers, any questions? 9 MS. MYERS: I don't have any. 10 MR. CHAIRMAN: Thank you, Mr. Snoke. 11 Ms. Myers? 12 MS. MYERS: The District's next witness 13 is Theresa Bellville. 14 MR. CHAIRMAN: Ms. Bellville, is the 15 testimony you are about to give the truth, the whole 16 truth and nothing but the truth? 17 MS. BELLVILLE: Yes, it is. 18 MR. CHAIRMAN: Thank you. Any questions 19 from the Rate Commission to start? 20 Mr. Neuschafer? 21 MR. NEUSCHAFER: Yes. 22 MR. CHAIRMAN: Once again. 23 THERESA BELLVILLE, having been duly 24 sworn, testified as follows: 25 QUESTIONS BY MR. NEUSCHAFER: Page 92 1 Q. Good morning, Ms. Bellville. How are 2 you? 3 A. Just fine. 4 Q. Good. You have your surrebuttal 5 testimony in front of you there. Let me get myself 6 organized here. 7 I would like to look at the table on Page 4 8 on your surrebuttal testimony. And in the bottom 9 right-hand corner you indicate a running average, so 10 this is related to bad debt? 11 A. Yes. 12 Q. A running average beginning in Fiscal 13 Year 11 that's reduced by 1.1 percent. Can you 14 explain how you reached this number? 15 A. The one marked in red, the very last 16 one? 17 Q. Yes. 18 A. That is starting with Fiscal 11 and 19 taking the cumulative total of the bad debt 20 provision for each year and the total bad debt 21 balance and taking the total provision divided by 22 the balance. 23 Q. Okay. So if we go then -- let's look at 24 that same table. If we compare the year over year 25 decrease in bad debt as a percentage of the SSC -- Page 93 1 first off, can you -- what is SSC? 2 A. Wastewater sewer charge. 3 Q. SSC is the wastewater sewer charge? 4 A. Yes. 5 Q. Okay. We're seeing a significant 6 year-over-year decrease in bad debt as a percentage 7 of SSC when you compare Fiscal Year 10 to 13. Do we 8 expect that to continue? 9 A. Can you repeat that? I'm sorry. 10 Q. Sure. When you're comparing the bad 11 debt as a percentage of SSC, I believe that's the 12 third from last line, and particularly when you 13 compare Fiscal Year 10 and then scroll over to 14 Fiscal Year 13 we're seeing significant decreases 15 year over year. Do you expect that to continue? 16 A. As in my testimony, we do expect it to 17 decrease slightly as we continue with our collection 18 procedures. A part of the analysis here is in 14 we 19 had an adjustment to our bad debt calculation that 20 created an adjustment of 9.8 million and when you 21 take the effect of that adjustment out, the 22 adjustment -- the bad debt provision for FY14 would 23 have been 2.9 million. 24 And so in my testimony, as I said, when you 25 remove that, the effect of that, the average over Page 94 1 that period, the time period of the Rate Proposal 2 from 11 to 14, was actually 2 percent. So taking 3 into account what we're doing with collections, 4 that's why we reduced it in the Rate Proposal down 5 to one and a half percent versus the 2 percent 6 average that we've been experiencing. 7 Q. You just referenced if you "take into 8 account what we're doing with collections." Are 9 these new programs designed to improve your 10 collections or is this a continuation of old 11 programs or what -- you know, how does what you're 12 going to be doing under the Rate Proposal compare to 13 what you're currently doing? 14 A. We're going to continue with the process 15 that we put into place in 2011, which was to 16 continue a more aggressive approach in that we 17 institute a pre-collect program where we do our 18 automatic dialing program and then it phases through 19 to different collection agencies, first placement 20 agency, second placement agency and then to law 21 firms to pursue them through judgments because we 22 don't have the ability to shutoff. So that is our 23 only means to try to collect and we've been having 24 success in that arena. 25 Q. And so you're continuing that program. Page 95 1 Are you investing more in that program? 2 A. We're continuing with that program and 3 just really pressing and trying to continue as much 4 as we can to collect the delinquencies. 5 Q. Is MSD devoting additional resources, 6 either more people or more money? 7 A. Not additional resources, no. It's the 8 continuation of the program. We try to look at it 9 and revamp it as far as we might start collecting at 10 different periods or reassigning at different 11 periods, adjusting the program to try to increase 12 collections. 13 Q. But nonetheless MSD feels it has been 14 very effective? 15 A. Yes, it has to the extent that we can. 16 Q. Okay. If we go to Page 5 of your 17 testimony, Lines 12 and 13 in particular I believe, 18 you suggest that it's contradictory for Mr. Gorman 19 to assume that the bad debt provision would increase 20 one half percent down to one percent of the same 21 time assuming that the late charge credit fees would 22 increase; is that correct? 23 A. Yes, that's correct. 24 Q. Okay. Is it true that whatever late 25 charge fees you collect will be based on a Page 96 1 percentage of outstanding principal balance of the 2 bills that have not yet been paid? 3 A. Yes. 4 Q. So late charge fees could increase with 5 increases in the customer bills, which haven't been 6 paid? 7 A. Yes, they could. 8 Q. Okay. And you indicated Mr. Gorman 9 assumed a 1 percent bad debt provision in the 10 forecast period 17 through 20, Fiscal Year 17 11 through Fiscal Year 20? 12 A. Yes. 13 Q. Okay. I want to look at Page 2. Flip 14 back a bit to Page 2 of your testimony. This is 15 with respect to volume projections. 16 You take issue with the projections of 17 wastewater volumes during the forecast period, 18 right? 19 A. Correct. 20 Q. Okay. And this is done in part with 21 taking a look at the projections that were made in 22 the last rate case as compared to MSD's projections 23 and then comparing them to actuals; is that right? 24 A. Yes. 25 Q. Okay. And you state that if the Page 97 1 District had followed Mr. Gorman's recommendations 2 in the last case the District would have suffered a 3 $7.3 million greater deficit than was actually 4 experienced? 5 A. That is correct. 6 Q. How did you reach the 7.3 7 million number, can you explain that for us? 8 A. It's using Exhibit MSD 115. What we did 9 is we took Mr. Gorman's projections in his testimony 10 from FY11 and he had projected them to remain stable 11 for that entire period, so we multiplied that by 12 four and we compare that to our four-year 13 projections or looking at the actuals for that same 14 four-year period and then we compare that with the 15 volumes it would have been compared to the actuals. 16 If we would have used Mr. Gorman's projections we 17 would have been under sewer service revenue by 18 17.2 million. And when we compare it to our -- 19 projections to our actuals we were under 9.9 million 20 and that's the difference. 21 Q. Okay. This -- 22 A. I'll clarify that it's MSD 115E1. 23 Q. Yes. Thank you. And this takes into 24 account -- the actual numbers take into account the 25 metered customers from the year 2014; is that Page 98 1 correct? 2 A. Correct. 3 Q. Now, in 2014, wasn't that the year that 4 American Water Company, there were I guess some 5 changes to their methodology that impacted the 6 actual numbers on the volume for metered customers? 7 A. Yes, it was and in my testimony I do 8 indicate that if you take into account that 9 adjustment, which we did bill in FY15 so it was 10 outside of that rate period, if you adjust that, 11 that 7.9 million, we would have been within 12 2 million. And if you look at Mr. Gorman's numbers 13 then it would have been 9.2 million, so this 14 difference still would have been the same, that 15 $7 million. 16 Q. Okay. But thinking just about volumes, 17 the volume, not the collections or billings, I'm 18 going to show you here, this is -- actually, if you 19 got the Rate Proposal in front of you, this is part 20 of the Rate Proposal, Page 4 dash 7, which is Table 21 4 dash 3. If you look at Line 4, which is subtotal 22 metered customers, Fiscal Year 14 it's about 23 51.8 million, that's right? 24 A. Yes. 25 Q. Down significantly from the 56.2 million Page 99 1 in Fiscal Year 13? 2 A. That's correct. 3 Q. So for the volumes, if you account for 4 the discrepancies in Missouri American Water 5 Company's numbers, what is a more appropriate volume 6 for Fiscal Year 14? 7 A. What we did there you can see that in 8 FY15 in our projections, before we did the rest of 9 the rate model, we adjusted for that one time -- for 10 that one time anomaly in 2014, so in FY15 you see a 11 more accurate usage number at 55,053,889. 12 Q. So you're suggesting that 55 -- the 13 55 million in Fiscal Year 15 is perhaps a more 14 reflective number of what was actually happening in 15 Fiscal Year 14 or the actual volumes from Fiscal 16 Year 14? 17 A. It includes the adjustment. It has been 18 adjusted for that -- the lack of usage in 2014. It 19 has been corrected in 2015. 20 Q. Where -- help explain to me that 21 correction and how much of that volume reflects 22 correction? 23 A. I don't have the exact volume number but 24 the number has been adjusted from 2014. The 25 51,867,679 is the number that has -- without the Page 100 1 usage error from Missouri American Water and in 2 2015, with the corrections that were made, that 3 number is the adjusted usage number including the 4 corrected usage at 55,053,889. 5 Q. So, in other words, the number here for 6 Fiscal Year 14, 51,867,679, doesn't actually reflect 7 actual volumes for Fiscal Year 14? 8 A. Correct. 9 Q. Okay. And if we had an actual number 10 for Fiscal Year 14 alone, do you know what that more 11 appropriate number would be? 12 A. I don't have that number with me. 13 Q. Do you know if it would be closer to the 14 56.2 million in 2013 or the 55 million that was in 15 2015 than it is to the 51.8 million in '14? 16 A. I don't know that. 17 Q. Okay. So then get back to my question, 18 I guess the original question about projections, 19 you've taken issue with Mr. Gorman's total volume, 20 yet part of your total actual volume calculation is 21 Fiscal Year 14, which is not an accurate number? 22 A. We corrected it in 2015, so the volumes 23 going forward into the Rate Proposal have been 24 corrected and have been adjusted. 25 Q. But you're saying Mr. Gorman's Page 101 1 projections years ago for the Fiscal Years 11 2 through 14 time period were off from actuals but 3 you're also telling me your actuals were incorrect 4 when you're looking at just that time period? 5 A. We corrected that adjustment. Again, as 6 I stated, when we looked at the projections if we 7 take into account the 7.9 million that we did 8 back-bill all of our customers in 2015 and you add 9 that to either Mr. Gorman's number or MSD's 10 projections, Mr. Gorman's numbers, if we adjust for 11 that, we would still be under 9.2 million and for 12 MSD's projections we would be under 2 million. 13 Q. I understand that. My concern is that 14 it appears that when you're trying to take issue 15 with Mr. Gorman's calculations on actual volumes, 16 you haven't given Mr. Gorman the benefit of that 17 back calculation but when you're trying to 18 demonstrate to us how MSD's calculations or 19 projections were accurate, you are giving yourselves 20 the benefit of that number? 21 A. I did give him the benefit. I think his 22 number, again -- 23 Q. For total volume? 24 A. For total volume, if I add that -- the 25 adjustment to that, he would still be off Page 102 1 9.2 million versus our 2 million. 2 Q. I'm looking at the volume, the CCF 3 number. 4 A. But that's how I would have come up 5 with -- using the volumes is how I came up with the 6 revenue. 7 Q. I understand that but I'm not looking at 8 the revenue right now. I'm looking at volumes. 9 Okay. And what your testimony is, is that the 10 actual volumes for Fiscal Years 11 through 14 did 11 not compare to Mr. Gorman's projections, Mr. Gorman 12 was off in his projections? 13 A. Correct. 14 Q. But you're also telling me that the 15 actual number -- the actual volume that you used in 16 Fiscal Year 14 is not accurate because of the issue 17 with Missouri American Water Company? 18 A. Yes, but it's also the actual volumes 19 that we billed, so comparing actuals to actuals. 20 Q. But you didn't bill them until 2015? 21 A. Correct. 22 Q. So they count in the 2015 number on this 23 table, not in the 2014 number? 24 A. Correct. 25 MR. NEUSCHAFER: Okay. Thank you. Page 103 1 MR. CHAIRMAN: Any questions from the 2 Commission? Mr. Stein? 3 MR. STEIN: Ms. Bellville, has the 4 District ever pursued enabling the legislation to 5 allow you to work with the city water division and 6 Missouri American to shutoff water for nonpayment of 7 sewer bills? 8 MS. BELLVILLE: I believe the statutes 9 say that we have the -- they have the ability to 10 make -- to enter into agreements with either of the 11 water providers. 12 MR. STEIN: Have you done so? 13 MS. BELLVILLE: We have had discussions 14 with both. 15 MR. STEIN: But it's not gone anywhere? 16 MS. BELLVILLE: No, sir. 17 MR. STEIN: Are those discussions 18 ongoing? 19 MS. BELLVILLE: Yes, they are. 20 MR. STEIN: Thank you. 21 MR. CHAIRMAN: Any questions? 22 Mr. Goss, do you have any questions on behalf 23 of the Home Builders Assocation? 24 MR. GOSS: I do not, Mr. Chairman. 25 MR. CHAIRMAN: Mr. Arnold? Page 104 1 MR. ARNOLD: No, sir. 2 MR. CHAIRMAN: Ms. Myers, any further 3 questions? 4 MS. MYERS: No, sir. 5 MR. CHAIRMAN: Thank you. Thank you 6 very much, Ms. Bellville. 7 MS. MYERS: The District calls its last 8 witness as William Stannard. 9 MR. CHAIRMAN: Mr. Stannard, is the 10 testimony you're about to give the truth, the whole 11 truth and nothing but the truth? 12 MR. STANNARD: It is. 13 MR. CHAIRMAN: Thank you, sir. Any 14 questions from the Rate Commission to start? 15 All right. Mr. Neuschafer, any questions? 16 MR. NEUSCHAFER: No. 17 MR. CHAIRMAN: Mr. Goss, any questions 18 on behalf of Home Builders Association? 19 MR. GOSS: Yes, Mr. Chair. 20 MR. CHAIRMAN: Please come forward. 21 WILLIAM STANNARD, having been duly 22 sworn, testified as follows: 23 QUESTIONS BY MR. GOSS: 24 Q. Good morning. 25 A. Good morning. Page 105 1 Q. It's getting late, I'll try and make 2 this brief. Mr. Stannard, you have in front of you 3 your surrebuttal testimony, correct? 4 A. Yes, I do. 5 Q. In your surrebuttal testimony you stated 6 two reasons why you supported the proposed use of a 7 property tax based charge off of funding a new 8 stormwater tax and I refer you to Page 2 of your 9 testimony and ask if you would read the first 10 sentence after "yes" in Lines 5 and 6 into the 11 record. 12 A. "First the use of property taxes funding 13 the costs of stormwater systems is a common method 14 used by cities and counties throughout the United 15 States." 16 Q. In follow up to this first point, can 17 you tell me a percentage of how many cities or 18 counties use a property tax for funding stormwater 19 services versus another method such as an impervious 20 surface or otherwise? 21 A. I don't have the percentage but there is 22 some data with regard to the number of cities that 23 have an impervious fee structure, which is a growing 24 mechanism to use by cities around the country but 25 it's not uniformly applied throughout -- for all Page 106 1 cities and counties throughout the United States. 2 So I can't -- so we can probably find the number of 3 ones that have impervious area fee structures and 4 then divide by the number of cities and counties and 5 that would give us that percentage but I think it's 6 still -- it's a minority percentage, I believe. 7 Q. But it's a growing percentage? 8 A. It is a growing trend across the United 9 States. 10 Q. And do you have the source of that data 11 you just referred to? 12 A. There are a number of surveys that are 13 conducted. One is Kentucky State University and 14 then Black & Veatch Stormwater Survey that they 15 produce every year or so and that was included as an 16 exhibit to my direct testimony. 17 Q. Okay. And do you have any sense or a 18 percentage of the major metropolitan areas that are 19 using a property tax for funding their stormwater 20 tax as opposed to some other charge? 21 A. There are some major metropolitan areas 22 that use property taxes. One that comes to mind is 23 the New Orleans Sewerage and Water Board that uses 24 property taxes for their funding of all their 25 stormwater drainage activities in the city. Page 107 1 Q. I think my question was: Do you have 2 any information regarding other -- what other major 3 metropolitan areas are using in terms of impervious 4 surface charges? 5 A. I don't have anything with me but yet I 6 think based on the survey data that determination 7 can be made. 8 Q. Okay. And given that this is a growing 9 trend, as you just noted, for cities to use the 10 impervious surface charge, is there a reason why the 11 District is not proposing to use that kind of 12 methodology in its current tax proposal? 13 A. Based on my discussions with the 14 District during our studies there were a couple 15 things. One, of course, was the Supreme Court 16 decision after the challenge of the proposed 17 impervious area fee and then examining the -- there 18 are studies in order to determine the levels of 19 service that would be provided and the focus of 20 providing operation and maintenance of the existing 21 public stormwater sewers, as opposed to major 22 capital upgrades, that their proposed methodology to 23 continue to use a property tax, to continue with a 24 property tax structure provided a reasonable link 25 with the value of the properties that are being Page 108 1 protected. 2 Q. Okay. And I think that was your second 3 point in your surrebuttal, where you reference the 4 relationship between the use of property tax 5 assessment charges and the value of the property 6 itself, is that not correct? 7 A. Yes. 8 Q. Okay. And, if I may, I'll just -- if 9 you look back at your surrebuttal testimony on Page 10 2, Lines 6 through 9, could you read that second 11 sentence into the record? 12 A. "Second, in terms of the value of the 13 service provided expressed in terms of protection of 14 property, the use of property taxes assesses charges 15 in proportion to the value of the property receiving 16 the service and achieves a nexus between the amount 17 paid and the benefit received." 18 Q. Okay. So in follow up to that second 19 point, in the Zweig case the Supreme Court in its 20 opinion states that -- Page 227 of the opinion, and 21 I'll quote it, "The District insisted that a tax 22 based on the assessed valuation of a property has no 23 relation to stormwater services but a stormwater 24 user charge directed at the landowners who 25 collectively created the need for stormwater Page 109 1 services was much fairer and more easily 2 understood." 3 Now, that seems to be at odds with your 4 opinions and those of the District under the current 5 proposal, which is a property tax proposal. Can you 6 explain how given this conflict the District now 7 contends that tax based on assessed valuation of 8 property is fair and equitable? 9 A. I guess first would be the level of the 10 stormwater management program that was proposed at 11 the time of the prior case with the proposed 12 impervious area charge, which was a much more 13 expansive program than the limited operation and 14 maintenance of existing storm sewer systems as 15 proposed in this Rate Change Proposal. 16 One of the issues that was discussed 17 previously was the anticipation that the -- when you 18 think of tax-exempt properties who also benefit from 19 the stormwater system, as well as other services 20 provided by cities and counties but they do not pay 21 property taxes but they would pay an impervious area 22 charge, you know, it is my understanding that there 23 is still some concern, you know, it hasn't been 24 tested yet but there is concern that the Zweig case 25 may open the door for tax-exempt properties to Page 110 1 challenge a voter-approved stormwater impervious 2 area fee. 3 Q. And I think that's -- I think that's 4 something Mr. Arnold was exploring with 5 Mr. Hoelscher, if I recall, and that's certainly 6 outside the scope of your testimony, so I don't want 7 to get into that because I already had a chance to 8 ask that once, so I will not go there again. 9 A. Some people like to chastise. 10 Q. I'm just teasing you. It's all right. 11 Let me just take you through a real quick 12 hypothetical. I have two properties that are 13 equally valued and one of the properties has no 14 impervious surface, it's absorbing all of its 15 stormwater and the other property is entirely 16 consisting of impervious surface, so all of its 17 stormwater is running off. 18 So under this tax proposal they're both going 19 to pay the same tax, isn't that true, because 20 they're both valued equally? 21 A. That's correct. 22 Q. Okay. And so isn't it true that the 23 property that consists entirely of impervious 24 surface, has a lot of runoff going into the system, 25 is directly benefiting from this tax, whereas the Page 111 1 other property that is absorbing all of its 2 stormwater isn't directly benefiting from that tax 3 that it's paying? 4 A. I think we have to go beyond that 5 relationship of the runoff that is created by that 6 property to along to the benefits provided by having 7 the properly operated maintained public storm sewer 8 system and the protection that that provides by 9 eliminating or at least mitigating flooding and 10 flooding of streets so that emergency vehicles can 11 actually go to places where they're needed. 12 I think your hypothetical of a developed 13 property that absorbs a hundred percent of its 14 runoff, certainly it's theoretically possible and 15 certainly many systems require now new development 16 to not increase the volume of runoff from that 17 property after development than existed prior to 18 development. 19 Q. Right. And isn't it true that actually 20 the regulations require over-detention by new 21 development so that not only do they detain for 22 their project but they're correcting existing 23 problems around them so they're over-detained, isn't 24 that true? 25 A. As far as the specifics here with the Page 112 1 MSD system, that's -- I don't have knowledge on 2 those, that level of detail, but there are some 3 systems out there that do require that. 4 Q. And so you don't know whether MSD is, in 5 fact, requiring some developments to over-detain to 6 correct problems in the general area that exist, 7 you're unaware of that? 8 A. I'm not aware of that. 9 Q. Okay. Are you aware that the District 10 previously included a credit-based program in its 11 proposed stormwater user charge based on impervious 12 surface? 13 A. Yes. 14 Q. All right. Well, if the District is 15 able to implement a credit-based program in that 16 structure, why hasn't the District considered a 17 credit-based program in this current proposal or 18 even reviewed a credit program? 19 A. I was not involved in any detailed 20 discussions or general discussions on the topic of 21 credit programs as part of our work for this Rate 22 Change Proposal. But certainly one of the questions 23 that I would have would be just the administrative 24 process how if such a credit could be supported, how 25 it could be done with the District's ability and Page 113 1 their linkage with the county in doing the tax 2 bills. 3 Q. Well, presumably the District figured 4 that out in the prior program because they were 5 offering a credit as part of that, isn't that true? 6 MS. MYERS: I would chastise you again. 7 I think you're getting outside of the surrebuttal 8 testimony of Mr. Stannard. 9 MR. CHAIRMAN: Sustained. 10 Q. (MR. GOSS) Do you know who would have 11 knowledge of the consideration of a credit-based 12 program in the District? 13 A. I think the executive director as well 14 as Ms. Myers. Brian Hoelscher and Susan Myers. 15 MR. GOSS: I understand. Thank you. I 16 have nothing further. Thank you. 17 MR. CHAIRMAN: Thank you, Mr. Goss. 18 Mr. Arnold, any questions on behalf of the 19 Rate Commission? 20 MR. ARNOLD: Yes, sir. 21 QUESTIONS BY MR. ARNOLD: 22 Q. Good morning, Mr. Stannard. 23 A. Good morning, Mr. Arnold. 24 Q. Mr. Stannard, with respect to your 25 surrebuttal testimony I'm going to call your Page 114 1 attention to Page 3, Lines 9 through 11, where 2 you're referring to a critical step in the rate 3 development process. Could you read that sentence 4 for us? 5 A. Which line? 6 Q. I'm sorry. Lines 9 through 11. 7 A. "However, a critical step in the rate 8 development process is to use the cost of service 9 process to allocate the total revenue requirements 10 and calculate fair and equitable rates." 11 Q. Okay. Now, this response is in 12 connection with the wastewater proposal? 13 A. Yes. 14 Q. Is this analysis sometimes called 15 "causation"? 16 A. Yes. So -- 17 Q. Go ahead. 18 A. That's a terminology that is sometimes 19 used. 20 Q. All right. So that the cost of service 21 or causation is calculated at a fair and equitable 22 rate. 23 Now, let's take a look at your testimony on 24 Page 2 and this is in response to a question about 25 property tax used for the public stormwater system Page 115 1 and I would like for you to read your testimony 2 Lines 10 through 15. 3 A. "Considering fire protection as an 4 analogy, the costs of fire protection are recovered 5 through property taxes with those taxes directly 6 proportional to the assessed valuation of the 7 property receiving this service. As with many cost 8 recovery structures the property tax approach is not 9 perfect, but given the level of stormwater service 10 provided by MSD at this time and anticipated during 11 the period covered by the Rate Change Proposal, it 12 is my opinion that the proposed property tax-based 13 funding is equitable." 14 Q. All right. Now, I understand your 15 analogy is we can do stormwater because we do fire 16 protection. I understand fire protection being 17 based on an assessed valuation because if it burns 18 down you've lost value. I don't understand the cost 19 causation if stormwater runs by the house. 20 A. It's probably more from a flooding 21 protection. Property flooding is an issue that can 22 be affected within improperly maintained storm sewer 23 system, as well as the ability of the streets to 24 remain clear so that when a fire does occur that the 25 fire trucks can get to the property that needs the Page 116 1 service as well as handle that service. 2 Q. Thank you. I hand you what has been 3 previously marked as MSD -- I'm sorry -- Exhibit MSD 4 84G. And I'm asking the other side of the question, 5 which Mr. Goss put to you earlier, and it has to do 6 with the number of Districts who use a user fee 7 based on impervious area. 8 Now, I grant you this is a survey. This does 9 not include every storm sewer system in the country 10 but I would ask you to turn to Page 13. 11 A. I have it. 12 Q. Okay. And at the top of the page, the 13 left-hand column Figure 19, "Is your stormwater user 14 fee based on some form of parcel area such as gross 15 and/or impervious area?" What's the response? 16 A. Ninety percent of the respondents 17 indicated yes and 10 percent indicated no. 18 Q. All right. Right below that, Figure 20, 19 "What is the basis for calculating your parcel area 20 based stormwater user fees? (Select all that 21 apply)." 22 And what is the response? 23 A. Seventy-nine percent of the respondents 24 indicated that they use impervious area for the 25 determination of the fee structure and the charges. Page 117 1 Fourteen percent used gross area with some runoff 2 factor. Thirteen percent used -- indicated they 3 used gross area with intensity of development 4 factor, which is somewhat similar to the runoff 5 factor. Ten percent used gross area only and 6 3 percent indicated they had some other way of doing 7 it. 8 Q. All right, sir. I'm going to hand you a 9 book. I'm going to ask if you can identify the 10 book? 11 A. Yes, I can. 12 Q. Would you, please? 13 A. This is a book published by my firm, 14 Water and Wastewater Finance and Pricing: The 15 Changing Landscape, Fourth Edition. 16 Q. All right. And I took a peek at -- it's 17 an unnumbered page but it was published in 2015? 18 A. Yes. 19 Q. All right. And the book contains pieces 20 from -- I'll call them contributing editors. If you 21 go to Romanette 18, Mr. Beckley contributed to the 22 book and he is sitting right here? 23 A. Yes. 24 Q. And if you go to Romanette 26 you 25 contributed? Page 118 1 A. I did. 2 Q. All right. But neither of you talked 3 about cost causation and I want to get to that right 4 now. If you go to Romanette 25, Keith Reding -- 5 A. Readling. 6 Q. Readling, I'm sorry. Was a contributor? 7 A. Yes. 8 Q. And Romanette 22, Henrietta Locklear was 9 a contributor? 10 A. Yes. 11 Q. And they both wrote Chapter 23, 12 "Expanding Financing And Pricing Concepts into 13 Stormwater." I want to ask you to turn to Page 474. 14 A. I have it. 15 Q. Got it. All right section 23.5, 16 "Developing a Rate Structure." And I would like for 17 you to go to Section 23.5.2, "Choosing a Rate 18 Structure Based on Cost Causation," and I would like 19 you to read that paragraph. 20 A. "The most appropriate rate structure 21 links demand for service to the rate structure. 22 Total runoff volume, a cost causation factor, is 23 influenced by a number of variables on a given 24 parcel: size of the parcel, vegetation, slope, 25 soils, and the amount of roof top and pavement Page 119 1 (impervious area where water cannot readily 2 percolate into the earth, closed parentheses. All 3 of these influences -- all these influence the 4 estimable runoff volume and thus the demand from the 5 property. Among these variables, some of them are 6 major variables, with the paramount variable being 7 the amount of the impervious area. On the other 8 hand, other variables are minor, such as the health 9 of the vegetation on the parcel. Rate structure 10 choices usually reflect the primacy of some 11 variables in determining demand." 12 Q. All right. And the next Section 23.5.3, 13 "Balancing Fairness with Ease of Understanding and 14 Simplicity." Could you read that paragraph, please? 15 A. "Rate structure choices also reflect 16 other equity, practical and efficiency-related 17 concerns. A number of variables contribute to the 18 demand for service. Some are major and some are 19 minor and the fairer process would take all of these 20 variables into account. However, a rate structure 21 that did so would be very complex. It would be the 22 fairest rate structure, but it would also be 23 difficult to implement because of the effort 24 involved in measuring the attributes, maintaining 25 the data, and explaining the rate structure to Page 120 1 customers. On the other end of the spectrum, the 2 simple rate structure would be a -- the simplest 3 rate structure would be a flat rate. For example, 4 meter size has been used in some jurisdictions, and 5 a pure land use classification has been used in 6 others. Flat fees are not very fair as a means for 7 equitably recovering or allocating cost among 8 ratepayers. However, they are relatively easy to 9 implement and maintain. These can be easier to 10 explain to ratepayers than a complex rate 11 structure." 12 Q. Thank you, sir. Now, the next page and 13 this is the last sentence of that paragraph. 14 A. "Impervious area rate structures have 15 been used very frequently to date by jurisdictions 16 because an impervious area basis reflects cost 17 drivers. It is very fair and is relatively easy to 18 understand." 19 MR. ARNOLD: Thank you, sir. 20 MR. STANNARD: You're welcome. 21 MR. ARNOLD: I have no further 22 questions. 23 MR. CHAIRMAN: Thank you, Mr. Arnold. 24 Questions from the Commission? 25 MR. BROCKMANN: Mr. Stannard, of all the Page 121 1 municipalities that enacted a property tax have any 2 of them been under criteria that the Rate Commission 3 is under as far as fair and equitable? 4 MR. STANNARD: They're usually under the 5 criteria of a state constitution in the 6 determination of property taxes and I took a look at 7 the Missouri Constitution -- excuse me for talking 8 Kansas Citian -- but in some states the 9 constitutions will require taxes to be just and 10 equitable, which can provide some direction as to 11 how the property tax rate should be established. 12 But those that have -- for example, New 13 Orleans, their taxes, their ability to levee taxes 14 for stormwater are established by the state 15 legislature and they have limitations on the amount 16 of -- the tax rate that can be applied. 17 MR. BROCKMANN: So currently the 18 stormwater rate is two different -- I'm sorry -- our 19 stormwater rate is two different parts right now, 20 part of it being the 24 cents that's fixed for every 21 property, it's a minuscule amount, but yet that's 22 consistent with every property owner paying that 23 amount? 24 MR. STANNARD: Yes. 25 MR. BROCKMANN: And so we're saying -- Page 122 1 you're recommending we eliminate that and go to a 2 variable amount per property owner on the property 3 tax? 4 MR. STANNARD: That is the proposal. 5 MR. MAHANTA: I have a question. 6 MR. CHAIRMAN: Mr. Mahanta? 7 MR. MAHANTA: Yes, the reason that we're 8 not considering the impervious area primarily, would 9 it be reasonable for me to suggest that it's 10 primarily because of the complexity of the 11 implementation? 12 MR. STANNARD: That is a factor that was 13 considered by the District but then, again, I think 14 just as relevant was the level of service that is 15 included in the financial plan for the stormwater 16 program incorporated into this Rate Change Proposal, 17 so focusing just on operation and maintenance of the 18 existing storm sewer system. 19 MR. CHAIRMAN: Ms. Bowser? 20 MS. BOWSER: I just wanted to clarify 21 one point. The tax that is paid in those 22 subdistricts that exists now is based on assessed 23 valuation of the particular properties, am I 24 correct? 25 MR. STANNARD: Yes. Page 123 1 MS. BOWSER: And if we had -- the 2 previous impervious area was a fee, so therefore, it 3 did not go through the county, am I correct, it was 4 strictly a billing from the District? 5 MR. STANNARD: That is correct. 6 MR. MAHFOOD: Have you seen any, in your 7 experiences and I have not seen the book that was 8 referred to, any kind of hybrid where there's an ad 9 valorem tax with credits that are integrated in 10 there, have you seen anything like that? 11 MR. STANNARD: I've not seen any systems 12 that use property tax, an ad valorem tax for funding 13 the stormwater management activities that have 14 implemented a credit program. 15 MR. MAHFOOD: Okay. 16 MR. MAHANTA: Would it be considered, 17 would it be fair or practical to consider that? 18 MR. STANNARD: I think practicality has 19 a big component of how that could be accomplished. 20 MR. CHAIRMAN: Mr. Schoedel? 21 MR. SCHOEDEL: If there's a great number 22 of municipalities that are using the area as part of 23 the fee structure, how do they take into account the 24 nonprofits, do they provide credit for those or 25 payment in lieu of taxes? Page 124 1 MR. STANNARD: The ones that are using 2 impervious area charges generally will assess those 3 fees to all properties subject to some modifications 4 that might be part of the enabling ordinances 5 established by their governing bodies. 6 A project that we, my firm, did was for the 7 City of Baltimore for their stormwater impervious 8 area fee structure and they -- the city council 9 determined that it would be appropriate to apply 10 credits to a variety of institutions including 11 places of worship but then limited it to just the 12 worship area of a parcel, so if there was other 13 activities going on, broader-based, then they would 14 adjust -- those would be charged the fee. 15 The State of Maryland actually exempted 16 through their state statute establishing stormwater 17 fees as the desired result in the state, throughout 18 the state, that state-owned properties and 19 municipal-owned properties would not be subject to 20 those fees. So they exempted themselves and then 21 gave the municipalities a break too, so they gave 22 them a break too. 23 MR. SCHOEDEL: But there's no particular 24 thing specifically for non-for-profit organizations? 25 MR. STANNARD: No, usually not unless -- Page 125 1 again, unless they come to a conclusion that they 2 want to just have a reduced rate for nonprofits. 3 MR. SCHOEDEL: Thank you. 4 MR. CHAIRMAN: Ms. Myers, do you have 5 any questions? 6 MS. MYERS: Could I have just a minute? 7 MR. CHAIRMAN: Please. 8 MS. MYERS: I don't have anything. 9 Thank you. 10 MR. CHAIRMAN: Thank you, Ms. Myers. 11 Are there any further matters before we 12 adjourn? Mr. Stannard, you're free to go. Any 13 further matters? Mr. Arnold? 14 MR. ARNOLD: Mr. Chair, members of the 15 Commission, may I urge my colleagues of the bar to 16 file, produce, whatever material which they request 17 the Commission to review on the 26th as early as 18 conveniently possible. One, for consideration by 19 the Commission; and two, for consideration by 20 counsel so that we are in a position to honestly 21 wrap things up. Thank you, Mr. Chair. 22 MR. MAHFOOD: I don't know if this is 23 appropriate or the right time or whatever, but do we 24 have any background information on this previously 25 talked about or talked about this previous credit Page 126 1 program that MSD had considered in the past? Just 2 curious to see if we might -- along with this other 3 information we might have something that could be 4 available to the Rate Commission. 5 MR. HOELSCHER: Yeah, I think there's 6 two sources in the information they asked to be 7 provided. There was initially what was provided to 8 the Rate Commission during those previous 9 proceedings, of course that's not on the internet. 10 But what we can do -- 11 MR. MAHFOOD: Sorry. 12 MR. HOELSCHER: No, that's fine. I 13 think what we can do is we can lay out what the 14 ordinance was that laid out that along with the 15 credit policy as to what we laid out previously for 16 the impervious. We can provide that with the 17 additional information. 18 MR. MAHFOOD: Thank you very much. 19 MR. CHAIRMAN: Any further questions 20 before we adjourn? Ms. Myers? 21 MS. MYERS: Could I ask the Rate 22 Commission that we set a date by which you want to 23 see this additional information prior to the 24 pre-conference hearing? 25 MR. CHAIRMAN: As soon as reasonably Page 127 1 possible. It's the 26th. I would say give us at 2 least three days to review it. 3 MR. BROCKMANN: Five p.m. on the 23rd? 4 MR. CHAIRMAN: Five p.m. on the 23rd. 5 That actually gives us only two. 6 MR. BROCKMANN: That's true. 7 MR. CHAIRMAN: How about 5 p.m. on the 8 22nd? 9 MS. MYERS: June 22nd by 5 p.m.? 10 MR. CHAIRMAN: Yes. 11 MS. MYERS: Thank you. 12 MR. CHAIRMAN: Very good. Thank you. 13 Having no further matters we are adjourned. Oh, we 14 need a motion. 15 MR. STEIN: Motion to adjourn. 16 MR. JONES: Second. 17 MR. CHAIRMAN: All in favor say aye. 18 RATE COMMISSION: Aye. 19 - - - - - 20 (Whereupon, the Technical Conference 21 adjourned at 12:16 p.m.) 22 23 24 25 Page 128 1 CERTIFICATE OF REPORTER 2 I, Suzanne Zes, within and for the State 3 of Missouri, do hereby certify that the witness 4 whose testimony appears in the foregoing deposition 5 was duly sworn by me; the testimony of said witness 6 was taken by me to the best of my ability and 7 thereafter reduced to typewriting under my 8 direction; that I am neither counsel for, related 9 to, nor employed by any of the parties to the action 10 in which this deposition was taken, and further that 11 I am not a relative or employee of any attorney or 12 counsel employed by the parties thereto, nor 13 financially or otherwise interested in the outcome 14 of the action. 15 16 ______________________________ 17 Certified Court Reporter 18 19 20 21 22 23 24 25 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 129 A ability 8:12,17 68:3 94:22 103:9 112:25 115:23 121:13 128:6 able 56:24 83:22 112:15 absorbing 110:14 111:1 absorbs 111:13 accept 21:11,23 25:15 26:3 27:3 acceptable 57:4 accompanied 8:9 accomplished 123:19 account 35:21 51:6 73:5 78:23 94:3,8 97:24,24 98:8 99:3 101:7 119:20 123:23 accounts 39:1,4 40:15,16 61:3 62:22 64:2 accrued 32:15 accuracy 63:14 accurate 62:22 90:12,15 99:11 100:21 101:19 102:16 achieves 108:16 acquiring 50:14 Act 22:15 56:5 action 25:16 27:5 58:9 128:9,14 actions 56:12 actively 21:7 activities 106:25 123:13 124:13 activity 85:19 actual 31:19 32:3 36:9,10 37:14 97:24 98:6 99:15 100:7,9,20 101:15 102:10,15,15,18 actuals 96:23 97:13 97:15,19 101:2,3 102:19,19 ad 123:8,12 add 48:20 101:8,24 added 63:19 76:20 adding 80:20 addition 14:11 51:8 51:16 80:22 additional 9:11 13:14,23 14:22 18:9 49:13 53:23 80:20 95:5,7 126:17,23 additions 80:17 address 81:8 83:4,6 83:12,14,23 addressed 14:5 55:24 addresses 31:3 56:5 addressing 54:17 adequate 8:13 84:6 adequately 17:14 adjourn 125:12 126:20 127:15 adjourned 127:13 127:21 adjust 20:22 98:10 101:10 124:14 adjusted 99:9,18 99:24 100:3,24 adjusting 95:11 adjustment 59:21 93:19,20,21,22 98:9 99:17 101:5 101:25 adjustments 31:1 63:1 administer 57:17 administered 15:3 19:2,7,17 45:1 administration 20:18 administrative 112:23 admission 23:6 admit 26:1 admitted 23:12 adopted 8:24 16:22 46:3 advance 30:11 advantage 45:12 advent 63:11 advised 14:4 47:3 50:9,18,25 51:25 52:10 aerial 72:9 73:3 affidavit 14:9 15:16 17:18 27:4 27:12 58:22 affluent 69:24 afternoon 3:4 23:3 agencies 94:19 agency 55:9 65:16 94:20,20 agenda 6:3 27:6 aggressive 94:16 ago 23:10 43:4 69:18 101:1 agree 21:15 25:4 31:9 51:21 agreement 72:12 agreements 103:10 ahead 114:17 air 68:9 allocate 13:8 114:9 allocating 120:7 allotted 13:13 allow 103:5 allowable 48:17 allowed 14:21 15:15 18:3 75:18 allowing 43:9 allows 19:18 all's 58:8 alternative 60:6 amended 6:17 8:11 8:19 amendment 6:19 51:7 Ameren 87:3,10 88:7,15,21 Ameren's 88:23 89:4,9,13 90:4,6 90:11 American 34:15 35:15,19,25 36:8 37:7 98:4 99:4 100:1 102:17 103:6 amount 31:20 62:19 69:7,9 108:16 118:25 119:7 121:15,21 121:23 122:2 amounts 8:4 90:9 ample 17:9 analogy 115:4,15 analysis 22:21 32:6 87:7 93:18 114:14 analyze 64:4 90:13 and/or 80:17,18,20 116:15 animal 56:15,16 annual 32:23 37:19 39:16 72:16 75:25 87:21 89:1 annually 74:5 anomaly 34:14 37:5 47:5 99:10 answer 10:12 12:7 13:3 20:13 28:10 48:14 66:7,16 68:24 70:20 answered 28:8 anticipate 25:3 40:18 anticipated 8:5 115:10 anticipation 50:5,7 109:17 anybody 26:20 45:4 apologies 37:23 apologize 30:11 70:10 apparently 85:12 appears 101:14 128:4 appendix 30:24 31:5 applicable 8:18 application 9:1 14:4,7 applications 9:3,6 applied 105:25 121:16 apply 116:21 124:9 appreciate 21:2 55:2 58:17 82:8 approach 19:14 94:16 115:8 appropriate 24:2,4 26:3 31:1 49:14 54:22,25 99:5 100:11 118:20 124:9 125:23 appropriately 64:10 approved 6:15 approves 65:5 approximately 30:15 36:6 43:20 62:21 April 10:2,3,6,7,16 10:19,20,24 area 22:5 60:4 62:21 63:20 64:21 65:16 71:9 72:5 73:4 74:16,22 75:2 77:6,13 78:2 78:3,5,14,18 79:2 79:3,5,22,22 81:9 81:13,17,19,25 82:4,5,17,20,24 83:2,3,21 84:3,8 85:12 106:3 107:17 109:12,21 110:2 112:6 116:7 116:14,15,19,24 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 130 117:1,3,5 119:1,7 120:14,16 122:8 123:2,22 124:2,8 124:12 areas 73:2 77:23 81:8,9 82:25 106:18,21 107:3 area's 56:8 arena 94:24 argument 23:17 Army 23:25 Arnold 4:10 12:25 13:17,19 20:13,25 22:25 23:24 25:24 26:2 29:3,5 41:18 41:20,22,23 48:5 48:19,25 52:14,16 73:15,15,16,17 82:8,19 85:2,4 91:3,5 103:25 104:1 110:4 113:18,20,21,23 120:19,21,23 125:13,14 article 47:10,25 48:18 58:13,14 asked 14:21,25 15:1,4 28:11 82:14,19 126:6 asking 15:14 18:25 24:6 43:8 89:9 116:4 Assembly 43:19 assess 51:12 124:2 assessed 44:14,15 51:19 108:22 109:7 115:6,17 122:22 assesses 108:14 assessment 108:5 assessments 50:24 51:23 asset 76:4,6,10 78:7 79:12,23 80:16 82:3 assets 8:3 assign 26:3 62:20 assigned 58:3 Assocation 103:23 associated 7:12 37:6 64:9 Association 4:23 7:14,17 9:4 11:4 11:10,19,20 12:18 13:22 27:4 28:1 61:18 84:25 91:1 104:18 Association's 58:5 assume 95:19 assumed 96:9 assuming 95:21 assumption 32:12 attached 58:6 attachments 27:14 27:15 attempt 13:8 attend 45:5 attention 42:2 44:13 114:1 attorney 128:11 attribute 32:14 attributes 119:24 August 9:14 43:25 authority 20:10 authorization 46:10 authorizes 52:4 automatic 94:18 available 16:25 81:12,16,19 83:10 83:22 126:4 average 33:6,22 34:1,9,21 35:4 87:21 92:9,12 93:25 94:6 aware 67:22 69:13 112:8,9 aye 27:20 127:17 127:18 B B 80:11 back 19:3 22:5,17 24:15 36:9 39:12 40:23 42:6 48:5,8 48:9,12 55:6 66:19,22 68:18 88:5 96:14 100:17 101:17 108:9 background 125:24 back-bill 101:8 bad 92:10,19,20,25 93:6,10,19,22 95:19 96:9 Baer 4:10 10:14 13:1 balance 42:13 78:22 79:5,6 92:21,22 96:1 balances 77:7 Balancing 119:13 Baltimore 15:21 124:7 bar 7:17 125:15 base 39:24 87:4,9 87:24 88:8 89:5 89:13 90:14 based 16:20 25:10 39:16 43:5 63:2 69:7 75:18 83:16 83:17 87:7 88:22 95:25 105:7 107:6 107:13 108:22 109:7 112:11 115:17 116:7,14 116:20 118:18 122:22 basing 90:1 basins 64:24 72:18 basis 32:11 42:19 89:12 116:19 120:16 Beach 15:21 Beckley 117:21 began 12:12 beginning 42:11 47:21 78:10 81:5 92:12 begins 79:6 behalf 12:14,18,20 27:25 28:22,25 29:14 30:3 41:13 41:19 61:17 84:22 84:25 85:3 86:13 90:25 91:4 103:22 104:18 113:18 believe 15:4 19:17 26:2 31:1 32:8,24 37:12,15 39:21 46:17 48:14 49:18 53:3,21 55:14 60:1,14 75:17,20 75:23 79:4 82:12 93:11 95:17 103:8 106:6 Bellville 2:8 9:19 37:12 91:13,14,17 91:23 92:1 103:3 103:8,13,16,19 104:6 beneficial 15:8 21:6 benefit 45:5 50:24 51:23 68:5 83:17 101:16,20,21 108:17 109:18 benefiting 45:12 110:25 111:2 benefits 45:23 83:17 111:6 best 18:1 56:20 128:6 Bethany 9:18 better 15:11 beyond 49:13 72:24 74:24 81:23 111:4 big 123:19 biggest 43:1 bill 31:15 35:16 43:19 98:9 102:20 billed 102:19 billing 36:6 37:6 63:2 123:4 billings 98:17 bills 52:9 96:2,5 103:7 113:2 Bissell 35:1 36:22 85:16 bit 32:20 40:23 74:1 89:25 96:14 Black 12:24 106:14 BMP 65:5 67:3 72:13 BMPs 19:19 64:14 64:16,24 65:2,20 72:5 Board 6:24 7:25 8:8 9:9,12 25:22 106:23 bodies 124:5 Boerding 2:3 12:4 13:25 15:1 18:25 28:6,10,12,14,17 28:20,22,25 29:4 29:7,10 bonds 8:2,16 50:16 50:23 book 117:9,10,13 117:19,22 123:7 borrowing 50:4 Botanical 7:15 bottom 43:16 80:10 87:15 92:8 boundaries 45:7,14 52:6 56:10 69:15 69:17,20,24 71:22 71:25 74:19 bounds 66:10 Bowser 4:6 5:7,8 6:11 52:19,20 53:7,13 122:19,20 123:1 Brad 4:24 12:19 Brandon 4:16 12:22 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 131 break 57:11,13 124:21,22 Brian 2:4 9:17 29:19 30:7 33:16 53:16 58:2 113:14 brief 59:15 105:2 briefly 22:4 42:1 bringing 22:4 broad 21:1 broader-based 124:13 Broadway 4:17 Brockmann 4:6 5:9 5:10 6:11 14:16 18:22 20:7 27:12 27:17 120:25 121:17,25 127:3,6 brought 53:15 BRYAN 4:16 Builders 4:23 9:4 11:3,10,18,20 12:18 13:22 14:2 14:7 27:4 28:1 41:14 58:4 61:18 84:25 91:1 103:23 104:18 building 40:3 76:12 burden 8:20 64:9 65:22 67:22 burning 67:18 burns 115:17 business 56:17 bwneuschafer@... 4:19 C C 4:1 5:1 50:22 CAGR 88:16 calculate 114:10 calculated 32:16 63:22 114:21 calculating 62:10 116:19 calculation 93:19 100:20 101:17 calculations 62:17 101:15,18 calibration 31:8 call 5:2,6 44:13 45:20 56:20 74:22 84:13 113:25 117:20 called 50:6 56:6 76:3 114:14 calling 42:2 calls 104:7 capacity 81:1 capital 75:10 76:13 77:8,12,16 78:13 79:2,7,15,24 80:3 80:5 81:12,16 82:1,17,20 84:5 107:22 care 18:17 36:19 54:13 57:23 84:7 carefully 21:11 carries 55:16 carryover 62:2 case 25:19 53:1,11 72:6 96:22 97:2 108:19 109:11,24 causation 114:15 114:21 115:19 118:3,18,22 caused 72:20 CAVE 4:16 CCF 102:2 cent 79:1,5 81:22 centers 85:11 cents 51:18 121:20 certain 25:22 72:16 certainly 110:5 111:14,15 112:22 CERTIFICATE 128:1 Certified 3:7 128:17 certify 128:3 cetera 20:11 chair 6:10 104:19 125:14,21 chairman 4:2 5:2,9 5:11,13,16,19,22 5:24 6:2,7,8 12:17 12:20,23 13:17,18 13:19 14:13,17,19 16:10,16 18:21 20:16 21:12,14 22:1,2,24,25 23:19 24:1,24 25:12,24 26:2,9 26:12,18,25 27:2 27:9,11,18,21 28:3,5,12,18,24 29:3,6,9,16,20,24 30:6 41:11,17,21 52:16 53:14 55:5 57:5,8,10,14,21 57:25 58:16,18,19 58:24 59:5 61:15 66:4,5,9,14 67:7 70:12 71:2 73:8 73:14 82:10 84:10 84:14,18,24 85:2 85:5,8 86:2,6,10 86:15 90:23 91:2 91:3,6,10,14,18 91:22 103:1,21,24 103:25 104:2,5,9 104:13,17,20 113:9,17 120:23 122:6,19 123:20 125:4,7,10 126:19 126:25 127:4,7,10 127:12,17 challenge 107:16 110:1 challenged 49:1,3,5 Chamber 7:13,20 Chan 4:6 5:24 6:13 21:15 chance 22:3 23:17 25:16 54:25 110:7 change 1:11 5:5 7:23 8:7,10,22,25 9:9 20:19 22:14 25:10 31:19 39:1 76:17 77:18 109:15 112:22 115:11 122:16 changes 6:21 7:25 21:19 31:22 35:14 37:6 57:3 98:5 changing 49:6 117:15 channel 81:2,2 Chapter 118:11 charge 44:16 46:25 62:5 93:2,3 95:21 95:25 96:4 105:7 106:20 107:10 108:24 109:12,22 112:11 charged 87:8,16 124:14 charges 22:10 61:1 107:4 108:5,14 116:25 124:2 Charter 6:15,19,24 49:19,20,24 chastise 110:9 113:6 check 37:11,18 Chodes 4:7 5:11,12 6:12 choices 119:10,15 Choosing 118:17 chosen 83:5 cite 44:1 cites 42:15 Citian 121:8 cities 105:14,17,22 105:24 106:1,4 107:9 109:20 city 7:17 34:25 35:18 43:5 74:17 74:19 103:5 106:25 124:7,8 clarify 24:5,12,20 97:22 122:20 classes 8:20 classification 120:5 clause 88:14 clean 22:15 56:5 83:12 clear 24:18 54:12 115:24 clearly 47:14 close 84:9 closed 119:2 closely 22:3 closer 100:13 Club 7:14 Coalition 7:22 codified 43:25 colleagues 75:21 125:15 collect 51:12,22 78:18 94:23 95:4 95:25 collected 77:7 78:19 collecting 95:9 collection 49:8 50:5 71:8,13 93:17 94:19 collections 94:3,8 94:10 95:12 98:17 collectively 108:25 column 42:12 116:13 combination 39:25 combined 34:24 35:1 combusting 67:18 come 22:21 30:6 41:21 79:19 84:9 86:15 102:4 104:20 125:1 comes 35:18 56:3 63:21 85:15 106:22 coming 35:7 69:10 comment 68:12 71:18 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 132 comments 16:10,16 16:17 21:3 Commerce 7:20 commercial-indu... 7:4 Commission 1:6 4:4,9 5:3 6:8,14 6:20 7:1,3,11,24 8:8,22,25 9:7,10 9:13,16,20,24 10:3,10,13,15,20 11:7,21 12:8,25 13:1,8,20,24 14:5 14:20,22 16:2,8 16:18,23 17:25 18:1,8,19 19:24 20:10,15 23:1,5 24:23 26:5 27:20 28:6,19 29:25 41:19 52:17 54:8 58:2,11,12,15 59:6 73:9 82:11 84:11,19 85:3 86:11 91:4,7,19 103:2 104:14 113:19 120:24 121:2 125:15,17 125:19 126:4,8,22 127:18 Commissioner 20:13 Commission's 9:13 13:2 common 8:11 105:13 community-neig... 7:9 company 34:15 37:7 67:17 68:5 98:4 102:17 Company's 99:5 compare 36:14 92:24 93:7,13 94:12 97:12,14,18 102:11 compared 96:22 97:15 comparing 93:10 96:23 102:19 comparison 32:6 completed 13:11 complex 119:21 120:10 complexity 122:10 compliance 17:11 85:21 comply 8:18 22:12 22:22 complying 22:15 component 67:2 123:19 compromises 17:21 Concepts 118:12 concern 43:1 101:13 109:23,24 concerns 119:17 conclusion 125:1 conclusions 86:25 conducted 106:13 Conference 1:15 3:1 6:5 10:7,11 12:2 18:15 23:8 23:14,20 24:22 127:20 conflict 109:6 connected 45:1 connection 38:1,2,7 38:10,13,16,20,21 39:8,12,15 40:10 114:12 connections 36:20 connect/reconnect 39:21 Consent 22:12,16 22:23 55:25 conservation 31:11 consider 16:9,14 21:10,20 23:17 49:12,14,15 54:21 66:11 72:25 74:5 75:13 123:17 consideration 14:23 16:2 23:4,5 113:11 125:18,19 considered 26:4 49:13 81:14 112:16 122:13 123:16 126:1 considering 14:20 19:24 21:4,10 41:4 115:3 122:8 consist 80:16 consistent 8:10,14 121:22 consisting 110:16 consists 7:11 110:23 constituting 77:11 78:13 80:5 constitution 44:5 46:7 47:4,11 58:13,14 121:5,7 constitutional 8:10 constitutions 121:9 construct 52:7 constructed 67:3 72:13,19 constructing 50:14 construction 7:19 39:19 51:23 80:25 consultant 11:8 12:24 Consumers 4:15 7:17,19 9:6 10:17 10:25 11:9,14,15 12:21 29:1 30:3 84:22 86:13 contacted 13:22 contains 117:19 contends 109:7 continuation 94:10 95:8 continue 57:15 78:25 83:24 93:8 93:15,17 94:14,16 95:3 107:23,23 continues 47:9 62:1 continuing 94:25 95:2 continuously 35:11 Contractors 7:12 contradictory 95:18 contribute 119:17 contributed 117:21 117:25 contributing 117:20 contribution 54:23 contributions 55:22 contributor 118:6 118:9 control 15:12 71:6 71:9,18,22 controlled 36:24 convenient 69:9 conveniently 125:18 conversation 76:1 conveyed 44:20 45:18 cooperation 56:18 copies 32:21 33:3 33:13 copy 18:5 59:2 60:18 74:3 86:23 corner 92:9 correct 30:18 33:23 34:10,16 38:3,12 38:23 39:14 45:2 46:22 47:1,17 48:3 49:5 51:16 52:23 55:18 59:1 59:23,24 60:5,11 61:11 62:7,8,9 63:3,6,24 64:15 65:4,7 71:11,15 71:20 74:11,12,16 75:4,11 76:5 77:20 78:4,8 79:14,17,20,25 80:1 88:4,18 89:8 95:22,23 96:19 97:5 98:1,2 99:2 100:8 102:13,21 102:24 105:3 108:6 110:21 112:6 122:24 123:3,5 corrected 99:19 100:4,22,24 101:5 correcting 111:22 correction 99:21,22 corrections 100:2 cost 8:3 50:13 62:5 66:2 83:16,19 87:4 88:7 114:8 114:20 115:7,18 118:3,18,22 120:7 120:16 costs 36:10,11 53:23 57:3 69:7 83:11 87:8 90:18 105:13 115:4 council 7:18,21 124:8 counsel 10:15 12:9 13:1,10,11,21 14:11 20:9 23:12 80:7 125:20 128:8 128:12 count 102:22 counties 105:14,18 106:1,4 109:20 country 16:1 105:24 116:9 county 6:16 7:18 7:20,21 46:19 70:18 74:20 113:1 123:3 couple 18:15 33:5 67:9 107:14 course 107:15 126:9 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 133 court 3:7 32:15 42:15,22 43:11 48:8,12 53:4 66:22 107:15 108:19 128:17 covenant 8:15 cover 8:5 covered 77:4 89:17 115:11 co-permittees 56:24 created 93:20 108:25 111:5 creation 46:11 credit 15:3,6,8,19 15:24 19:2,3,15 19:16,18,25 25:7 58:21 72:21,25 95:21 112:18,21 112:24 113:5 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10:9 20:8 66:6 106:16 directed 20:2 108:24 direction 18:7,13 18:20 121:10 128:8 directly 26:19 31:3 57:16 110:25 111:2 115:5 director 113:13 disagree 59:21 87:6 88:6,19,20,23,24 89:12 discharge 55:12 discharges 69:21 discontinuities 35:24 36:1 discovery 9:21,25 10:4,18,21 11:1,4 11:13,18,22 14:2 17:3 24:5 75:20 76:19 77:19,22 80:9 discrepancies 99:4 discuss 70:9 discussed 23:3 109:16 discussing 54:24 discussion 18:21 21:12 22:17 26:20 27:11,18 discussions 14:6 103:13,17 107:13 112:20,20 dispose 69:4 district 1:8 3:2,5 5:4 6:9,15,21,23 6:25 7:6,24 8:3,17 8:18,23 9:10,12 9:15,22,22 10:1,1 10:5,5,10,11,18 10:19,22,22 11:1 11:2,5,5,12,17,23 11:23,25 12:5,15 13:10 14:3 15:2 15:11 16:7,17,19 17:2,5,14,15,20 18:2,7,25 19:2,5 19:17,23 20:4 23:7,11 24:6,13 24:20 25:6,16 27:7 28:7,22 29:14 34:22 44:17 44:20 45:18 46:11 46:20 49:23 59:1 62:9,11 63:22 65:1,5,8,13 67:23 68:14 69:17 71:5 71:7,20,22 74:5 74:10 77:4,13 78:3 80:9 81:14 82:23,24 83:1,4 83:13,23 84:12 TECHNICAL CONFERENCE 6/17/2015 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expiration 13:12 expired 13:15 explain 82:15 92:14 97:7 99:20 109:6 120:10 explained 61:4 explaining 119:25 exploring 110:4 expressed 108:13 extending 50:14 extends 74:24 extent 13:10,13 48:1 62:16 65:20 95:15 extra 33:2,12 60:17 F facilities 8:13 50:15 facility 69:21 70:17 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 135 76:15 fact 15:9,10 35:16 40:15 72:22 112:5 factor 87:19 88:25 90:3 117:2,4,5 118:22 122:12 factors 20:19 87:20 87:24 fair 7:2 8:20 15:9 16:3,23 17:21 19:20 21:22 22:9 109:8 114:10,21 120:6,17 121:3 123:17 fairer 109:1 119:19 fairest 119:22 fairly 20:1,5 Fairness 119:13 falling 8:2 falls 77:24 85:22 familiar 37:3 70:7 far 35:7,13 36:25 49:17 56:2 66:13 87:15 90:16 95:9 111:25 121:3 fate 67:13 favor 27:19 127:17 favorably 16:8 Fax 4:12,18 features 67:1 72:19 February 6:17 8:23 9:15 federal 8:18 70:18 fee 22:17 24:15 42:16,18,24 43:7 43:10,18,21 44:16 46:25 53:8,18 62:6 66:3 69:7 72:7,9 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113:11 known 43:19 L L 9:17 labor 7:8,21 62:19 lack 99:18 laid 16:23 126:14 126:15 lakes 35:12 land 40:4 120:5 landfill 70:17,23 85:12,14 landowners 108:24 Landscape 117:15 large 40:7 57:1 largely 68:8 74:16 87:4 88:8 larger 35:13 40:6 54:16 Lashly 4:10 10:14 13:1 late 25:20 95:21,24 96:4 105:1 laundry 49:22 law 8:11 43:19,24 48:23 53:11 94:20 laws 8:19 47:21,23 lay 126:13 layman's 53:9 leaching 85:14,18 League 7:15,18 leaves 71:21 Leeds 43:4 left 18:16 84:5 left-hand 116:13 legal 10:14 12:9 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 138 13:1,9,11 20:9 21:16 50:9,18,25 51:25 54:14 55:21 legislation 44:2,4 44:24 45:15 46:3 103:4 legislature 121:15 Lemay 35:2 36:22 Lemoine 12:24 length 23:18 62:5 Leonard 5:16 let's 14:17 37:22 49:22 55:17 68:8 68:16 88:14 89:15 92:23 114:23 levee 75:14,25 79:6 79:19 121:13 leveed 74:9 levees 78:6 level 36:18 42:23 82:16 109:9 112:2 115:9 122:14 levels 107:18 levy 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Louis 1:8 3:2,5,6 4:11,17 5:4 6:9,16 6:16 7:13,13,14 7:17,18,20,21 9:4 12:15 34:25 35:18 46:19 54:4 60:4 65:16 74:17,19,20 love 42:5 Lutheran 7:19 Lynchburg 15:23 M M 3:7 9:17 magnitude 37:11 Mahanta 4:6 5:25 6:1,13 16:12 21:2 84:3 122:5,6,7 123:16 Mahfood 4:7 5:22 5:23 6:13 21:13 21:14,15 26:10,15 27:10 53:15 55:2 123:6,15 125:22 126:11,18 maintain 45:7 48:23 62:5,20 76:14 79:1 120:9 maintained 44:20 45:18 111:7 115:22 maintaining 76:8 76:10 119:24 maintenance 8:4 45:6 48:16,16 51:18 54:6 72:12 74:14,15 76:3 78:6,24,25 79:7 79:10,12 81:23 82:3,22 83:11 107:20 109:14 122:17 major 36:18 57:2 65:13 106:18,21 107:2,21 119:6,18 making 16:24 24:14 management 21:8 44:16 56:20 76:4 76:7 78:7 79:12 79:24 82:3 109:10 123:13 mandate 22:11 manner 21:4 map 74:21 76:18 76:20 March 9:20,22,24 Mark 4:5 5:19 marked 46:17 47:13,20 80:10 92:15 116:3 Market 3:6 Maryland 15:22 124:15 material 14:12 16:13 18:23 20:17 21:5 23:11 24:22 67:13 85:15 125:16 matter 35:16 55:11 57:24 matters 6:4 13:16 27:24 125:11,13 127:13 maximum 75:18 MDNR 56:19 mean 39:20,21 65:25 68:13 70:3 78:17 89:25 meanders 74:21 means 94:23 120:6 measure 32:3 45:23 measured 31:19 measures 21:6 measuring 119:24 mechanism 105:24 meet 23:15 50:13 57:4 65:10 meeting 1:6 5:3 27:6 43:4 45:5 58:5 72:23 meetings 18:15 meets 20:22 member 28:19 29:24 31:6 52:17 59:6 84:19 members 10:13 12:7 13:7,19 14:19 23:1 26:4 28:5 82:10,11 86:10 125:14 memory 55:7 mentioned 67:10 mentioning 37:16 metals 68:17 meter 120:4 metered 31:11,14 97:25 98:6,22 method 44:4 49:8 105:13,19 methodology 98:5 107:12,22 methods 49:15 metropolitan 1:8 3:1,5 5:3 6:9 12:14 46:20 106:18,21 107:3 Michael 2:3 12:3 28:6 Mike 5:19 million 33:8,22 34:2,9 36:6,13 60:8,25 61:2,3,5 61:10 77:12 78:13 79:18 80:5 93:20 93:23 97:3,7,18 97:19 98:11,12,13 98:15,23,25 99:13 100:14,14,15 101:7,11,12 102:1 102:1 mind 20:14 53:16 54:11 72:18 106:22 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 139 Minneapolis 15:23 Minnesota 15:23 minor 34:17,19,20 36:2,2 119:8,19 minority 106:6 minus 82:21 minuscule 121:21 minute 125:6 minutes 25:18 57:11 minutia 64:1 Mississippi 35:8 55:17 Missouri 3:6,8 4:11 4:15,17 7:15,16 7:22 9:5,5 10:16 10:24 11:8,13,15 12:21 29:1 30:3 34:15 35:14,18,25 36:7 42:14 43:5 43:18 44:5,9 46:7 47:4 55:17 84:22 86:13 87:10 99:4 100:1 102:17 103:6 121:7 128:3 Missouri's 87:3 88:7 mitigating 111:9 model 99:9 modifications 34:14 124:3 moments 23:10 Monday 17:3,13 money 50:4 95:6 monitor 22:20 55:14 85:18 monitoring 85:20 85:23 month 23:21 43:4 morning 13:20 20:16 27:5 41:24 41:25 61:21,22 73:18,19 86:20 92:1 104:24,25 113:22,23 motion 14:13,20 16:11,20 17:2,13 17:18,20,24 18:1 18:4,6,19 26:10 26:13,17,19,21,24 27:8 54:1 58:5,6 58:10 127:14,15 Mound 7:17 move 26:11,20 27:3 88:12 moved 14:15 26:14 MSD 4:20 21:22 30:16,21 31:6,19 32:3,8 35:24 36:8 36:24 42:15,16 44:6 45:1 56:4,9 56:13,23 57:1 60:1,14 62:25 65:10,11,18 69:2 69:18,25 71:5,7 72:3,6 74:4,18 76:19 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okay 20:24 24:1,24 26:9 27:17 28:24 30:20 31:7 32:19 33:14,18,25 35:20 37:5,19 38:6,13 38:24 39:15 40:9 41:5 46:6 49:22 50:3 58:1,25 59:4 59:8,14 60:6,12 61:13 66:14 71:1 72:2 73:7 75:19 76:6,17,23 77:15 79:21 80:15 81:25 87:11 88:1,22 89:7,15 90:16,21 92:23 93:5 95:16 95:24 96:8,13,20 96:25 97:21 98:16 100:9,17 102:9,25 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 140 106:17 107:8 108:2,8,18 110:22 112:9 114:11 116:12 123:15 old 94:10 OMCI 73:24 74:25 75:5 77:2,5,10,10 77:13 OMCIs 77:6 once 19:9 20:1 83:8 91:22 110:8 ones 84:4 106:3 124:1 one-time 36:4,5 ongoing 103:18 on-the-record 12:12 open 109:25 opened 85:11 operate 79:1 operated 111:7 operates 67:12 operation 7:6 8:3 48:16 51:18 54:5 70:23 74:14 76:2 78:6,23,25 79:7,9 79:11 82:2,21 83:11 107:20 109:13 122:17 operational 13:2 81:23 operations 74:15 90:20 opinion 108:20,20 115:12 opinions 109:4 opportunity 9:1 10:12 16:19 17:9 24:4,19 25:18 27:7 41:7 52:7 oppose 16:20 opposed 27:21 88:3 106:20 107:21 opposing 18:19 25:3 opposition 17:23 opt 43:7,9 option 69:4 options 21:20 order 5:5 15:9 16:5 64:5 65:9 107:18 ordinance 74:3,4 126:14 ordinances 69:19 124:4 organizations 6:25 7:4,5,7,9,10 124:24 organized 75:22 92:6 original 74:18 77:20 78:3 100:18 originally 9:7 32:16 Orleans 106:23 121:13 Otis 5:24 outcome 128:13 outlined 18:12 outside 54:18 65:25 71:5,19 98:10 110:6 113:7 outstanding 8:16 96:1 overall 65:22 72:9 90:17 overlaps 74:24 oversalting 56:15 overstep 50:2 over-detain 112:5 over-detained 111:23 over-detention 111:20 owner 74:10 121:22 122:2 owners 52:5 O&M 73:24 74:6 74:13 75:3,9 79:23 82:1 84:4 O'Connell 5:19 P P 4:1,1 5:1 package 21:11 page 2:2 30:14 33:21 34:1 35:22 37:22,23 38:1,25 42:3,8 43:12,16 49:7 59:20 60:21 60:21 61:25 62:1 62:2 73:22 78:1,2 78:9 80:8,11 81:5 86:24 92:7 95:16 96:13,14 98:20 105:8 108:9,20 114:1,24 116:10 116:12 117:17 118:13 120:12 pages 33:5 73:23 paid 52:8 55:25 74:8,15 78:6 81:25 82:2,4 96:2 96:6 108:17 122:21 Pamela 12:23 paper 30:11 37:24 46:14 47:8 59:15 paragraph 35:23 42:11,13 43:12 60:22 78:11 80:11 118:19 119:14 120:13 paramount 119:6 parcel 65:21 116:14,19 118:24 118:24 119:9 124:12 parcels 62:11 parentheses 119:2 part 19:4 34:17 39:9 43:23 45:14 50:15 56:5,10,23 58:21 62:12 63:5 63:12 64:17 65:15 65:18 70:8 72:8 72:14 78:19 83:5 93:18 96:20 98:19 100:20 112:21 113:5 121:20 123:22 124:4 participants 13:6,9 participate 12:11 21:7 42:18 participating 43:21 particular 16:3 27:13 44:24 55:11 63:23 64:3 70:3 76:14 87:14 95:17 122:23 124:23 particularly 30:14 42:11 93:12 parties 18:2 128:9 128:12 parts 55:21 121:19 pass 65:17 passage 43:17 48:22 passed 17:17 43:19 44:2 passes 27:22 passing 70:22 Paul 4:6 5:9 6:11 pavement 118:25 pay 8:1 19:20 43:8 43:10 48:15 53:25 75:8,9,10 79:23 79:23,24 109:20 109:21 110:19 payable 50:23 paying 45:14 49:12 90:10 111:3 121:22 payment 48:2 123:25 pays 47:16 75:2,3 79:22 peek 117:16 people 19:18 41:7 46:18,21 51:15 95:6 110:9 percent 32:10 34:5 39:1,3 40:22,24 61:1,2,4,6,9 87:16 87:17,21,23,25 88:16,25 89:2,10 89:14,16,19,20,21 89:24 90:12 92:13 94:2,5,5 95:20,20 96:9 111:13 116:16,17,23 117:1,2,5,6 percentage 82:16 90:17 92:25 93:6 93:11 96:1 105:17 105:21 106:5,6,7 106:18 percolate 119:2 Peres 35:9 perfect 115:9 perform 79:2 period 13:4 18:23 59:23 60:10 72:16 77:14 78:15 81:20 83:7 89:17 94:1,1 96:10,17 97:11,14 98:10 101:2,4 115:11 periods 95:10,11 permanent 58:7 permission 49:17 permit 14:8 23:6,15 56:4,7,7,8,11 65:12,15 72:15 permits 38:1,2,7,10 38:14,17,20,21 39:8,13,15,19,20 40:10 56:25 61:4 61:7,9,11 permitted 12:11 13:14 permittees 56:19 person 8:25 12:6 13:3,14 17:1 44:14 persons 27:24 29:13 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 141 person's 13:12 44:19 pervious 64:7 73:4 petitions 63:2 ph 15:21 phases 94:18 photography 72:10 73:3 picks 55:12 pickup 56:16 pieces 46:13 117:19 piping 80:21 place 45:22 48:22 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proportion 108:15 proportional 115:6 proposal 9:1 19:5 20:19,21 24:13 25:4,7 30:24 TECHNICAL CONFERENCE 6/17/2015 www.midwestlitigation.com Phone: 1.800.280.3376 Fax: 314.644.1334 MIDWEST LITIGATION SERVICES Page 142 31:24 32:7,18 34:13 35:21 37:13 37:17 38:24 76:17 77:18 78:20,24 83:5 89:7,16,18 90:2 94:1,4,12 98:19,20 100:23 107:12 109:5,5,15 110:18 112:17,22 114:12 115:11 122:4,16 propose 25:14 proposed 6:22 8:9 9:8 14:23 19:3,4 25:7 42:16 84:1 105:6 107:16,22 109:10,11,15 112:11 115:12 proposing 25:8 55:1 78:24 107:11 propound 13:14 propounded 10:12 12:7 14:2 protect 80:23 protected 44:4 108:1 protection 55:9 81:3 108:13 111:8 115:3,4,16,16,21 provide 8:12 10:11 15:5 18:20 44:17 44:22 50:4 70:4 73:24 76:9,10 81:3 121:10 123:24 126:16 provided 18:4,6 26:8 45:13 66:2 77:17 107:19,24 108:13 109:20 111:6 115:10 126:7,7 providers 103:11 provides 47:11 77:21 111:8 providing 13:23 16:24 22:18 53:25 81:1 107:20 provision 8:15 47:4 48:24 50:10,19 51:1 52:11 61:2 92:20,21 93:22 95:19 96:9 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