HomeMy Public PortalAboutExhibit MSD 144 - Transcript of July 10, 2015 Public Hearing PUBLIC HEARING 7/10/2015
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1 THE METROPOLITAN ST. LOUIS SEWER DISTRICT
2 CAPITAL IMPROVEMENT & REPLACEMENT PROGRAM
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4 FY17 TO 20 STORMWATER PROJECTS
5 PUBLIC HEARING
6 JULY 10, 2015
7 9:00 AM - 11:35 AM
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1 I N D E X
2 PAGE
3 Opening Remarks 6
4 Presentation 10
5 Public Comment 33
6 Closing by Ms. Myers 48
7 Closing by Mr. Burkhart 72
8 Closing by Mr. Neuschafer 94
9 Closing by Mr. Arnold 99
10 Meeting Adjourned 113
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1 THE METROPOLITAN ST. LOUIS SEWER DISTRICT
2 CAPITAL IMPROVEMENT & REPLACEMENT PROGRAM
3
4 FY17 TO 20 STORMWATER PROJECTS
5 PUBLIC HEARING
6 JULY 10, 2015
7 9:00 AM - 11:35 AM
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12 Kathleen Watson Brunsmann
13 CSR, CCR, CRR, RPR
14 Midwest Litigation Services
15 711 North 11th Street
16 St. Louis, Missouri 63101
17 314.644.2191
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1 A P P E A R A N C E S
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3 PRESIDING RATE COMMISSIONER: Mr. Leonard J. Toenjes
4 RATE COMMISSIONER MEMBER: Mr. Chan Mahanta
5 RATE COMMISSIONER MEMBER: Mr. Steve Mahfood
6 RATE COMMISSIONER MEMBER: Mr. Paul Brockmann
7 RATE COMMISSIONER MEMBER: Mr. Russell Hawes
8 RATE COMMISSIONER MEMBER: Ms. Nancy Bowser
9 RATE COMMISSIONER MEMBER: Mr. Eric Schneider
10 RATE COMMISSIONER MEMBER: Mr. Mike O'Connell
11 RATE COMMISSIONER MEMBER: Mr. Mark Schoedel
12 RATE COMMISSIONER MEMBER: Mr. Kennard Jones
13 RATE COMMISSIONER MEMBER: Mr. Otis Williams
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16 METROPOLITAN ST. LOUIS SEWER DISTRICT STAFF:
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18 Mr. Brian L. Hoelscher - Executive Director
19 Ms. Susan Myers - General Counsel
20 Mr. Tim Snoke - Secretary Treasurer
21 Mr. Rich Unverferth - Director of Engineering
22 Mr. Jonathon Sprague - Director of Operations
23 Ms. Theresa Belleville - Associate Director of
24 Finance
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1 ATTORNEYS FOR THE COMMISSION:
2 Mr. John Fox Arnold
3 Ms. Lisa Stump
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5 RATE CONSULTANT:
6 Ms. Pam Lemoine
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8 ATTORNEY FOR HOME BUILDERS ASSOCIATION OF ST.
9 LOUIS & EASTERN MISSOURI:
10 Mr. Nicholas Burkhart
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12 ATTORNEY FOR MISSOURI INDUSTRIAL ENERGY CONSUMERS:
13 Mr. Brandon W. Neuschafer
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1 (Wherein, the following proceedings
2 were had of record, to-wit:)
3 MR. TOENJES: Good morning, we will
4 call the meeting of the Rate Commission of the
5 Metropolitan St. Louis Sewer District to order.
6 My name is Leonard Toenjes, and I am
7 Chairman of the Rate Commission of the Metropolitan
8 St. Louis Sewer District and will serve as the Chair
9 of this proceeding.
10 I will ask each of the Rate
11 Commissioners from my left to right to identify
12 themselves and the agency they represent.
13 MR. BROCKMANN: Paul Brockmann,
14 Missouri Botanical Garden.
15 MR. SCHOEDEL: Mark Schoedel, Lutheran
16 Senior Services.
17 MR. HAWES: Russell Hawes, St. Louis
18 County Municipal League.
19 MR. SCHNEIDER: Eric Schneider, St.
20 Louis Regional Chamber.
21 MR. JONES: Kennard Jones, Mound City
22 Bar Association.
23 MR. WILLIAMS: Otis Williams, St. Louis
24 Council of Construction Consumers.
25 MR. O'CONNELL: Mike O'Connell, The
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1 Greater St. Louis Labor Council.
2 MR. MAHANTA: Chan Mahanta, North
3 County Incorporated.
4 MR. TOENJES: Thank you.
5 The Charter Plan of the District was
6 approved by the voters of St. Louis and St. Louis
7 County at a special election on February 9th, 1954
8 and amended at a general election on November 7th,
9 2000. The amendment to the Charter Plan established
10 the Rate Commission to review and make
11 recommendations to the District regarding changes in
12 wastewater rates, stormwater rates, and tax rates
13 proposed by the District.
14 On February 26th, 2015, the Rate
15 Commission received a Rate Change Notice proposing
16 changes to the District's wastewater and stormwater
17 rates. The Rate Commission adopted operational
18 rules and a procedural schedule to govern the
19 proceedings on March 4th, 2015, and amended its
20 procedural schedule on May 20th, 2015.
21 Under the procedural schedule adopted
22 by the Rate Commission, as amended, the MSD Rate
23 Commission has until August 10th, 2015 to review and
24 make a recommendation to the Board of Trustees as to
25 whether the proposed rates should be approved, not
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1 approved, or modified with suggested changes and
2 then approved.
3 Under procedural rules adopted by the
4 Rate Commission as amended, any person affected by
5 the Rate Change Proposal had an opportunity to
6 submit an application to intervene in these
7 proceedings. Applications to intervene have been
8 filed by the Home Builders Association of St. Louis
9 and Eastern Missouri, and Missouri Industrial Energy
10 Consumers. These applications have been granted.
11 A Prehearing Conference for the purpose
12 of identifying any issues raised by the Rate Setting
13 Documents and the prepared testimony previously
14 submitted was conducted on the record on June 26th,
15 2015.
16 Each participant in the Prehearing
17 Conference submitted on or before July 8th, 2015, a
18 Prehearing Conference report describing the issues
19 raised by the Rate Setting Documents and the
20 prepared testimony, together with a brief
21 description of such participant's position, if any,
22 on each issue and the rationale therefor.
23 Ratepayers who do not wish to intervene
24 are permitted to participate in on-the-record public
25 hearings conducted in several sessions beginning May
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1 11th, 2015, and concluding today.
2 The Rate Commissions operational rules
3 provide that this public hearing session will be
4 held on the record to, number one, permit ratepayers
5 and taxpayers to testify regarding the proposed rate
6 change; number two, receive into evidence any
7 prepared testimony previously submitted to the
8 Commission subject to any valid objections, together
9 with discovery responses and transcripts of the
10 technical conferences; three, permit the Commission
11 members to ask questions regarding any issue
12 addressed by the prepared testimony or any other
13 element of the proposed rate change; and four,
14 permit closing statements by the District, the
15 intervenors, and legal counsel for the Rate
16 Commission.
17 Before proceeding to the other aspect
18 of this public hearing, we will begin with a public
19 comment period. Those wishing to speak should sign
20 in on the sheet provided just outside the door, and
21 will be called in the order of the names listed
22 thereon. Each ratepayer should identify themselves
23 and any organizations represented by such ratepayer.
24 Are there members of the public present
25 who wish to comment?
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1 (Showing of hand.)
2 MR. TOENJES: Yes, there are. So let
3 us -- first, before we start with the public hearing
4 portion of this, let's begin with the District
5 providing a brief summary of the Rate Change
6 Proposal.
7 MR. HOELSCHER: Okay. This will be a
8 duplicate of the presentations that have been given
9 at all other public hearings for the public.
10 So first of all, before I start, a
11 couple of things to remember, this is a summation of
12 MSD's staff submission to the Rate Commission for
13 our proposed -- our Rate Proposal, Rate Change
14 Proposal.
15 There's two things driving the program
16 that we're proposing. On the wastewater side, it is
17 mostly requirements through the consent decree based
18 on our agreement with the of Department of Justice,
19 EPA, and the Coalition of the Environment; but it is
20 also driven by other regulatory permit requirements
21 on the wastewater side, mostly -- mostly overseen by
22 the State of Missouri.
23 On the stormwater side, MSD is
24 proposing a District-wide ten cent tax and its
25 primary purpose is to provide funding for one half
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1 of our public storm sewer system that currently has
2 no funding. It is ours to maintain, but we have no
3 funding to maintain it.
4 Those are the two drivers for the
5 proposal.
6 MSD consists -- remember, it consists
7 of two utilities. One, we provide a wastewater
8 service. There we collect and treat used water from
9 sinks, toilet, drains, bathrooms, bathtubs, washing
10 machines. It travels through pipes, and it's
11 treated before being returned to our waterways in
12 compliance with our permits.
13 The wastewater service is currently
14 funded by a monthly charge based on affordable water
15 usage.
16 We also provide a stormwater service.
17 Any water that is not absorbed into the ground or
18 goes directly to creeks and streams, MSD provides a
19 public storm sewer system to collect that water and
20 convey it to creeks and streams.
21 There are other things that we're
22 responsible for, such as the water quality of creeks
23 and streams and the impacts of high flows. Those
24 aren't currently being considered but those are
25 other services we provided.
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1 The stormwater service is currently
2 funded by a flat twenty-four cent per month fee that
3 all ratepayers who have wastewater service pay, but
4 primarily the funding is through ad valorem property
5 taxes, and those taxes vary throughout the District
6 depending on where you live in the District.
7 We cannot mix the two funding sources.
8 Whatever we collect for one service has to only be
9 spent on that service.
10 Let's skip that portion. Go on to page
11 five.
12 Quickly, on the current wastewater
13 rates. Under the current rate between 2013 and
14 2016, MSD identified to start nine hundred and
15 seventy one million dollars of capital work. Right
16 now we're projecting that we'll start eight hundred
17 and ninety million or approximately 95 percent of
18 the amount identified.
19 Those savings mostly come through good
20 prices we're getting through construction, as well
21 as some savings that we were able to obtain during
22 the design process.
23 For operation and maintenance, there
24 was seven hundred and sixteen million dollars that
25 was in the previous rate proposal for operation and
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1 maintenance. It looks like now our totals will come
2 in at seven hundred million or approximately sixteen
3 million dollars under budget.
4 With a list of -- below that, we have a
5 list of accomplishments, probably the biggest one
6 being we believe that since we started these efforts
7 we've eliminated based on backups and overflows by
8 about two thirds, so we have had quite a gain in the
9 response of the system of rain events.
10 Proposed wastewater rates. I'm on
11 slide seven. MSD Project Clear is what we're using
12 to address the wastewater issue. It's driven by
13 regulatory requirements.
14 There's three things we're doing. One
15 is getting the rain out. When it is not raining,
16 MSD's wastewater system, all the waste is kept in
17 the pipes and all of the waste goes to the plants,
18 gets treated and properly discharged.
19 The only time we have issues is when we
20 have a pipe collapse, it's identified late in the
21 process or somebody flushes enough grease down the
22 system or roots that will cause a blockage in the
23 system. Outside of those, all the water gets to the
24 wastewater system.
25 The problem we have is when it rains.
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1 When it rains, stormwater, either too much or
2 stormwater that's not supposed to be in the system
3 gets in the system, uses up the capacity, causes
4 overflows to the environment or basement backups.
5 The cheapest way to take care of those
6 overflows caused by that is to keep the rain water
7 from getting in in the first place. That's the
8 majority of MSD's program. It's four to five times
9 cheaper to do that than to increase the size of the
10 system to accept all the overflows.
11 Also, we do have a comprehensive
12 program to repair and maintain the system to make
13 sure we maintain its integrity, and there are a few
14 places where we'll build system improvements because
15 it's most cost effective to address all our issues.
16 We're looking to -- what we submitted,
17 we believe we're looking to maintain the financial
18 stability and financial -- build projects in a
19 financially responsible manner. We're doing that
20 based on proposals to -- based on the parameters
21 that we know of as maintaining a Double A bond
22 rating for MSD. That's -- that's what we proposed.
23 We take a look over an eight year period, and that
24 information is completed -- included in the Rate
25 Proposal.
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1 Currently, MSD has a Triple A bond
2 rating of Standard & Poor's and a Double A1 and
3 Double A Plus with Fitch & Moody's. We're looking
4 to maintain the Double A bond rating. That is
5 pretty much the standard in the wastewater industry.
6 The next slide on slide eight. What is
7 in this Rate Proposal? One is the start of 1.5
8 billion dollars worth of capital work over the next
9 four years. Coming in four years, as shown on the
10 chart, seven hundred and thirty-six million dollars
11 in operation and maintenance costs, and assuming an
12 approval of bond authorization for the next four
13 years, four hundred and seventy-seven million of
14 debt service.
15 How will the debt be used? Right now
16 to fund the 1.5 billion dollar Capital Program,
17 where we are proposing four hundred and fifty
18 million -- 15 million dollars in cash financing,
19 total bond financing will be 1.1 billion dollars.
20 That would consist of two hundred million dollars of
21 bond authorization that's remaining from the current
22 rate cycle, and assuming the proposer -- voter
23 approval of nine hundred million dollars in
24 additional bond authority.
25 That would bring our total debt
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1 authorization if that's approved to 2.62 billion
2 dollars. All bond monies are spent on capital
3 improvements, they are not used for operating costs.
4 Let's go to slide 11. This is a list
5 of the projects that are going to get done. Each
6 dot is a project. If you looked on a Rate Proposal,
7 within each one of those dots there is a number and
8 then inside our rate propose is a list of what those
9 projects are, what problem they resolve, how much
10 they cost and when they are going to get done.
11 For members of the public that's here,
12 after we're done with this presentation, we actually
13 have copies of those maps over here in the corner,
14 along with the spread sheets if anybody is
15 interested in the individual projects.
16 Let's go to slide 13. This is a
17 summation of the two options that we are proposing
18 that we have placed before the voters.
19 The first one on the left is what
20 happens with rates assuming the voters grant us
21 additional bonding authorization. If you go down
22 the list, this is assuming an additional nine
23 hundred million dollar bond authorization. We will
24 start 1.5 billion dollars worth of capital work over
25 the next four year period. And you'll see the
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1 impact on the average single family wastewater sewer
2 bill.
3 Currently, as of July, 1 the average
4 family is paying $40.72 a month. With bonding, that
5 would go up to about $60.82, or about a 50 percent
6 increase over the next four years.
7 That still places us somewhere in the
8 middle of cities nationally. They are paying
9 anywhere between 25 and a $135.00 a month for
10 wastewater service.
11 The voters will have to decide whether
12 or not to grant that authorization. There is a
13 possibility, and that's represented on the right
14 column, if voters don't authorizes bonding. If they
15 don't, and you have zero additional bonding, then
16 all 1.5 billion dollars of wastewater Capital
17 Program will be -- still have to be billed, but
18 we'll use cash as well as the remaining two hundred
19 million dollars of bond authorization to do that.
20 And below is the that chart reflects
21 what happens to the average single family wastewater
22 sewer bill. Again, fiscal '16, $40.72. You'll find
23 fiscal '17 under both scenarios is the same because
24 we're using the remaining two hundred million
25 dollars of bond authorization; and after that, by
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1 fiscal '20, the rates will go up to $96.00 per
2 month.
3 Stormwater, and let's go to page 16.
4 There we go.
5 Stormwater, MSD services are different
6 throughout the District and are different depending
7 on where you live. It's based on the amount you
8 pay.
9 So if you take a look at this map, the
10 pink area is the area primarily outside of 270. It
11 represents the area that was annexed by MSD in 1977.
12 If you live in that area now -- I'm
13 switching to stormwater now. So I'm going to talk
14 about what the existing stormwater revenues look
15 like.
16 So for stormwater, if you live in that
17 red area, you pay a twenty-four cent per month fee.
18 If you have wastewater service, add a two cent
19 property tax. So based on the average resident, if
20 you live in the red area, you pay MSD $8.00 a year
21 for stormwater service.
22 And the service you receive is us --
23 allowing us to meet all the regulatory requirements
24 regarding stormwater quality, as well as any kind of
25 emergency service, as well as data collection.
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1 There is no operation of maintenance to the public
2 storm sewer system, and there are no, to my
3 knowledge, any projects to resolve issues such as
4 flooding or erosion.
5 If you live in the yellow area, which
6 is the City of St. Louis and primarily the near
7 North, West, and South County adjacent to the city,
8 you pay a twenty-four cent per month fee on your
9 wastewater bill, two cent property tax, and a seven
10 cent property tax. The average customer -- for the
11 average customer, that relates to $26.00 per year
12 for stormwater service.
13 If you're in that area, we're able to
14 maintain -- take care of all the regulatory issues,
15 data collection, emergency response, and we do a
16 pretty good job of maintaining the public storm
17 sewer system in that area. A little bit lacking,
18 but we do a pretty good job of keeping up. There
19 are no monies to resolve other stormwater issues,
20 such as flooding or erosion.
21 If you live in the green area, you pay
22 a twenty-four cent per month -- and this is the area
23 between that yellow area near the city and our
24 original boundaries near 270.
25 If you're in that area, you pay a
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1 twenty-four cent per month fee on your wastewater
2 bill, two cent property tax, seven cent property
3 tax, and another property tax up to ten cents.
4 With those revenues, we're able to
5 maintain all the regulatory requirements, do data
6 collection, emergency response, operate and maintain
7 the public storm sewer system in that area, as well
8 as we do have monies to do capital work.
9 And so if you ever hear of MSD
10 resolving flooding issues or MSD resolving erosion
11 issues, it is projects that are in that green area,
12 where we have funding available to do those
13 activities.
14 So 17, let's just go to the next page.
15 Now, if you notice what I mentioned
16 previously, the two cent property tax is paid
17 District-wide. That two cent property tax currently
18 meets all our local, state and federal stormwater
19 regulations, its plan review and permitting, billing
20 to meet our area's storm -- MS-4 stormwater permit,
21 meet all those requirements, complaint
22 investigation, and emergency response.
23 That is currently sufficiently funded
24 to maintain those operations on an annual basis.
25 MSD is not proposing any change on the regulatory
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1 side.
2 What does that look like? In this next
3 map, what we've done is we've taken the yellow and
4 green areas the District -- original District and
5 made them gray. Everything outside of that was what
6 was the red area on the previous maps. This is a
7 representation of what the two cent property tax
8 pays for in the red area.
9 Those blue lines you see on the map is
10 1154 miles of creeks. The green dots are 22 --
11 2,638 Best Management Practices. These are basins
12 or rain guards used to take care of volume or water
13 quality issues in the area.
14 All the work here is currently funded
15 in those creeks. We do sampling. We are required
16 to monitor and address issues having to do with
17 water quality caused by stormwater runoff in those
18 areas, and we're also -- then we police all the Best
19 Management Practices, such as basins and rain guards
20 to make sure they're properly operating as
21 originally designed and constructed. All that is
22 currently funded through the two cent.
23 The next map is a representation of the
24 part of the system that is not currently funded,
25 part of our service that's not funded, and it is the
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1 main reason -- it is the driver why MSD is seeking a
2 ten cent stormwater tax for the main -- Operation
3 and Maintenance of the public storm sewer system.
4 Every one of the dark lines you see there is part of
5 the public storm sewer system's 1363 miles worth of
6 sewer out there.
7 Operation and Maintenance of that sewer
8 is not currently funded. There is no regular
9 operation and maintenance. There's no monies to do
10 any kind of Operation and Maintenance for that.
11 There's two things we're looking to
12 resolve. One, we want to provide a funding source
13 so we can operate and maintain that public storm
14 sewer system. The lines you see out there represent
15 approximately one half of our public storm sewer
16 system.
17 In addition, anybody who lives in that
18 red area is not paying anything for the Operation
19 and Maintenance of the public storm system
20 throughout our area. That public storm sewer
21 system's primary service is to provide drainage off
22 local roads and streets. So if you drove here
23 today, you -- you benefited from MSD's public storm
24 sewers infrastructure in this area.
25 So we're looking to find a way to also
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1 have those folks participate in the cost of the
2 stormwater -- the public stormwater system that's
3 located in District 1.
4 Let's go to 21. Yeah.
5 What will come out of our proposal is
6 approximately ninety million dollars of Operation
7 and Maintenance costs over the four year period from
8 2017 to 2020, and approximately a hundred million
9 dollars worth of capital work starting in the fiscal
10 year that just ended through 2020.
11 Again, what's driving our proposal is
12 the maintenance of the public storm sewer system
13 District-wide. We think that is the primary issue
14 we have, it affects most of our customers, the fact
15 that we're not able to maintain that system.
16 23.
17 Operation and Maintenance costs fiscal
18 '16. Our Operation and Maintenance costs primarily
19 for the public storm sewer system is about sixteen
20 million dollars per year. We're projecting that if
21 we double the size of the area that we have to
22 maintain, those costs go up to about twenty-two or
23 twenty-three million dollars a year, slightly less
24 than 50 percent increase.
25 Due to the economy, the scale, because
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1 we're doubling the amount of the system we have to
2 operate and maintain doesn't mean we double our
3 costs. Our costs go up just a little under 50
4 percent in order to maintain the entire public storm
5 sewer system.
6 Next slide.
7 This also results in us being able to
8 do some projects. I'm going to start at the top of
9 the slide with the green area. We've identified 64
10 projects to be completed with approximately
11 twenty-five million dollars. These projects are
12 being funded from that extra OMCI tax, up to ten
13 cent tax that's being paid by folks in the green
14 area.
15 Probably we would have done all these
16 projects regardless of whether or not our proposal
17 was approved. Some of that OMCI money did have to
18 go towards Operation and Maintenance of the public
19 storm sewer system, so if not approved, we would do
20 slightly fewer projects, but most of those projects
21 would get done anyway as is our current practice.
22 If you look in the yellow area, we've
23 identified 47 projects for approximately seventeen
24 and a half billion dollars. Half those projects are
25 in the City of St. Louis, half of those in the near
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1 North, West, and South County.
2 The ability to do these projects comes
3 from us being able to make an accounting chain of
4 the way we use the dollars. By putting in the ten
5 cent wide tax in order to pay for the Operation and
6 Maintenance public storm sewer system, we have some
7 balances that are remaining from the fund in that
8 area. We're able to use those funds to build
9 capital work.
10 So there's a seventeen and a half
11 million dollar balance in those funds. Once spent,
12 they're gone. There are no other dollars, but it
13 does allow us to take care of some of the large
14 issues in the yellow area.
15 And then finally in the red area, we've
16 identified 60 projects that costs about seven and a
17 half million dollars. This comes from whatever
18 balance is available on an annual basis from the new
19 ten cent tax that doesn't directly go towards
20 operation and maintenance of the public storm sewer
21 system.
22 Our proposal right now indicates that
23 just under nine cents would be getting -- would be
24 used for the Operation and Maintenance of the
25 system, but we want to make a commitment as to what
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1 would happen with the balance of those dollars.
2 Right now, what they would go towards
3 is capital work in the red area, seven and a half
4 million dollars. The reason -- and then for this
5 four year cycle only, all those dollars are just
6 spent in the red area. The reason for that, MSD
7 prioritizes the stormwater projects it does based on
8 a cost benefit analysis. The benefit of the
9 improvement, you know, whether it's just eroding
10 part of the yard or whether it's ready to draw a
11 garage down into the creek, that's an example of the
12 priority difference, divided by the cost.
13 So we do that cost benefit analysis and
14 the one that had the highest priority, we simply do
15 those first. So once you take into account the
16 monies spent in the green and yellow area for
17 capital projects, the highest remaining priority for
18 the next four years is in the red area, therefore
19 all the additional funding gets spent in that red
20 area.
21 The next chart is a list of what
22 happens to all the current funding sources. There
23 we go.
24 I mentioned the ten cent OMCI tax, MSD
25 is proposing to set that rate at zero for the next
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1 four years. We will no longer collect that tax.
2 The stormwater O&M tax, which is in the
3 yellow area, as well as the green area, that was
4 applied to the operation and maintenance of the
5 public storm sewer system, it will go away. It
6 would be replaced by the ten cent District-wide tax.
7 The two cent District-wide property tax
8 would remain in place, that pays for our regulatory
9 obligations, that's currently sufficiently funded,
10 and we're not proposing to make any changes in that.
11 And then finally, it would all be
12 replaced by a ten cent District-wide property tax
13 for the Operation and Maintenance of the public
14 storm sewer system.
15 Also, there is a twenty-four cent fee.
16 This is a monthly charge for all the wastewater
17 customers for stormwater that was voted in by the
18 residents for our District in 1987. That will also
19 be -- go away and be replaced by the proposed ten
20 cent property tax.
21 Impact to all the individual customers
22 in the proposed changes are equalized services
23 throughout the District.
24 We'll start first with the green area.
25 Based on an average property value of $184,500.00
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1 for those in the green area, they're currently
2 paying about $60.00 per year. This proposal would
3 lower their annual property tax load to the District
4 by $20.00, bring it to about $40.00 per year, while
5 maintaining the same service level over the next
6 four years.
7 Their change in their total property
8 tax bill would be a decrease of one half of one
9 percent. MSD is a very small tax -- very small
10 portion of the property tax bill, so even though
11 we're decreasing the burden by one third, it's still
12 a very small impact on the overall property tax
13 bill.
14 The next map, those folks who live in
15 the yellow area, currently paying the two cent and
16 seven cent tax, the average property value in that
17 area is $70,800.00. Right now they're paying us
18 approximately $12.50 per year for stormwater
19 services on their annual property tax bill. With
20 our proposal, that would go up approximately $3.60,
21 so the average customer would be paying $16.10 per
22 year for the -- for stormwater services.
23 And they would see an increase in
24 services, complete Operation and Maintenance of the
25 public storm sewer system, as well as the seventeen
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1 million dollars worth of projects I identified
2 earlier.
3 Change in their overall property tax
4 bill is an increase of three tenths of one percent,
5 or an increase of $3.00 for every thousand dollars
6 of taxes currently paid.
7 Finally, the change in the red area.
8 Remember, these folks were paying a small amount to
9 begin with and we're looking to extend services so
10 we can fund the public storm sewer system in this
11 area.
12 Currently, they're paying two cent tax
13 based on an average valuation of $266,700.00 per
14 property. Folks in that area are paying us just
15 over about $10.50 per year for stormwater services.
16 Our proposal is to raise that to $50.00 per year
17 resulting in an average burden of $60.00 per year on
18 your annual property tax bill to pay for stormwater
19 services.
20 That would be a change in the overall
21 property tax bill of approximately 1.2 percent, and
22 for this we would keep -- continue doing the
23 regulatory work but we would now be able to operate
24 and maintain the public storm sewer system in this
25 area, and at least up front, be able to do some
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1 capital projects to address erosion and flooding in
2 the red area.
3 Let's go to slide 30.
4 This is a summation of the overall
5 impact to customers for MSD. We've rolled the
6 annual wastewater and stormwater costs in two
7 columns.
8 The one on the left is assuming the
9 voters approve nine hundred million dollars in
10 additional bond authorization. Fiscal '16, the
11 average customer pays MSD $522.00 a year for all
12 services that MSD provides.
13 If this proposal goes into place, along
14 with nine hundred million dollars bond
15 authorization, in 2020 the average customer will pay
16 MSD $770.00 per year annually for all services that
17 MSD provides.
18 The right-hand side is assuming the
19 ratepayers do not approve nine hundred million
20 dollars worth of bonding. Again, $522.00 per year
21 for all services. That's what currently exists. By
22 2020, because we're using cash instead of bonding to
23 pay for the Capital Program, by 2020 the average
24 annual cost for an individual living in the District
25 for all the services that MSD provides is
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1 approximately $1200.00 per year.
2 The next chart is just showing the
3 impact on low income customers. I'm not going to
4 spend a lot of time on this, but on the wastewater
5 side low income individuals pay one half of the rate
6 that everybody else does, so if you compare this
7 chart to the previous chart, you'll find that the
8 average annual cost for low income customers will be
9 approximately one half of what everyone else is
10 paying from the previous chart.
11 The balance of the rate process, we're
12 in the middle of the Rate Commission process right
13 now, the Rate Commission's recommendations are due
14 to our Board of Trustees no later than August 10,
15 2015.
16 Our Board of Trustees, between October
17 and December, will kind of go through the same
18 considerations the Rate Commission is doing. They
19 will take the Rate Commission's recommendations and
20 run them through the same process and do the same
21 kind of valuation you are doing with our proposal,
22 and they will then come up with a plan.
23 After that plan, invariably there will
24 be two votes that will be required. One of those
25 will be for wastewater. And somewhere in 2016 we'll
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1 ask the residents do you want us to approve an
2 additional nine hundred million dollars of bonding
3 authority for MSD to do wastewater capital
4 improvements.
5 If you say yes, your rate will go from
6 $40.00 a year approximately to about 60 -- $40.00 a
7 month to approximately $60.00 per month. If you
8 vote no, your rate will go from currently about
9 $40.00 a month to $96.00 per month.
10 It will be a decision that folks have
11 to make similar to any other kind of loan, if they
12 agree on additional bonding authority, they are
13 voting to keep rates lower now. For every dollar
14 they borrow though, they do have to pay $2.00 back
15 some time in the future. Or if they vote no,
16 they'll decide hey, we want -- we're going -- we're
17 okay with going ahead and absorbing a larger
18 increase now knowing that we won't have the debt
19 burden to pay back in the future.
20 That will be a decision the ratepayers
21 have to make.
22 There will be a second election some
23 time in 2016 that will have to do with stormwater.
24 It will be fairly simple. It will be a request to
25 put the ten cent property tax in and do away with
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1 the twenty-four cent charge and the seven cent
2 property tax.
3 If they approve -- if they approve
4 that, we would have the new program you saw of
5 District-wide operation and maintenance of public
6 storm sewer system, as well as the resulting capital
7 projects that are being constructed over the next
8 four years.
9 If they say no, we will simply maintain
10 the current system, where the value or the amount of
11 service you attain is based on the amount you have
12 to pay. That's that red/yellow/green map, the
13 different levels of payment and levels of services.
14 Later on, I think the Chairman is going
15 to ask for any comments from the public. They can
16 give them here. We also have some addresses here or
17 locations you can submit comments for consideration
18 by the Rate Commission at a later date.
19 Mr. Chairman, that is the end of the
20 presentation.
21 MR. TOENJES: Thank you, Mr. Hoelscher.
22 We do have a member of the public here
23 present to make a presentation, so Robert Sabatino,
24 you may -- there's a microphone there and a chair
25 for you, so please have a seat --
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1 MR. SABATINO: Can I use your easel?
2 MR. TOENJES: You may use whatever you
3 care to use, yes, sir.
4 MR. SABATINO: I have pictures with me,
5 I don't know if it's better to put them this way.
6 MR. TOENJES: Why don't you put them so
7 the Rate Commissioners can see them.
8 MR. SABATINO: Like that?
9 MR. TOENJES: Yeah.
10 MR. SABATINO: Cool.
11 MR. ARNOLD: I have two hands if you
12 want me to hold them.
13 MR. SABATINO: You want to hold them?
14 MR. TOENJES: This is fine. Why don't
15 we just pass --
16 MR. SABATINO: Pass them around?
17 MR. TOENJES: Yeah, let's do that.
18 MR. SABATINO: Should I start off by
19 stating my name is Robert Sabatino. I live at 4328
20 Theiss Road in South County. I've lived there since
21 1974, have seen a lot of changes, also have seen a
22 lot of rate increases. By leaps and bounds, I must
23 say. Never seen utility rates go up as much as
24 MSD's in my life by any other utility.
25 But some words come to mind. Global
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1 warming. The rains of Biblical proportions, which I
2 think we're all seeing worldwide. It's not
3 fictitious, it's a fact. It's happening everywhere.
4 And I don't blame MSD for any of it.
5 I'm not here to slam them. As a matter of fact, I'm
6 here to compliment them on the great work they've
7 done in the past.
8 But it's just -- the amount of flooding
9 that's going around, and I've talked to people from
10 Oakville, South County, Arnold, which I know doesn't
11 affect MSD, but just St. Louis in particular is
12 getting slammed.
13 On the news two nights ago, I think we
14 all saw at Texas -- and I have a picture of Texas
15 and Cherokee Street there, and we also saw a geyser
16 actually coming out of the street 20 feet high. I
17 don't know if everybody had the opportunity to see
18 that, but it's all from stormwater.
19 Naturally, the pipes can't handle it,
20 and like I said, storms and rains of inches and many
21 inches of rain cause things like that. And unless
22 you're there at the time it's occurring, you don't
23 know it's happening. Much like my back yard.
24 But there -- your cure now was welding
25 the grate shut and I took a picture of that. It's
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1 not naturally going to fix anything, it may prevent
2 that grate from slamming into someone causing them
3 harm, but it's not a fix for the problem. Also, it
4 relates to my street. There's a sign that says
5 flooding occurs during heavy rains.
6 Well, this could be prevented a very
7 lot by MSD being able to accept the responsibility
8 of cleaning the creek. And I've only gotten them to
9 come out one time since 1974 to clean the channel in
10 the creek behind my house.
11 You can see in that creek there's more
12 concrete in it from people dumping, you know, which
13 may -- it may incur a fine for the person who's
14 dumping it, and it may get some tax money for the
15 county, but absolutely does nothing for cleaning the
16 creek. That creek is so full of concrete that it
17 outnumbers the stones and rocks that are in it.
18 You know, putting a sign up where a
19 road floods -- also in those pictures, there are
20 pictures of Theiss Road flooded.
21 When the creek comes up into my yard,
22 which yes, I confess I live in a flood plain, when
23 it comes up in my yard and gets into my yard like 20
24 feet or so, it's already on Theiss Road. I have to
25 call the third precinct to send the police out to
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1 stop traffic because a couple of times we've had
2 cars float away.
3 And years ago, before I got them to
4 come out to clean the creek, they said well, we
5 don't have enough money to clean the creek because
6 you're only paying that twenty-four cents.
7 And I think you said from 1987 --
8 MR. HOELSCHER: Yes.
9 MR. SABATINO: But there was years --
10 not since then, there was years, like I think it
11 changed from twenty-four cents to the area of
12 roof -- the roof that you had on your house, your
13 asphalt or concrete in your yard, and they were
14 charging -- the twenty-four cent fee stopped, and
15 then we were paying dollars. My particular amount
16 was like $6.00 on my bill every month.
17 And I'm just wondering how many years
18 did you collect, and it wasn't something that we
19 voted on either, it was because they made you stop
20 collecting that money in that particular amount.
21 How many years did you collect that
22 amount of money?
23 MR. HOELSCHER: I believe it was about
24 nine months.
25 MR. SABATINO: Nine months?
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1 MR. HOELSCHER: Yes, it was right -- a
2 little less than a year, I believe.
3 MR. SABATINO: Oh, I can't agree with
4 that. Do you know how much money you gathered in
5 that timeframe?
6 MR. HOELSCHER: Yeah, I don't have that
7 information with me. I don't recall the exact
8 amount.
9 MR. SABATINO: Okay. That's like
10 pleading the Fifth. But anyway, what they told me
11 was they didn't have the money for it. In the
12 amount of time that we citizens, all of us, paid
13 that extra amount of money, I know they have enough
14 money accumulated to clean my creek, which could
15 possibly save people's lives. And there's pictures
16 of deer on there. If you don't -- if you don't care
17 about people's lives, save the deer.
18 I'm just saying we're in a situation
19 right now where the amount of rain we're getting is
20 just crazy. We've never seen these amounts of rain.
21 When Hurricane Ike hit in 2008 --
22 that's what some of those pictures are that are
23 dated 2008. A tropical depression, we never heard
24 of it in St. Louis, I don't think, until then. And
25 then that same storm went up to Chicago.
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1 So these are times when -- when we're
2 seeing the most detrimental amounts of rain that
3 could possibly devastate people's lives. It's not
4 to be taken lightly.
5 I don't blame MSD for any of this, you
6 know, this is something that's just happening
7 natural. But I'm saying we could prevent a lot of
8 South County -- and these are people who live around
9 me who have all been talking about it, how dangerous
10 our road is. We could prevent this if MSD would
11 man-up, accept responsibility, and clean our creek.
12 Like I said, there's more concrete in
13 our creek than there is rocks. It's just crazy.
14 And the channel is so narrow -- and I could also
15 state this, I don't know how many square miles of
16 water runoff go passed my creek into those three box
17 culverts that go underneath Highway 55, but I know
18 it starts at Gravois and Lindbergh -- and this is
19 the old Fee Fee area, and I know it's probably more
20 than 20 square miles of runoff.
21 When 270, they got rid of the median in
22 the middle, which was grass, which absorbed the
23 rain -- well, there's another lane. That got rid of
24 that. That made a problem a lot worse than it is
25 now -- then.
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1 My big thing is let's make it safe, you
2 know. I know down there at Cherokee and Texas, you
3 can't do anything about it because the pipes
4 probably are not big enough to handle what they did.
5 I know -- I'm not talking about
6 stormwater right now, but in '93 I granted MSD the
7 right to come through my yard. They -- they
8 maintained a line for so long, it was 18 inch in
9 diameter, well they came and put a 36 inch line and
10 tunneled underneath 55, and I gave them, like I
11 said, permission to do that in my yard. Naturally,
12 it was for the benefit of everybody around us for
13 not stormwater, for the wastewater.
14 But even then, '93, you know how
15 flooding was then. It was terrible. And some of
16 their equipment even floated away that was in my
17 back yard when MSD was there.
18 It's -- it's just a problem. We need
19 to address it. And I hope -- and I don't think that
20 twenty-four cents was gathered up -- either I think
21 there was years where they gathered more money than
22 they needed to, which I don't know if it was done
23 legally or not, but the thing is we've got the money
24 to clean this stuff up, you know, we can do
25 something about it. We need to.
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1 You know, people probably wouldn't mind
2 paying a little extra on their stormwater if they
3 were not threatened so often of getting flooded or
4 their cars floating away driving down the street.
5 That's about it. Got any questions?
6 MR. HOELSCHER: I think, Mr. Chair, I
7 can correct some information I gave earlier --
8 MR. TOENJES: Please do.
9 MR. HOELSCHER: -- that the gentleman
10 asked.
11 So the impervious fee that was approved
12 by the Rate Commission and the Board of Trustees
13 went into place, we collected for approximately two
14 years. Collected a total of eighty million dollars.
15 MR. SABATINO: Eighty million?
16 MR. HOELSCHER: And prior to the --
17 prior to the ruling from the Missouri Supreme Court,
18 all of that money had been appropriated and spent on
19 Operation and Maintenance in District-wide capital
20 projects until we were told to stop collecting, and
21 so all that money had been spent during that two
22 year period as promised.
23 MR. SABATINO: So the monies -- the
24 monies acquired for stormwater were not, you know,
25 spent for stormwater?
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1 MR. HOELSCHER: They were for
2 stormwater District-wide and those monies during
3 that two year period was spent.
4 MR. SABATINO: Wasn't it true that most
5 stormwater systems were put in by private entities?
6 MR. HOELSCHER: Most of them are put in
7 by private entities under our rules and regulations.
8 MR. SABATINO: Right.
9 MR. HOELSCHER: Then once constructed,
10 they become MSD storm sewers.
11 MR. SABATINO: Right.
12 MR. HOELSCHER: For operation and
13 maintenance.
14 MR. SABATINO: Right. So as far as
15 maintaining, it's just keeping the lines open,
16 correct?
17 MR. HOELSCHER: Operation and
18 Maintenance would consist of keeping them open, they
19 deteriorate and those pipes collapse, joints open up
20 causing sink holes. Those are examples. Tree roots
21 will block storm sewers. Probably the biggest issue
22 we have out in your kind of area is some -- a lot of
23 storm sewers were built with corrugated metal pipe.
24 Those are reaching the end of their lives. They've
25 corroded, the top has corroded, we've seen
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1 collapses. I think one was on TV a few nights ago.
2 Those are the types of problems we have
3 with the operation and maintenance of the public
4 storm sewer system. Your area isn't currently
5 funded, the operation and maintenance of that
6 system, I kind of explained during the presentation.
7 MR. SABATINO: In our area, we don't
8 have any storm sewers, you know, and I -- when they
9 first implemented that stormwater charge, I said I
10 don't have any storm -- I don't have any storm
11 sewers. I have a creek behind my house.
12 Well, yeah, but you drive on our
13 streets they said. Well, yeah. Well, so what?
14 With them millions of dollars, the money that you
15 guys collected illegally, I think we need to address
16 my creek. I really do. To make things safe down
17 there in South County.
18 That's one thing that could be done and
19 needs to be done. You can even see sewer pipe in
20 those pictures from when they replaced that 18 inch
21 sewer pipe and left debris.
22 I walked down in the creek and took
23 those pictures yesterday. Those pipes and debris
24 are still down there from 1993 when you guys came
25 through my yard and, like I said, I gave you
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1 permission to do that.
2 You know, it's not just people who are
3 dumping, MSD is a little guilty too. You know,
4 maybe I throw something biodegradable in the creek,
5 but I don't throw anything like chunks of concrete.
6 So let's -- let's work together on this, kids. We
7 need to clean this creek. We need to address this
8 issue.
9 MR. TOENJES: Mr. Sabatino, I
10 appreciate your comments. Thank you so much for
11 taking your time to be here this morning and helping
12 us understand the issues that we're dealing with. I
13 truly appreciate it.
14 MR. SABATINO: Thank you.
15 MR. TOENJES: Thank you.
16 Now, we will proceed to the procedural
17 and evidentiary aspects of this public hearing
18 session. Who is here on behalf of the Metropolitan
19 St. Louis Sewer District?
20 MS. MYERS: Susan Myers.
21 MR. TOENJES: Who is here on behalf of
22 the Intervenor The Home Builders Association of St.
23 Louis and Eastern Missouri?
24 MR. BURKHART: Nick Burkhart.
25 MR. TOENJES: Who is here on behalf of
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1 the Intervenor Missouri Industrial Energy Consumers?
2 MR. NEUSCHAFER: Brandon Neuschafer.
3 MR. TOENJES: Also present are John Fox
4 Arnold and Lisa O. Stump of Lashly and Baer who are
5 serving as legal counsel to the Rate Commission.
6 Are there any procedural matters that
7 need to be addressed?
8 Mr. Arnold?
9 MR. ARNOLD: Is the power point
10 presentation which Mr. Hoelscher went through an
11 exhibit in this proceeding?
12 MR. HOELSCHER: We're checking.
13 MS. MYERS: It currently is not an
14 exhibit.
15 MR. ARNOLD: May I request it be
16 assigned an exhibit number and put in the record?
17 MR. TOENJES: Yes.
18 MR. ARNOLD: Thank you, sir.
19 MR. TOENJES: Do we have an exhibit
20 number for that?
21 MS. MYERS: It will be Exhibit MSD 140.
22 MR. TOENJES: Thank you. Miss Stump.
23 MS. STUMP: Mr. Chair, there's two
24 other items that I would request have exhibit
25 numbers. The Rate Commission, as you heard Mr.
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1 Hoelscher comment, we did ask for comments to be
2 submitted by email or otherwise from the public.
3 There were two emails received directed
4 towards the Rate Commission commenting on the rate
5 increase, and I would ask that they be put into the
6 record also.
7 MS. MYERS: The numbers will be Rate
8 Commission 141 and Rate Commission 142. Lisa, you
9 want to identify which email will be which.
10 MS. STUMP: We'll put the email from
11 Mr. Poeling, P-O-E-L-I-N-G, as 141, and the email
12 from Mr. Strodtman as email -- as number 142.
13 MR. TOENJES: Are there any other
14 procedural matters at this time?
15 MS. MYERS: Yes, I have one. Per the
16 Rate Commission's direction provided on June 26th,
17 the District filed Exhibit MSD 139 on July 9th as a
18 response to evidence that had been admitted to the
19 record after June 22nd. So I just wanted to ask
20 that Exhibit 139 be accepted as part of the record.
21 MR. TOENJES: Thank you. It will be
22 done. It is done.
23 Any further procedural issues?
24 (No response.)
25 MR. TOENJES: On July 9th, 2015, the
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1 District transmitted a proposed list of exhibits to
2 the participants. Is the District prepared to
3 present that list to the members of the Rate
4 Commission?
5 MS. MYERS: Yes, we are.
6 MR. TOENJES: Does any participant wish
7 to add any additional exhibits?
8 (No response.)
9 MS. MYERS: Okay. That final exhibit
10 list will be made available later today on the
11 website and sent out to everyone.
12 MR. TOENJES: Thank you. Are there any
13 additional exhibits?
14 MR. NEUSCHAFER: I do have one
15 question, I assume the transcript today will be
16 assigned an exhibit number as well.
17 MS. MYERS: Yes, it will.
18 MR. NEUSCHAFER: Okay.
19 MR. TOENJES: All the documents
20 identified on the exhibit list then will be and are
21 admitted into evidence in this rate case proceeding
22 with the addition of the transcript of today's
23 meeting.
24 The District, each Intervenor and legal
25 counsel to the Rate Commission shall each present
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1 closing statements. After each closing statement,
2 the members of the Rate Commission will have the
3 opportunity to ask questions.
4 I think I would remind the Rate
5 Commissioners that this will be our final
6 opportunity to ask questions of the District and the
7 Intervenors.
8 Is the District ready to present its
9 closing statement?
10 MS. MYERS: Yes, we are.
11 MR. TOENJES: Please proceed.
12 MS. MYERS: Thank you, Mr. Chairman.
13 Good morning, Commission. My name is
14 Susan Myers and I'm the general counsel here at MSD.
15 On behalf of the District, I would like to thank
16 each and everyone of you for participating in this
17 rate setting process.
18 As I begin the District's closing
19 statement, I would like to remind you that the task
20 before you is to determine if the District's Rate
21 Change Proposal submitted on February 26th, 2015,
22 complies with Section 7.270 of the MSD Charter,
23 specifically, if the Rate Proposal is fair and
24 reasonable on all classes of ratepayers.
25 Both the Stormwater Rate Change and the
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1 Wastewater Rate Change Proposals are fair and
2 reasonable on all classes of ratepayers. This fact
3 has been substantiated many times during these
4 proceedings by both testimony and evidence. All of
5 this information is in the record for your
6 reference.
7 MSD has spent a substantial amount of
8 time during testimony and in written responses to
9 clarify the misconceptions being made by others and
10 provide a clear path of understanding for the Rate
11 Commission as to what is being proposed during these
12 proceedings. This Rate Change Proposal is proposing
13 the District use a ten cent ad valorem tax to pay
14 for Operation and Maintenance of the public
15 stormwater sewer system and a mixture of debt and
16 PAYGO to finance our wastewater needs.
17 As you proceed with deliberations and
18 are evaluating everyone's positions on stormwater
19 financing, please keep the following in mind:
20 MSD's concerns with the recent Supreme
21 Court Ruling in Zweig versus MSD centers around
22 asking the public to vote on an impervious fee
23 similar to the fee approved by the Rate Commission
24 in 2007.
25 MSD believes that if the 2007 fee
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1 method is voted on that non-profit organizations
2 will not be subject to the fee, that the fee may not
3 be tax deductible, that current state law that
4 excludes approximately 35 customers could be
5 expanded to include more customers, and there will
6 be an additional cost to implement the fee versus an
7 ad valorem tax. In 2007 that additional cost was
8 one million dollars.
9 If you take all of these factors into
10 consideration, MSD does not have a fear of how Zweig
11 affects the implementation of an impervious fee, we
12 have a concern about the increase in cost to the
13 ratepayer. All of this is important in determining
14 what is fair and reasonable.
15 As the District has previously
16 testified, the ad valorem taxes for the Operation
17 and Maintenance of the public stormwater system is
18 the correct, fair and equitable mechanism to provide
19 these services.
20 Please keep in mind that protection and
21 restoration of water quality is not part of MSD's
22 Stormwater Rate Change Proposal. The Rate Proposal
23 being considered by the Rate Commission is only for
24 the Operation and Maintenance. Water quality issues
25 related to the stormwater program are currently
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1 fully funded by an existing two cent ad valorem
2 property tax. No proposed change in the rate or
3 structure of this two cent tax is being considered
4 and, therefore, has not been presented to the Rate
5 Commission for consideration.
6 MSD does not believe that it would be
7 fair and equitable for some ratepayers to pay a
8 higher portion of the cost of Operation and
9 Maintenance of the public stormwater system by
10 awarding credits for a regulatory need that does not
11 exist and is not part of the services being paid
12 for.
13 Also, there most definitely is a nexus
14 between property value and stormwater services
15 received. It is the same nexus you consider in fire
16 protection. Charges are proportional to the value
17 of the property receiving the service.
18 The Intervenors have alleged that MSD's
19 expert witness testimony is at odds with an existing
20 stormwater utility survey and the founder of
21 Raftelis. This is not accurate.
22 The survey reference included
23 stormwater systems that are an enterprise fund based
24 operation of a municipality. It did not include the
25 majority of stormwater systems across the United
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1 States that are funded through the taxing authority
2 of a government entity.
3 The Intervenors do not recognize the
4 difference between the services being proposed now
5 and those proposed in 2007.
6 Keep in mind, as suggested by the
7 Intervenors, MSD can implement a different type of
8 impervious fee method. That would be greatly
9 reduced by the one million dollars per year cost.
10 If you assume the best case scenario,
11 that there is no difference in cost in managing a
12 tax system versus an impervious method, the MSD
13 customers would still pay thirty-six percent more to
14 fund an impervious method of financing. MSD does
15 not think this is fair and equitable when we are
16 only funding Operation and Maintenance. An
17 impervious method may prove to be more fair and
18 equitable when funding of capital or regulatory work
19 is considered.
20 When considering credits to the
21 stormwater program, MSD has accurately testified
22 that if a credit was applied, it would not change
23 how much it cost MSD to perform the necessary
24 Operation and Maintenance of the public stormwater
25 system.
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1 MSD will never recommend that a new
2 development receive a credit for meeting regulatory
3 requirements that mitigate peek stormwater runoff
4 and the impact of stormwater pollutant runoff caused
5 by those redevelopments.
6 Secondly, the Intervenors claim that
7 credits are appropriate because they will enhance
8 the District's ability to provide service and reduce
9 costs, yet they have not provided any evidence of
10 what that enhancement would be or what costs would
11 be saved.
12 Regarding the information and documents
13 provided, MSD believes that it is extremely
14 important that the Rate Commission keep in mind what
15 service is being provided for in the proposed
16 Stormwater Rate Change Proposal. It is the
17 Operation and Maintenance of the public stormwater
18 system.
19 We also strongly urge the Rate
20 Commission to consider how a credit program, such as
21 proposed by the Intervenors with no relation to the
22 service being provided would result in a system that
23 is fair and reasonable for all classes of
24 ratepayers.
25 If MSD was submitting a Stormwater Rate
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1 Change Proposal that addressed all of the services
2 we proposed in 2007, we did in the past and would
3 again in the future consider many of the ideas that
4 have been presented by the Intervenors, however that
5 is not the scope of services being considered in
6 this Rate Change Proposal.
7 When evaluating the District's
8 Wastewater Rate Change Proposal, please remember
9 that MSD has retained the same general methodology
10 used in the past. Our economic assumptions are
11 supported by factual data and the portions of St.
12 Louis County that are being factored in to the
13 Intervenors economic considerations are not within
14 MSD's municipal boundaries and have the fastest
15 growing population rate.
16 In conclusion, the MSD Charter does not
17 require the rate structure to be the most fair and
18 reasonable rate structure, what it does require is
19 that the rate structure being used must be fair and
20 reasonable on all classes of ratepayers.
21 All evidence and testimony provided by
22 MSD, including the expert testimony by Mr. William
23 Stannard and the policy information provided by Mr.
24 Brian Hoelscher, demonstrates that MSD's proposed
25 Stormwater Rate Change Proposal consisting of a
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1 District-wide ten cent ad valorem property tax to
2 fund the Operation and Maintenance of the public
3 stormwater system, and the wastewater funding
4 methodology are both fair and reasonable on all
5 classes of ratepayers.
6 MSD believes that when considering all
7 of the information, MSD's proposal is the correct
8 one to recommend to the MSD Board of Trustees.
9 I again would like to thank you for
10 your time and efforts to put into this rate setting
11 process. The District believes we have fully
12 substantiated our Rate Proposal with sound, factual
13 evidence and testimony. The exhibits on file
14 provide detailed evidence to support the elements I
15 have just highlighted.
16 Thank you.
17 MR. TOENJES: Thank you, Miss Myers.
18 Do any of the Rate Commissioners have
19 questions for Miss Myers at this point? Mr.
20 Mahanta.
21 MR. MAHANTA: Yes, I have a question
22 regarding the proposal for services presented now,
23 the Stormwater System Operation and Maintenance,
24 with the property tax to pay for it, is it to be
25 different from what is proposed under the impervious
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1 system? What are the differences and why is there a
2 difference?
3 MR. HOELSCHER: In a very broad
4 category in 2007, the impervious rate was to pay for
5 all regulatory requirements, it was to pay for all
6 capital work that would address stormwater issues
7 outside of the public stormwater system -- storm
8 sewer system, and it would also pay for the
9 Operation and Maintenance of the public storm sewer
10 system.
11 The primary focus of the proposed ten
12 cent tax is just to address the Operation and
13 Maintenance of the public storm sewer system. It is
14 not to address capital work, to address issues, and
15 it's not to address regulatory issues.
16 MR. MAHANTA: Has that part been
17 addressed under a different program then?
18 MR. HOELSCHER: Yeah, the -- as we
19 explained, the two cent District-wide property tax
20 that we proposed would remain in place is currently
21 funding all of the regulatory issues, and we haven't
22 proposed a change in that. That's currently
23 sufficient to meet all our needs, we're not
24 proposing to change.
25 By the mechanics of the way the
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1 proposal comes through and balances left on existing
2 taxes, we're able to address to some degree
3 stormwater capital issues, such as flooding and
4 erosion District-wide.
5 And if you recall the map I showed you,
6 the red/yellow/green, again depending on where
7 you're at, but we're able to start addressing some
8 of those issues.
9 We don't -- that is not a long term
10 issue, the capital concern, it does address
11 immediately some of those. I have no doubt that at
12 some point MSD will be coming back to the Rate
13 Commission to find a way -- a different accounting
14 source, depending on the response we get from the
15 customers, our ratepayers, as to whether or not they
16 would like for us to consider additional rates or
17 additional capital work outside the work that's
18 demonstrated in the four year proposal.
19 MR. MAHANTA: Can I ask a couple of
20 other questions?
21 MR. TOENJES: Continue, yes.
22 MR. MAHANTA: This is something that
23 was raised by Mr. Sabatino today. Just for my
24 knowledge and understanding everything here that
25 were mentioned.
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1 First, Brian, do you know what part of
2 the red part, green part, or yellow part was Mr.
3 Sabatino talking about for the creek problems?
4 MR. HOELSCHER: Right. And if you
5 don't mind, I'll take the opportunity to discuss
6 both areas he mentioned, including the Cherokee
7 geyser that he mentioned.
8 So first of all, on the channel work,
9 he is in the red area, and MSD currently does not
10 address the -- any kind of Operation and Maintenance
11 with natural storm channels located throughout the
12 area.
13 And a lot of the flooding issues he's
14 mentioned and those kinds of things, I believe the
15 sign he mentioned is actually a county sign with
16 regard to the flooding, and I think a lot of that
17 generates from the county actually being in -- flood
18 plains throughout the area are not managed by MSD.
19 They're managed by individual municipalities and the
20 county, MSD does not have flood plain management
21 requirements. We work with them.
22 MR. TOENJES: Yeah, that was a St.
23 Louis County road sign.
24 MR. HOELSCHER: Yeah, I think it was
25 St. Louis County who put that up. So, you know, and
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1 that is again part of the confusion. There's a lot
2 of overlap in authority. So it's a very difficult
3 issue to explain.
4 So I think with regard to that, in the
5 new -- I think what we do have in the proposal is
6 MSD has submitted if there are issues in creeks that
7 are going to cause significant flooding issues
8 outside of the flood plain flooding, MSD has
9 committed, once notified, to remove those. We have
10 been doing that in the past. Blockages across road
11 culverts for instance, and those types of things,
12 but we haven't taken on, or nor are we proposing to
13 take on the management of flood plains in general.
14 So that's the creek.
15 If you want to ask -- you had asked, I
16 can go to Cherokee Road.
17 MR. MAHANTA: Let me complete the creek
18 questions in my mind.
19 MR. HOELSCHER: Okay.
20 MR. MAHANTA: Okay. If we get the --
21 or the MSD gets the rates that they're proposing
22 now, will that then allow MSD to address some
23 basins, the creek blocking and so forth?
24 MR. HOELSCHER: Right. I think if you
25 listened to what the Intervenor mentioned, and
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1 again, I'm not familiar with that specific site, but
2 we've been through enough of these to know that
3 random pieces of material in a channel during rain
4 events that cause flooding to the flood plain, they
5 are not the cause of flood plain flooding, the cause
6 is flood plain flooding. It's not lack of the
7 capacity of the channel. I will give you that, but
8 I will tell you right now MSD is not proposing to
9 add that to its list of services other than the
10 major blockage issue I mentioned earlier.
11 MR. MAHANTA: I have one more question.
12 MR. TOENJES: Please.
13 MR. MAHANTA: Okay. This is about the
14 matter of privately built storm systems being handed
15 over or becoming MSD's responsibility for
16 maintenance and operation thereafter.
17 What happens if a private entity --
18 entity's system is somehow -- what is -- what on --
19 what happens to that system?
20 THE COURT REPORTER: I'm sorry, sir, I
21 can't hear you.
22 MR. MAHANTA: How does it get MSD's
23 attention or it is not MSD's problem, and that it's
24 nobody's problem any more.
25 MR. HOELSCHER: Very good question.
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1 And I'm addressing -- your addressing storm sewers,
2 right?
3 MR. MAHANTA: Right.
4 MR. HOELSCHER: Okay. So the way the
5 current -- and this is addressed in MSD's proposal.
6 I know the proposal is that thick, but I'll touch on
7 that piece.
8 Currently under the rules, nobody is
9 allowed to put a storm sewer system in the ground
10 without a permit from MSD. And we are required --
11 We are allowed and in almost all cases required that
12 that be built as a public system, once completed to
13 be turned over to us. That's where we exist right
14 now. Very few things are put in private. MSD is
15 responsible for the Operation and Maintenance of all
16 of them.
17 So I think the question is does a
18 private entity build them. Almost all the storm
19 sewer systems everywhere is built by a private
20 entity, but it is built under our rules and
21 requirements, and we then take over operation and
22 maintenance.
23 One of the things we're proposing to
24 add that's not currently in our service level in
25 this proposal -- I don't have an exact page -- is we
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1 are offering to those who do have private storm
2 systems -- and there are a lot of them that exist
3 and a lot of them under houses. It's not a good
4 situation.
5 But what we have offered is if folks
6 do -- if we do identify private storm sewer systems
7 that aren't currently operating, one of the service
8 levels that we put in here is to if the property
9 owners will convey title, easement title to us
10 around the existing system, we are committing under
11 the new proposal to clean the system so that it will
12 function as constructed.
13 We're not going to immediately bring it
14 up to code, but we will make sure that it operates
15 as functioned, but it will then go into the list of
16 as we're updating assets, it will -- and when its
17 turn comes up, we would then upgrade it.
18 So that's something we haven't done in
19 the past. Private storm systems have satisfied the
20 storm systems not being MSD's responsibility, we
21 have added that as a service level in this rate
22 proposal.
23 MR. MAHANTA: Thank you.
24 MR. TOENJES: Mr. Mahfood.
25 MR. MAHFOOD: Just kind of following up
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1 here, maybe in a little bit more of a mercenary
2 approach.
3 In the -- in the red area, Mr.
4 Sabatino, and I don't know anything about those
5 particular issues, but I can tell you that I know,
6 you know, in that -- in the areas that are going to
7 see an increase, potential increase in their rates,
8 there are probably hundreds of small issues like
9 this all over that area which could very well affect
10 the District's ability to get this passed, whatever
11 we decide on, whatever the Board of Trustees.
12 What do you think -- what do you --
13 what are you thinking -- is there a priority, is
14 there some template of how you're going to deal with
15 some of that, or how you will respond to that,
16 Brian?
17 Those are going to be the people that
18 are going to get up in arms no matter whether we
19 have something we all agree on as a system, you
20 know, it could really come back and that gets the
21 media attention, it's gets everybody's attention.
22 Anyway, what do you think about that?
23 I mean is there some way that you can -- that we
24 will be able to commit resources or be able to put
25 people's fears aside?
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1 MR. HOELSCHER: Yeah. I think I
2 touched on this in some earlier question in
3 testimony, so let me kind of go over it again.
4 I think MSD's thought process is with
5 the ruling for the Supreme Court, I think it's
6 pretty obvious that if we move forward with any kind
7 of change in stormwater funding, it's going to
8 require a vote of the people.
9 And so two things came to our mind as
10 we went through this. One, we need to make sure we
11 put in place a process where the voters as a whole
12 have an opportunity to say that's enough, that's all
13 I want to pay for. You know, they could ask us to
14 clean out their gutters I guess if they wanted, so
15 we want to put something like that in place.
16 The other part is we felt we had to put
17 out there in bite size pieces so that everybody can
18 understand the proposed change in service, and also
19 to the impact of those customers, so that was kind
20 of our thought process.
21 You're right, there are a lot of issues
22 out there. The primary one that we're addressing,
23 and quite honestly the primary issue we hear from
24 ratepayers in the red areas, the municipalities in
25 the red areas, is problems with our public storm
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1 sewer system that we currently maintain.
2 Whether it's problems with inlets,
3 whether it's sink holes, with pipe, you know, I
4 didn't make that lady's pipe collapse Tuesday night
5 so you guys could see that on TV, but that's the
6 type of example of problems we have everywhere.
7 Even on a smaller scale, there's just a sink hole in
8 somebody's back yard. It is the majority of
9 problems that we see that are out there, just
10 couched around the fact that half our public's storm
11 sewer system doesn't get funding.
12 So that all landed us towards, along
13 with the way the Charter is written, certain
14 restrictions on O&M that we're proposing has the
15 largest, biggest impact on the most customers today
16 in the gross, addressing most of the issues in
17 number that we see.
18 Now, you're right, there's a lot of
19 other issues out there, and one of the ones that the
20 gentleman mentioned having to do with what do we do
21 with creeks and stuff, we did mention that it's not
22 a solution, but we felt it was important to make a
23 commitment for whatever we don't spend on O&M,
24 public storm sewer system O&M out in county, what
25 are we going to do with those monies?
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1 That's where some of that comes to
2 address the biggest issues that we see so far. So
3 that seven and a half million dollars is going to
4 address flooding and erosion and those types of
5 issues that we've already identified out in that red
6 area when you look at a map. It's a start to that.
7 I am -- we know what's coming.
8 Regulatory requirements on stormwater are going to
9 get bigger at some point in the future. I think as
10 we discussed earlier, we've currently been able to
11 use the idea of integrated planning to try and
12 modify -- to try and restrict those a little bit.
13 But also the question is going to come
14 up about doing more things outside of the public
15 storm sewer system. But when we say the public
16 storm sewer system, it does allow us to take care of
17 erosion caused by discharge of public storm sewer
18 system. So it's not just that, but we can address
19 some other issues.
20 Will this or any future proposal
21 address this quickly or everything that everybody
22 wants? No, it will not. But we think is it is the
23 right first step. The most important parts, the
24 part that can be understood, and it also I think
25 gives the voters a chance to say okay, that's the
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1 value of that service, and if they're going to vote
2 on something in the future, it kind of gives them a
3 base line to say what do I sense the value being and
4 do I believe that's worth paying for.
5 Hopefully -- it was a long speech.
6 MR. MAHFOOD: No, it wasn't long, that
7 was -- I would tell you that would be a good
8 preamble to any other discussion and that's good to
9 hear that, what you're thinking, and I think very
10 briefly a pretty good overview of what you're
11 thinking about, thinking about how you established
12 your priorities.
13 MR. HOELSCHER: Thank you.
14 MR. TOENJES: Thank you, Mr. Mahfood.
15 Are there any -- yes, Mr. Jones.
16 MR. JONES: This is feedback of
17 non-profits and getting relief from, that's what I
18 want to talk about.
19 MR. TOENJES: Fee that non-profits --
20 MR. JONES: It was at the beginning of
21 your summary.
22 MR. HOELSCHER: Oh.
23 MR. TOENJES: State law.
24 MR. HOELSCHER: State law, true. Okay.
25 MR. JONES: What was that fee?
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1 MR. HOELSCHER: Well, what our concern
2 is, and we mentioned this sometimes in testimony, is
3 if we vote on an impervious fee, prior -- the
4 results that came out of 2007 was that it was a rate
5 that was put in place with concurrence of this body
6 based on impervious area and we were charging
7 everyone because it's a rate, just like wastewater,
8 non-profits pay for wastewater.
9 The concern is it's not clear, and we
10 don't know where Supreme Court or anybody else would
11 go as to what is a voted on impervious something,
12 what is its current standing. In other words, is
13 it -- could one argue that it is like a tax of some
14 kind that not-for-profits would then not have to
15 pay.
16 That is, I will tell you, probably been
17 the concern of the discussions going on, I think
18 it's safe to say nationwide, amongst all the
19 municipalities. And probably the most obvious
20 example or result of that, I conveyed I think to
21 this Commission, was talking with Mr. Terry Leeds,
22 who is my equivalent in Kansas City, Kansas, who has
23 a voted on impervious fee.
24 Upon the ruling of the Supreme Court,
25 they decided to allow not-for-profits to opt out of
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1 the payment of that fee. They're asking them to
2 voluntarily pay it, but the City of Kansas City is
3 asking that they be -- is allowing them to apply,
4 according to Mr. Leeds, there's some school
5 districts who immediately wanted to submit that
6 application because they didn't want to pay that
7 fee.
8 So our fear is that for a lot of the
9 right reasons that we put a fee in place for the way
10 we did the 2007, with the ruling from the Supreme
11 Court, a lot of those things go away, such as not
12 being able to charge the not-for-profits, cost of
13 the system, current legislation, state legislation,
14 that again, if you vote on a fee, it eliminates over
15 3500 people that we can still collect property tax
16 on, but we don't believe we can collect a voted on
17 impervious fee from. And, you know, could that
18 legislation continue rolling, excluding more folks.
19 So it's all wrapped around what your
20 interpretation of what the Supreme Court ruled on
21 our previous impervious fee.
22 MR. JONES: So, if the relief for
23 non-profits is an attempt to keep it legal --
24 MR. HOELSCHER: Well, we're not sure
25 based on the -- go ahead, I think I'm going to let a
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1 lawyer answer this.
2 MS. MYERS: I think our concern is, as
3 Brian has stated, we're trying to get stormwater
4 funding in place so we can store -- start operating
5 and maintaining the systems District-wide, and the
6 concern is if we would take an impervious fee to the
7 vote and consider it a fee and apply it to the
8 non-profits and ask them, you know, require them to
9 pay, that they may have a challenge against us, and
10 then we would be back in court fighting that
11 challenge and not be able to get the stormwater
12 funding mechanism in place.
13 MR. JONES: Okay. Thank you.
14 MR. TOENJES: Mr. Schneider.
15 MR. SCHNEIDER: Mr. Hoelscher, you just
16 mentioned your colleague, Mr. Leeds, you mentioned
17 he was director of Kansas City, Kansas.
18 MR. HOELSCHER: Oh, I'm sorry, Kansas
19 City, Missouri.
20 MR. SCHNEIDER: Kansas City, Missouri?
21 MR. HOELSCHER: Yes, I'm sorry.
22 MR. SCHNEIDER: Thank you.
23 THE COURT: Mr. Mahanta?
24 MR. MAHANTA: I have one more question.
25 The Operation and Maintenance cost for someone who's
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1 in these areas directly and so forth in the current
2 plan, they are much less than the million dollars
3 that you collected in 2006/2007 from the impervious
4 tax, why is there such a big difference?
5 MR. HOELSCHER: If I think I
6 understand, the eighty million dollars we collected
7 from the impervious tax paid for the Operation and
8 Maintenance of the public system, which if you look
9 at our numbers, was around twenty-five million
10 dollars, there was the cost of the regulatory
11 service, which is currently two cents, about five, a
12 total of about thirty, the balance of that went
13 towards capital projects, flooding, erosion control,
14 those types of things.
15 So the cost for the O&M, the system is
16 relatively -- that would be assigned to the O&M of
17 the public storm sewer system is the same in this
18 proposal as it was in 2007. We're not changing the
19 service levels. So that 20 -- under twenty-five
20 million dollar number you see in our proposal, that
21 was about the number for O&M and the public storm
22 sewer system was part of the eighty million dollars
23 that was collected.
24 MR. TOENJES: Further questions for the
25 District at this point?
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1 (No response.)
2 MR. TOENJES: Hearing none, is the Home
3 Builders Association ready to present its closing
4 statement?
5 MR. BURKHART: We are. Thank you, Mr.
6 Chair.
7 MR. TOENJES: Proceed.
8 MR. BURKHART: Commissioners, the
9 principle focus of the District's proposal as it
10 relates to stormwater is the use of the
11 District-wide tax structure to replace the
12 multi-layered sub-District taxes now assessed on the
13 real estate value of ratepayers' property to cover
14 the cost of stormwater, the operations and
15 maintenance.
16 We recognize that.
17 What is striking about the proposal, in
18 addition to its failure to enhance services in a
19 meaningful, innovative manner that would be
20 consistent with advancements made in other sewer
21 Districts around the country is that the proposal is
22 based on property taxes. Property taxes are based
23 on the assessed value of property.
24 The cost of stormwater service,
25 including Operations and Maintenance, to individual
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1 properties bears no relationship to the assessed
2 value of the property. This is our concern.
3 We're also concerned that the proposal
4 as submitted provides tax relief for the wealthy
5 while imposing greater tax burdens on the poor.
6 Despite rejecting the use of a property
7 tax in favor of an impervious area, District-wide
8 proceedings, the District now believes that an ad
9 valorem property tax used to operate the maintenance
10 and operations of the public stormwater system
11 within its municipal boundaries is fair and
12 equitable.
13 They believe that because of the use of
14 property taxes to fund services and maintenance of
15 infrastructure is allowed under the constitution and
16 is used by other Districts for these types of
17 services that it is fair and equitable. Or fair and
18 reasonable.
19 They believe that the use of an
20 impervious area method would cost more to operate
21 and maintain than the property tax methodology.
22 They believe that the use of an
23 impervious area method may result in fewer people
24 participating in the funding of these services as
25 we've just discussed.
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1 The HBA disagrees. The HBA does not
2 believe that the ad valorem property tax as
3 currently proposed can be implemented in a way that
4 is fair and equitable.
5 We do not believe there is a nexus
6 between property value and stormwater services
7 provided by the District.
8 We believe that the proposed stormwater
9 rate change proposal fails to provide a mechanism to
10 credit those ratepayers who install stormwater
11 remediation and quality control devices, all of
12 which may reduce operations and maintenance costs of
13 the District and certainly further the objectives of
14 the EPA consent decree by reducing the quantity and
15 improving the quality of stormwater runoff within
16 the District.
17 The District, when asked directly to
18 supply the basis for this nexus between property
19 values and stormwater services, has thus avoided
20 answering the question directly. To date, the Rate
21 Commission and the Intervenors are still waiting for
22 the fundamental answers to the question of the
23 simple hypothetical as to how one property that
24 sheds no stormwater, but is valued the same as
25 another property that does, equally benefit from
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1 MSD's stormwater service and should be taxed the
2 same.
3 The HBA's principle argument has been
4 the District's proposal to perform -- to impose a
5 uniform tax based on property value across its
6 District has no cost causation basis and, therefore,
7 does not equitably spread its proposed stormwater
8 costs across its customers within the service area.
9 It is for this reason that the HBA has
10 suggested alternative methodologies.
11 Taxing methodologies based on
12 impervious area have been widely accepted as fair
13 and more equitable to ratepayers. This has been
14 evidenced in the documents submitted by the HBA,
15 publications by the EPA.
16 Impervious area methodologies make
17 sense. Runoff volume, a cost causation factor, is
18 influenced by the size of the parcel and the
19 impervious area of that parcel, that portion of the
20 property where water cannot easily percolate into
21 the earth. These factors influence runoff and thus
22 the demand from the property.
23 Impervious areas structures have also
24 been widely accepted. Because impervious area basis
25 reflects cost drivers, it is very fair, and it is
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1 easy to understand.
2 The HBA is not ignorant to the
3 underlying concerns of the District. While the HBA
4 and myself are certainly not constitutional
5 attorneys and will not speculate as to the future
6 decisions of the Missouri Supreme Court, I can
7 address the concerns the District has raised with
8 the impervious area charge, or tax.
9 The District asserts that the use of an
10 impervious fee would result in up to a 40 percent
11 increase, I believe it may have been changed to 36
12 percent, to MSD customer for the same level of
13 service when compared to the proposed ten cent ad
14 valorem tax.
15 This calculation is based on an
16 antiquated method of calculating impervious ground
17 by examining each parcel within the District. New
18 methodologies and innovations and technology, such
19 as the equivalent rate residential unit method,
20 could drastically reduce operation costs for the
21 District.
22 For more information on these
23 alternatives, I would direct the Commission to those
24 publications of the EPA that the HBA has submitted
25 as Exhibits HBA 132 and 133.
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1 The inequity inequality of the ad
2 valorem tax is further illustrated by the disparate
3 impact the proposed tax will have upon residential
4 District ratepayers. The current proposal raises
5 taxes in the City of St. Louis, the yellow zone,
6 whose population is least able to sustain a tax
7 increase while reducing taxes in those parts of the
8 county and city where communities are most able to
9 pay. These are areas like Ladue, Kirkwood, Webster
10 Groves, Des Peres.
11 It is for these reasons that the HBA
12 believes that without considering impervious area or
13 credit based program related to stormwater quality
14 and quantity, the District's stormwater proposal
15 cannot be implemented in a fair and equitable
16 manner.
17 To provide a solution to the fairness
18 issue, the HBA has suggested inclusion of a
19 stormwater credit or incentive. The inclusion of a
20 stormwater credit program, whatever it maybe,
21 whatever form it may take, is an important
22 consideration for the Commission as these programs
23 offer a variety of equitable and political
24 advantages.
25 Rather than reiterating every advantage
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1 of these programs, I'd like to focus on responding
2 to the District's argument first.
3 In response to the HBA's proposal to
4 include a stormwater credit program as part of the
5 District's proposal, the District first argued that
6 BMPs have no impact on O&M and therefore are
7 inappropriate here, contending that the stormwater
8 infrastructure, stormwater system, operates by
9 gravity, and thus reducing the volume of water would
10 have no effect on the operation of the system or
11 associated maintenance costs.
12 The logical conclusion of this argument
13 would seem to militate any funds being required for
14 O&M because the system would maintain itself
15 regardless of the of the debris, the volume of
16 water, or the contaminates flowing through
17 potentially blocking the systems. The HBA
18 acknowledges and agrees that BMPs address regulatory
19 requirements and improve the quality of stormwater
20 runoff, thereby reducing treatment costs, a function
21 that the District has accurately stated is not part
22 of the proposed tax.
23 This argument by the District however
24 is a red herring. BMPs serve a greater purpose.
25 They also reduce the volume of stormwater runoff,
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1 which does have a direct impact on operations and
2 maintenance costs. Less water entering the system,
3 equals less burden on infrastructure.
4 The District's second argument against
5 adopting the stormwater credit program is that any
6 credit used for the use of BMPs would merely
7 redistribute costs among the ratepayers. The
8 District is arguably already proposing a tax
9 structure that requires some ratepayers to subsidize
10 others.
11 By proposing an ad valorem property
12 tax, the District is in essence forcing some areas
13 of service territory, which already have modernized
14 stormwater systems, and have already incurred the
15 costs of those systems, to subsidize the District's
16 cost of providing the same service to other
17 customers where the infrastructure has yet to be
18 developed.
19 The District also mischaracterizes the
20 HBA's proposal as only being intended to provide a
21 credit for new development. Such is not the case.
22 The HBA contends that a fair rate would provide a
23 credit for any ratepayer that improves the
24 stormwater system by the installation of BMPs,
25 including existing property owners and subdivision
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1 associations.
2 The HBA finds lacking in the District's
3 argument that these BMPs are not part of the
4 stormwater -- the public stormwater system and
5 therefore unworthy of any credit. These BMPs
6 clearly benefit the public system, or the District
7 would not be entitled to require them or regulate
8 them as part of the approval of stormwater
9 management for new developments.
10 Part of the problem with stormwater in
11 the St. Louis area is contending with, which the
12 District concedes in its proposal, arise from
13 existing developments that act -- that lack adequate
14 stormwater controls.
15 The credit system, as recognized by the
16 EPA in numerous Districts around the country,
17 including Kansas City, enhances the ability of a
18 sewer District to improve its stormwater system
19 because citizens are incentivized to improve the
20 stormwater conditions in their area.
21 In closing, I would note that the HBA
22 is not mandating a particular credit program or
23 methodology for implementing such a program, but
24 rather encouraging the Commission to consider the
25 benefits.
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1 By encouraging developers and
2 individual property owners to exceed current
3 regulations and take an active role in stormwater
4 management, the District is likely to see several
5 benefits, including reductions in volume, thereby
6 reducing the cost of Operation and Maintenance
7 costs, and increasing -- and increases in the
8 quality of runoff allowing the District to more
9 easily meet water quality standards.
10 This may be the most important factor.
11 Credit programs also enhance the perception of
12 charges to ratepayers. They afford customers the
13 opportunity to reduce the magnitude of the user fees
14 commensurate with the extent of onsite management.
15 Rather than settling for good enough,
16 this proposal may or may not be fair and equitable,
17 the HBA encourages the Commission to aim for
18 meaningful and innovative solutions to address the
19 stormwater needs of the District moving forward.
20 Thank you.
21 MR. TOENJES: Thank you, Mr. Burkhart.
22 Do any of the Rate Commissioners have any questions
23 for Mr. Burkhart?
24 Mr. Mahfood, then Mr. Schneider.
25 MR. MAHFOOD: Just I'm very sympathetic
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1 to your explanations and your testimony, however I'd
2 just like to get your thoughts on this Supreme
3 Court, this Zweig decision impact on what you're
4 recommending, and I have fears of us moving in a
5 certain direction and then having to go back and
6 start all over again from a legal standpoint, and
7 just in general, how do you feel about the
8 recommendation you've made, but yet having this
9 cloud over us of the Zweig decision that could very
10 well nullify any kind of movement?
11 MR. BURKHART: Yeah, and I suppose I'll
12 preface this with I'm certainly not a constitutional
13 attorney, and don't -- don't know that I have any
14 insight on what will happen. I certainly can't
15 speculate as to whether or not the decision would
16 make an impervious charge or tax, whatever it is
17 classified as, impossible to implement.
18 I think one of the big factors in that
19 case in general is that MSD during those proceedings
20 did not tie the charge to the service being
21 provided, and there was no cost causation, they
22 could not determine what a parcel output was.
23 It's a bit of a run-around, I guess the
24 answer is I don't know, and I don't think any of us
25 know until it's presented.
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1 One of the reasons that the HBA has
2 encouraged the adoption of a credit program is that
3 if property tax, if that is the methodology that is
4 safer, would offer an ability to make that system
5 fair and equitable, or fair and reasonable. It
6 would provide that element of cost causation.
7 If you're basing it on a property value
8 and this property has a BMP installed, you know that
9 they are reducing the burden on the system, then
10 that property should receive a credit as opposed to
11 one that does not.
12 So I don't know -- I don't know that
13 that answers the question.
14 MR. MAHFOOD: No, I appreciate your
15 answer, and I think that's what we're -- in my mind
16 that's what I'm facing. I like the -- some kind of
17 a hybrid approach, but then we don't want to be
18 spending all of our time in court again, and I feel
19 like the District, and although I may not agree or
20 may agree on certain things, has spent a lot of time
21 looking at that -- at that issue, and the fear of
22 the bigger picture of having to implement this thing
23 regardless, they've got -- they have to take into
24 consideration the Supreme Court decision. I mean
25 they have to think about it.
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1 MR. BURKHART: Absolutely. We don't
2 disagree with that at all, and I think as more
3 regulations and the laws are coming down, it's
4 really forcing Districts around the country to adopt
5 innovative approaches to this, and I think, you
6 know, fundamentally that is the basis of a credit
7 program, our suggestion for that is that that may
8 present an opportunity to address that issue.
9 MR. MAHFOOD: Thank you very much.
10 MR. TOENJES: Mr. Schneider.
11 MR. SCHNEIDER: Mr. Burkhart, my
12 question is did you submit a prehearing report?
13 MR. BURKHART: We did not submit a
14 prehearing report, no. We did submit a memorandum
15 that outlines the considerations for the Commission
16 that I think really addresses the HBA's stance on
17 this.
18 MR. SCHNEIDER: And that memorandum,
19 Mr. Goss [phonetic] presented at the last hearing?
20 MR. BURKHART: I believe that's
21 correct, yes.
22 MR. SCHNEIDER: Okay. Well, because
23 you didn't do a prehearing, I couldn't follow
24 everything you said very fast, so my question is you
25 talked a lot about the inequity I guess between the
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1 impervious service tax -- the ad valorem tax versus
2 an impervious fee. I kind of understand that
3 discussion.
4 But in your testimony today, you also
5 talked about inequality within a taxation system,
6 and I was wanting if you could kind of go back to
7 that part of your talk and kind of maybe clarify
8 what you meant by that.
9 I think you said -- I actually don't
10 remember it, I think you said low income people were
11 paying more than they should. If you could repeat
12 that part, I'd appreciate it.
13 MR. BURKHART: Sure. That part I
14 believe was addressing that the current proposal
15 submitted by the District would -- it would raise
16 taxes in the City of St. Louis, so that -- on MSD
17 Exhibit 1, I believe it's page 54, that area in
18 yellow, it's the St. Louis City and the Near North,
19 it would increase taxes in that area, which is a
20 population that historically has been lower income
21 and is less able to sustain a tax increase.
22 The area where taxes would be reduced
23 would be in the area lying east of 270, which would
24 be that -- I believe the green zone, which includes
25 those areas of Ladue, Des Peres, Kirkwood, Webster
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1 Groves, in essence more affluent areas.
2 MR. SCHNEIDER: Got you. So I guess
3 the yellow, you got more poor people in the yellow
4 area, more people live in the yellow so you're
5 raising the tax, that's that whole inequity compared
6 to lowering the taxes in the green area where the
7 District --
8 MR. BURKHART: Yes. Yes.
9 MR. SCHNEIDER: Okay. You don't
10 account for that and your argument doesn't have
11 anything to do with the red area, the income of the
12 red area where they're getting the ten cent.
13 MR. BURKHART: Right, I believe that
14 the red area sees the highest, but they're not being
15 provided that service, so you would expect that to
16 provide that service they'd see the most significant
17 increase.
18 MR. SCHNEIDER: Okay. Thank you.
19 MR. TOENJES: Mr. Jones.
20 MR. JONES: I have a couple of
21 questions. Well, actually a question and a dialogue
22 I'd like to have.
23 MR. BURKHART: Sure.
24 MR. JONES: If there is no credit, will
25 those who would reduce runoff lack the incentive to
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1 do so?
2 MR. BURKHART: That's I guess a mixed
3 answer, because developments are required by
4 regulations to install these. I think Mr. Hoelscher
5 commented that before, that through the permitting
6 process, new developments are required to install
7 BMPs.
8 MR. JONES: Right, you said BMPs?
9 MR. BURKHART: Yeah, Best Management
10 Practices.
11 MR. JONES: Okay.
12 MR. BURKHART: These are those
13 bio-detention basins, things of that nature. From a
14 private individual standpoint, if there was no
15 credit program, certainly I would say that
16 ratepayers would not be incentivized.
17 They might have some moral basis for
18 doing it. They may want to have a rainbarrel or a
19 rain garden for personal reason, but I wouldn't be
20 incentivized to do it without a credit program.
21 MR. JONES: New developers are required
22 to do that.
23 MR. BURKHART: That's correct.
24 MR. JONES: So when you say there would
25 be no incentive, you're speaking of me, for
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1 instance?
2 MR. BURKHART: Sure, or existing
3 developments that were not previously required to
4 have these BMPs.
5 MR. JONES: Okay. And the dialogue I
6 want to have is that if there is a credit program,
7 there's a certain amount of water that's going to
8 fall on everyone, and there's a certain amount of
9 water that's going to runoff, right?
10 The same amount -- we have two
11 properties that are the exact same, different
12 amounts of water are going to probably runoff both
13 of those properties, right?
14 MR. BURKHART: I think that may be a
15 bit too general. If you have a property that is
16 entirely undeveloped, we'll say --
17 MR. JONES: No, no, no, before you make
18 that assumption, let's just say two properties that
19 are already in existence that are the exact same
20 square footage, is it safe to say that different
21 amounts of water are going to runoff of both those
22 properties? One may have more runoff than the
23 other?
24 MR. BURKHART: Potentially yes.
25 MR. JONES: Okay.
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1 MR. BURKHART: I think that is where
2 the impervious ground comes in. You can see that
3 relationship if it -- if you have a parking lot,
4 arguably there's going to be more runoff than an
5 undeveloped grass lot.
6 MR. JONES: All right. Now, how is the
7 program implemented from a practical standpoint
8 between now and the time that these rates have to go
9 into effect to understand how to even apply credit?
10 MR. BURKHART: Well, that is one
11 element that is up for debate. I think the first
12 stage is to have a credit program considered. I
13 think that certainly there are tight timelines and
14 we don't -- we don't dispute the fact that MSD needs
15 the funding to address current issues.
16 I suppose the answer is that that is
17 undetermined at this stage.
18 MR. JONES: You said -- you
19 specifically said MSD would have to have the time to
20 address those issues. That's an additional cost
21 that would have to be incurred, studies, in order to
22 understand how to equitably apply a credit program.
23 MR. BURKHART: Absolutely.
24 MR. JONES: And those studies aren't in
25 place now?
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1 MR. BURKHART: I can't comment whether
2 or not MSD has conducted any studies on that.
3 Obviously, other Districts throughout the country
4 have. There are numerous districts throughout the
5 United States that have implemented credit programs
6 and have done them equitably or cost effectively.
7 MR. JONES: And at the risk of sounding
8 ignorant, I'll ask, have you all submitted those
9 studies as examples?
10 MR. BURKHART: We have submitted case
11 studies of different districts that have implemented
12 credit programs, yes.
13 MR. JONES: Okay. Having -- I'm --
14 let's assume that MSD says -- I mean the Commission
15 and ultimately Trustees say okay, yeah, let's have a
16 credit program, can you see it implemented by the
17 time these rates have to go into effect?
18 MR. BURKHART: I don't know at this
19 point.
20 MR. JONES: Okay.
21 MR. BURKHART: I can't answer that.
22 MR. JONES: All right. Thank you.
23 That's all I have.
24 MR. TOENJES: Let go to Mr. Schoedel
25 and Ms. Bowser.
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1 MR. SCHOEDEL: Following up on the
2 credit program, in any of those districts that have
3 implemented the credit program, have their rates
4 gone up?
5 MR. BURKHART: I have not reviewed the
6 individual rates. I would venture to guess that
7 nationwide rates have been going up. I don't know
8 if that has contributed to the introduction of
9 credit programs, though.
10 MR. SCHOEDEL: I understand the credit
11 program as an incentive to encourage homeowners to
12 implement those types of things, but is there an
13 potential inequality for those who can't afford to
14 implement a BMP to end up paying more in that type
15 of a system?
16 MR. BURKHART: I think the issue there
17 is that you're allowing someone to do it, they're
18 not mandated to do it. You know, I don't know that
19 you would create a situation of an equity between
20 those ratepayers. Certainly, that would be an issue
21 to -- that would need to be resolved.
22 MR. SCHOEDEL: The District in their
23 testimony seemed to indicate that a credit program
24 would cause rates to go up so the potential is there
25 for someone who couldn't afford to do an BMP to end
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1 up paying more?
2 MR. BURKHART: Hypothetically, I
3 suppose that may be true.
4 MR. TOENJES: Thank you. Miss Bowser.
5 MS. BOWSER: I want to get in on this
6 discussion because it seems to me that the other
7 side of having a credit program would be have a
8 rebate or a grant to enable people to do whatever
9 they need to do in order to reduce the stormwater
10 system, and I think that this would be a greater
11 incentive because the money would be there to help
12 people make that initial cost, because in most cases
13 I think where people get rebate or get a credit, or
14 whatever, the amount is so small that it would take
15 a very long time for the initial investment to pay
16 off.
17 MR. BURKHART: Yes, ma'am, and that is
18 one of the reasons that the HBA is not proposing a
19 mandate that this is the credit program that we
20 believe is appropriate and this is the way that it
21 should be implemented. We're merely suggesting that
22 a credit program would provide a mechanism for
23 creating a system that would be more fair and more
24 reasonable to the ratepayers.
25 Grant programs are certainly one way to
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1 achieve that. They have been implemented in other
2 areas. I believe that MSD has a grant program not
3 related to BMPs directly, but I don't know if Brian
4 wants to comment on that. There are -- also, a
5 credit program could in theory be implemented or
6 administered by a third party outside of the
7 District to limit the cost.
8 There are a myriad of options
9 available, and I think it is -- it is yet to be
10 determined which one of those would be best suited
11 for the District.
12 MS. BOWSER: And I guess what I'm
13 saying is if the ad valorem tax was chosen over the
14 impervious area, it would not mean that we would
15 have to give up all chance of having some sort of
16 incentive program for people?
17 MR. BURKHART: I believe that's an
18 accurate statement. Yes, ma'am.
19 MR. TOENJES: Other questions for Mr.
20 Burkhart?
21 (No response.)
22 MR. TOENJES: Hearing none, I'm going
23 to suggest we take a brief recess until 11:00.
24 (Short recess.)
25 MR. TOENJES: We will reconvene. It's
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1 11:00. Is the Missouri Industrial Energy Consumers
2 ready to proceed its closing statement?
3 MR. NEUSCHAFER: We are.
4 MR. TOENJES: Please proceed.
5 MR. NEUSCHAFER: Thank you.
6 As you all are aware, I'm Brandon
7 Neuschafer and I'm here on behalf of the Missouri
8 Industrial Energy Consumers.
9 This rate proceeding has been a long
10 and arduous journey and a lot of information has
11 been dumped at your feet. I don't envy some of the
12 decisions that you all are going to have to make.
13 I also don't intend to rehash all the
14 arguments outlined in the Prehearing Conference or
15 in the Prehearing Conference Reports, in the
16 testimony and discovery introduced into this
17 proceeding, because I think you're all aware the of
18 MIEC's position. I do, however, want to stress the
19 importance of the decisions that you'll have to make
20 over the coming weeks.
21 You all are here to insure, among other
22 things, that the rates to be imposed by MSD are fair
23 and reasonable to the citizenry. This means first
24 and foremost scrutinizing MSD's proposal to insure
25 that the District's rates are not excessive.
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1 Certainly, the District is facing a
2 lengthy and costly task of complying with the EPA
3 consent decree. We all understand that. But it's
4 very concerning to MIEC and should be concerning to
5 the Rate Commission that MSD's basic philosophy
6 behind the wastewater portion of this rate proposal
7 is to forecast so conservatively that rates are
8 unnecessarily high.
9 MSD tells us not to worry though
10 because they'll put the extra money towards
11 accelerating other projects. This is no way to
12 justify a Rate Proposal.
13 Most importantly, it unreasonably
14 inflates rates that will already be experiencing a
15 significant increase. It also creates an inflated
16 baseline for the next time we all sit down together
17 in four years. The negative impact of artificially
18 high rates on consumers cannot be overstated.
19 Another crucial impact of artificially
20 high rates is that it will disincentivize MSD from
21 aggressively managing costs.
22 The past rate change proceeding is a
23 perfect example. Despite MSD's comments about
24 MIEC's projections and recommendations in the last
25 proceeding, the fact of the matter is that the
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1 ultimate rates recommended by the Rate Commission to
2 the Board of Trustees were closer to what MIEC
3 proposed than what MSD proposed.
4 Nonetheless, MSD has indicated that
5 since the last rate case, it's plugging ahead under
6 budget and ahead of schedule. In other words, the
7 reduced rates recommended by the Rate Commission
8 were sufficient and avoided an unwarranted
9 escalation of consumer costs.
10 This shows that MSD can and will make
11 it work and that they don't need the plush cushions
12 they seek. Aggressive and structured cost
13 management may be difficult, but it can be done.
14 However, that is MSD's duty, and it is much more
15 fair and equitable than burdening the consumer base
16 with excessive rates.
17 That's all I have to say today. This
18 concludes MIEC's remarks. Once again, MIEC and
19 other consumers of MSD's services appreciate your
20 time and your service and your patience.
21 MR. TOENJES: Thank you, Mr.
22 Neuschafer. Are there questions from the Rate
23 Commissioners? Mr. Schneider.
24 MR. SCHNEIDER: Mr. Neuschafer, you
25 mentioned in your prehearing report, I just had two
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1 items on the Prehearing Conference report.
2 MR. NEUSCHAFER: Sure.
3 MR. SCHNEIDER: One is item one, the
4 waste hauler permit fees. MSD in their
5 preconference report kind of explained why they came
6 up with their conclusions. I wanted to get a sense
7 if you read their preconference report they filed a
8 couple of days ago? Do you have any comments on how
9 they -- new comments on how they determined the
10 waste hauler fee projections?
11 MR. NEUSCHAFER: I don't think we have
12 anything to add there. Some of that information was
13 new to us, so we didn't really have time or the
14 opportunity to dig into that new information that
15 was -- that was provided.
16 But nonetheless, you know, I think when
17 you look at the historical numbers, which is --
18 which is what we've done, we recognize that, you
19 know, the waste hauler fees might not be as much as
20 they have been over some of the past few years, but
21 we think that the significant decreases proposed by
22 MSD in their projecting is too much of a decrease.
23 It's not consistent with historical numbers.
24 MR. SCHNEIDER: Just a follow-up. I
25 guess this would be on your -- I'm talking item
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1 four, I guess, the header was MSD's PAYGO should be
2 modified during the start of its Capital Program
3 peek, that's the section I'm referring to here.
4 I guess, yeah, so I just want to make
5 sure I'm clear that you believe that -- your
6 estimates of your idea of the use of PAYGO funds and
7 more debt, I guess you're encouraging most debt in
8 this first couple of years, that's sufficient to
9 kind of meet the bond requirements going forward
10 just to maintain the Double A rating that MSD wants
11 to maintain?
12 MR. NEUSCHAFER: I think that's a
13 pretty accurate` restatement of our position.
14 There's such a significant peek of costs incurred
15 here at the beginning of the program that we think
16 there's opportunity to fund more of those costs with
17 debt as opposed to putting all of the burden on the
18 consumers at this point in time. And based on our
19 analysis, there's opportunity to do that and still
20 maintain bond ratings.
21 MR. SCHNEIDER: Okay. Thank you.
22 MR. TOENJES: Any other questions at
23 this point?
24 (No response.)
25 MR. TOENJES: Thank you.
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1 MR. NEUSCHAFER: Thank you.
2 MR. TOENJES: Thank you, Mr.
3 Neuschafer.
4 Is the legal counsel for the Rate
5 Commission ready to present its closing statement?
6 MR. ARNOLD: Mr. Chairman, I am, if
7 someone who is not technically challenged can tell
8 me whether I'm on.
9 MS. MYERS: If it's green, you're on.
10 MR. ARNOLD: I'm on.
11 Mr. Chairman, Members of the Board of
12 Commissioners, I want to join my colleagues in
13 expressing appreciation for your service, and it's
14 unique. The amendments to the Charter Plan in 2000
15 created an amalgam of a regulatory process with
16 which we've been involved since February, and
17 citizen oversight, which is the reason you have
18 attended a score of public hearings and technical
19 conferences to gather information, not as regulators
20 only, but also as consumers and representatives of
21 agencies which have a profound interest in clean
22 water among other things.
23 I mentioned I'm technologically
24 challenged. I can't type and I do don't well with a
25 computer, so each of the documents has to be printed
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1 for me. I commend you for your diligence in reading
2 three and a half feet of documents to this point.
3 You can read faster than I can talk.
4 We filed a Prehearing Conference
5 report. It was filed by my colleagues, I believe,
6 rather focused on the issues for your consideration.
7 I'll keep the repetition to a minimum, but I did
8 want to make a number of observations.
9 The wastewater change, as Mr.
10 Neuschafer observed, continues the model which we've
11 been building, and we need to not get caught up in
12 the -- in the model simply proceeding down the
13 track. We need to pay attention to a couple of
14 issues.
15 We need to balance competing public
16 policies, clean water and fair and reasonable rates.
17 Now, the proposal, moving down the
18 track, dramatically increases debt to a level which
19 Fitch in its credit analysis associates with weaker
20 credits.
21 Each of the District's targets for debt
22 service coverage, cash on hand, working capital,
23 exceed the requirements of the 2004 Master Bond
24 Indenture and the requirements for Double A rating.
25 Mr. Neuschafer has commented about the
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1 Operation and Maintenance expenses and I won't
2 recover that.
3 Let me use the residential bills as the
4 marker, but keep in mind that multi-family bills and
5 commercial-family bills also increase rather
6 dramatically. By 2020, from today the residential
7 bill will have doubled if the voters approve a 55
8 percent increase in debt. And if they don't, the
9 rate will triple in six short years.
10 Now, I mentioned to you when we were
11 last together, the immediate household income and
12 the two percent, if we get passed two percent, and
13 we're going passed two percent, the EPA says that
14 this is a utility which is heavily burdened.
15 Now, counsel for the District has
16 pointed out several times that we don't look at one
17 number. I agree with that. But we're talking about
18 more than one number which is driving this train
19 down the track.
20 And the District asks that you consider
21 that their credit metrics goals and their
22 conservative cost allocations are necessary to
23 provide for unanticipated expenses, emergencies, and
24 the present state of the economy, and the volatility
25 of the financial markets.
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1 The Intervenors are asking that you
2 consider whether this increased debt will affect the
3 ability to reduce cost if revenues decline. Whether
4 this will reduce the incentive to manage costs, and
5 whether it will make it more difficult to maintain
6 the very debt service coverages that are required by
7 this increased debt.
8 You need also, we believe, to consider
9 whether revenues may decline due to rate shock,
10 reduced volume by commercial ratepayers, because
11 they're in a position to manage their operations to
12 reduce the -- their requirements to deal with the
13 District's wastewater operations. And whether these
14 increased rates are going to increase delinquency.
15 Now, Mr. Neuschafer, forgive me,
16 Neuschafer.
17 MR. NEUSCHAFER: I'm fine either way.
18 MR. ARNOLD: Okay.
19 MR. NEUSCHAFER: Thanks.
20 MR. ARNOLD: Ask that we consider what
21 the District has had to say about how it's going to
22 manage its conservative Operation and Maintenance
23 proposals, and it's -- I don't want to use the word
24 excessive as a pejorative now, but they are asking
25 for more than the credit agencies require.
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1 The District will insure that if actual
2 annual spending within a fiscal year is below the
3 projections, remaining funds will be used to
4 accelerate projects. Any remaining funds within a
5 given fiscal year are carried over to the following
6 year for future projects.
7 And this from counsel for the
8 District's presentation to you when we were last
9 together. In a broad view, given that no person can
10 precisely predict future economic trends, it is
11 likely that some mixture of conservative and
12 optimistic economic assumptions as discussed during
13 these proceedings will represent reality.
14 If in the aggregate, MSD collects
15 revenues in excess of its forecasts, the District
16 will move forward and expedite the Federal Consent
17 Decree compliance related work or continue the
18 stated program with reduced use of debt, which would
19 then allow additional debt to be available for other
20 projects in future years.
21 On the other hand, if the assumptions
22 prove to have overstated available revenues in the
23 aggregate, the District would have revenue
24 shortfalls leading to inabilities to meet regulatory
25 requirements and subjecting the District to
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1 stipulated penalties, fines and other possible legal
2 action.
3 It sounds as though there's only one
4 element driving all of this, and that's the consent
5 decree. Overall, the ratepayer is better served if
6 the capital program is slightly over-funded as
7 opposed to under-funded.
8 Those aren't the only choices. Clean
9 water matters. Credit metrics matter. But
10 ratepayers matter. What if it's not slightly
11 over-funded? What if it's so excessive as to be
12 effectively unrelated to the service being provided?
13 This would be relevant to the fourth
14 Keller factor -- remember, the end contest -- of
15 whether a service is being provided for the fee. If
16 the fee is so exorbitant that it cannot be said to
17 bear a reasonable relationship to the services, at
18 least that excess amount cannot be said to be paid
19 for the service itself.
20 Now, you need to consider the size of
21 the increases, the size of the money being set
22 aside, the size of the projections, so that it is
23 not only a fair and reasonable fee, but it does not
24 run afoul of the Hancock amendment.
25 Now there's actually a way to do this,
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1 but so far there's been no testimony, and that's
2 Section 7.050 of the Charter Plan. And it's part of
3 the budget process. And at the end of the fiscal
4 year, the unexpended and unencumbered parts of all
5 appropriations shall revert to the funds from which
6 appropriated. And they can be reallocated by the
7 Trustees upon the recommendation of the District so
8 that the rates do not increase beyond those
9 absolutely necessary, so that the rates are fair and
10 reasonable.
11 In order -- all the District needs to
12 do is manage the level of debt, manage the debt
13 service, manage the cash on hand, manage the
14 Operation and Maintenance expenses, so that these
15 rates do not increase unnecessarily.
16 So much for wastewater.
17 Stormwater. And I -- I'm going to cut
18 this really short.
19 The District objects to the impervious
20 area method which it approved in 2007 because of its
21 cost and it may result in fewer ratepayers based on
22 possible future legislation or possible future court
23 review.
24 And this morning we've talked about
25 non-profits. If it's a fee, the non-profits pay in;
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1 if it's a tax, they don't. That's Chapter 136. We
2 don't need to worry about whether it's voted on or
3 whether it is simply appropriated. If it's a fee,
4 they pay it; if it's a tax, they don't.
5 Now, the rate process, the rate design
6 process has traditionally and nearly uniformly been
7 based on cost causation. That's impervious area.
8 It links the demand for service with the cost of
9 providing that service.
10 Now, the ad valorem tax is uniform for
11 all classes of taxpayers. It is cheaper to
12 administer, but it is not based on cost causation.
13 A word about the Black and Veatch
14 study. 79 percent of the people in the survey use
15 impervious area and they were not all enterprise
16 fund operations. The District was in that survey.
17 You've heard a lot about equal
18 values -- I'm sorry, equal property values and
19 unequal impervious area. That's pretty much
20 District-wide.
21 During the presentation this morning
22 there was further discussion on the yellow zone, the
23 green zone, and the red zone. The fact remains that
24 all new revenues from yellow and green and red --
25 and remember, yellow and green have been paying for
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1 these services for 35 years. Anything over the
2 Operation and Maintenance requirement will be used
3 for capital projects in the red zone. Consider
4 whether that's fair and equitable.
5 Now, the elephant in the room is the
6 Zweig case, and it produces for the Commission a
7 conundrum. If the court's footnote characterization
8 results in a stormwater charge being considered by a
9 future court as a property tax, then a stormwater
10 charge based on impervious area would not be based
11 on the value of the property as required by the
12 constitution.
13 So here you have it, Members of the
14 Commission. Can it be fair and reasonable? Can it
15 be consistent with law? That's why you are paid all
16 the big bucks.
17 Thank you very much.
18 MR. TOENJES: Thank you, Mr. Arnold.
19 Questions for Mr. Arnold. Mr. Schneider.
20 MR. SCHNEIDER: I've got one quick
21 question. On the preconference report, I'm
22 referring to page seven, it's regarding the debt
23 financing coverage, I'll just read the sentence out
24 loud.
25 It says: The Rate Consultant believes
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1 the District's policy to maintain senior debt
2 service coverage of 2.5 times or greater, and total
3 debt service of 1.6 times or greater is a valid and
4 important metric, particularly in light of the
5 District's current and anticipated future debt
6 profile.
7 My question to the Rate Consultant is,
8 and I think MIEC mentioned debt service comes to
9 2.45 times, so is 2.5 times -- it's reasonable, but
10 is it like a big cushion, is that -- could they go a
11 little lower and still maintain that Double A
12 rating? What's your opinion?
13 MS. LEMOINE: There's no magic number
14 that the rating agencies use to determine a specific
15 compilation of everything. In general, the reason
16 that the District would want to have a higher
17 cushion is to provide down the road more cash
18 funding for the Capital Program, what that coverage
19 would allow, probably the next rate cycle.
20 It also helps provide some additional
21 assurance to the rating agencies given the high
22 level of debt that they would be incurring, so
23 there's no magic number.
24 The other -- the other thing that
25 rating agencies look at is change year over year and
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1 what the plan is, so maintaining debt service
2 coverage relatively stable or if it's declining,
3 it's declining at a managed rate versus a
4 precipitous decline of something else.
5 MR. SCHNEIDER: I got you. So would
6 you say that there is some room perhaps to take out
7 additional debt in this rate cycle without impacting
8 their rate -- their rating?
9 MS. LEMOINE: It's possible. What you
10 would want to look at is not just this rate cycle,
11 but then what the impact would be the next time so
12 that you're managing over a longer period of time.
13 So in other words, if you're
14 increasing -- if you're making decisions in the next
15 four years, what does that mean in the subsequent
16 four years as far as rates and requirements and so
17 forth.
18 MR. SCHNEIDER: One other. There's
19 been some discussion about the unmetered -- the
20 water usage by unmetered, people in the unmetered
21 area, and water usage by the metered people, there
22 was a ten percent difference calculated between the
23 unmetered and the metered. Did you find that
24 analysis by the District acceptable or appropriate?
25 MS. LEMOINE: Yes, the approach that
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1 was used for that analysis did seem appropriate. I
2 don't believe that St. Louis water division has
3 conducted a similar analysis for some time, which is
4 probably relating to some of the comments that have
5 been made in previous testimony leading to that
6 difference.
7 You know, there's a balance between
8 conducting a detailed analysis every year and making
9 those adjustments, versus time passing and then
10 making the adjustment. But I didn't see anything
11 alarming in that.
12 MR. TOENJES: Further questions for Mr.
13 Arnold?
14 (No response.)
15 MR. TOENJES: I have one question, Mr.
16 Arnold. You did mention the fee that is paid by
17 non-profit tax exempt organizations.
18 Miss Meyer in her testimony mentions
19 state legislation that has exempted these folks.
20 Could you sort of clarify for me how that -- how
21 that's working right now, that those particular
22 entities are exempt from paying debt fee?
23 MR. ARNOLD: The legislation, and I
24 cannot give you the citation, was the subject of
25 some testimony during these proceedings, and it
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1 purports to exempt from the stormwater -- stormwater
2 service charges any enterprise which is not provided
3 wastewater service and whose stormwater does not
4 connect with the public sewer system.
5 And the legislation says that it cannot
6 be charged a fee or a tax. The constitution --
7 again, I cannot give you the article -- but the
8 constitution provides that these people can
9 provide -- these -- these organizations may levy
10 taxes and the -- and no one can exempt anyone from a
11 tax beyond these organizations.
12 The result, and I believe the District
13 agrees with me on this, that the reference to tax in
14 that legislation is unconstitutional, and if
15 challenged, would fall.
16 MR. TOENJES: Thank you. Further
17 questions for Mr. Arnold?
18 (No response.)
19 MR. TOENJES: Thank you. On the
20 conclusion of this public hearing session, this 2015
21 Wastewater and Stormwater Rate Change proceeding
22 will be closed, and the Rate Commission will begin
23 its deliberation.
24 This is the final opportunity for the
25 Rate Commissioners to ask any questions. Do any
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1 Rate Commissioners have any final questions for any
2 of the various parties regarding any issue or
3 element of the proposed rate change?
4 Mr. Mahfood.
5 MR. MAHFOOD: I'm going to ask the
6 stupid question here just to make sure in this
7 process -- in the process that we, of course, are
8 going to be able to have a discussion and question
9 our advisors as we move forward or not? Is that --
10 will we -- will they be part of this discussion in
11 going forward? Because I don't know how that
12 process works.
13 MR. TOENJES: I will let Mr. Arnold
14 answer that question.
15 MR. ARNOLD: The Rate Commission has
16 scheduled a series of meetings beginning on Monday,
17 two sessions next week, Monday and Thursday, and
18 those proceedings will be conducted rather like
19 Executive Session and the General Assembly, anyone
20 is permitted to attend the meeting, but only members
21 of the Commission are permitted to speak. That
22 includes your ability to speak with Miss Lemoine,
23 Miss Stump, and me, about any questions which you
24 may have.
25 Miss Stump will present to you a
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1 written examination and each of your meetings, it
2 will be a short summary of one of the criteria with
3 a series of questions about how you might reach your
4 decision; and as you respond to those, we will be
5 editing a document which we will submit to you later
6 on in the proceedings as a draft of your report, and
7 you get to edit that and return that to us for
8 preparation for a submittal to the Board of
9 Trustees.
10 MR. MAHFOOD: Very good. That helps
11 tremendously. Thank you.
12 MR. TOENJES: Hearing no other
13 questions, thank you, we will adjourn this public
14 hearing.
15 The Rate Commission will meet to begin
16 deliberations on Monday, July 13th, 2015, at nine
17 AM.
18 (WHEREIN, this proceedings was
19 concluded at 11:35 AM.)
20
21
22
23
24
25
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1 CERTIFICATE OF REPORTER
2 STATE OF MISSOURI )
3 ) ss.
4 CITY OF ST. LOUIS )
5 I, Kathleen Watson Brunsmann, a
6 Certified Court Reporter (MO), Certified Shorthand
7 Reporter (IL), Registered Professional Reporter,
8 Certified Realtime Reporter, do hereby certify that
9 the witness whose testimony appears in the foregoing
10 deposition was duly sworn by me; that the testimony
11 of said witness was taken by me to the best of my
12 ability and thereafter reduced to typewriting under
13 my direction; that I am neither counsel for, related
14 to, nor employed by any of the parties to the action
15 in which this deposition was taken, and further that
16 I am not a relative or employee of any attorney or
17 counsel employed by the parties thereto, nor
18 financially or otherwise interested in the outcome
19 of the action.
20
21 ____________________________
22 Kathleen Watson Brunsmann
23 RPR/CRR/CSR/CRR
24
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A
ability 25:2 53:8
63:10 80:17
83:4 102:3
112:22 114:12
able 12:21 19:13
20:4 23:15 24:7
25:3,8 29:23,25
36:7 57:2,7
63:24,24 66:10
69:12 70:11
77:6,8 85:21
112:8
absolutely 36:15
84:1 89:23
105:9
absorbed 11:17
39:22
absorbing 32:17
accelerate 103:4
accelerating
95:11
accept 14:10 36:7
39:11
acceptable
109:24
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75:12,24
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13:5
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86:10
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57:13
accumulated
38:14
accurate 51:21
93:18 98:13
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78:21
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acquired 41:24
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114:14,19
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ad 12:4 49:13
50:7,16 51:1
55:1 73:8 74:2
76:13 77:1
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60:9 61:24
97:12
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addition 22:17
47:22 72:18
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16:21,22 17:15
26:19 30:10
32:2,12 47:7,13
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108:20 109:7
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14:15 21:16
30:1 40:19
43:15 44:7 56:6
56:12,14,14,15
57:2,10 58:10
59:22 66:2,4,18
66:21 76:7
78:18 81:18
84:8 89:15,20
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45:7 54:1 56:17
61:5
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84:16
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61:1,1 64:22
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Adjourned 2:10
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47:21
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8:3
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102:2
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103:23
Aggressive 96:12
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101:17
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111:13
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108:19
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73:15
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7:22 8:4
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104:24
amendments
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18:7 24:1 29:8
33:10,11 35:8
37:15,20,22
38:8,12,13,19
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39:2 88:12,21
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109:24 110:1,3
110:8
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29:18 30:6,24
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82:24 83:15
87:3 89:16
90:21 112:14
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83:13
anticipated
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22:17 68:10
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38:10 63:22
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69:6
applications 8:7
8:10
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52:22
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89:9,22
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44:13 83:14
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110:1
appropriated
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106:3
appropriations
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15:23 80:8
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32:1 33:3,3
101:7
approved 7:6,25
8:1,2 16:1
24:17,19 41:11
49:23 105:20
approximately
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22:15 23:6,8
24:10,23 28:18
28:20 29:21
31:1,9 32:6,7
41:13 50:4
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89:4
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Arnold 2:9 5:2
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95:19
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104:22
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72:3
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30:8,18
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103:21
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100:13
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August 7:23
31:14
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96:8
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35:23 40:17
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85:6
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14:4
Baer 45:4
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110:7
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57:1
Bar 6:22
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107:10
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112:16
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92:20 93:2,17
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102:8 110:2
111:12
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107:25
Belleville 4:23
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80:6
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81:5
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52:10 87:9
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111:11
Biblical 35:1
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108:10
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66:2
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20:2 28:8,10,13
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101:7
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24:24
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Black 106:13
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Blockages 59:10
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78:17
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91:25
BMPs 78:6,18,24
79:6,24 80:3,5
87:7,8 88:4
93:3
Board 7:24 31:14
31:16 41:12
55:8 63:11 96:2
99:11 113:8
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100:23
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32:12
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73:11
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93:3
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93:23
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62:13
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6:13,13
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105:3
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C
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60:7
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12:15 15:8,16
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66:16
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107:6
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35:21 59:7 60:4
60:5,5 91:24
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21:17 53:4
66:17
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42:20
CCR 3:13
cent 10:24 12:2
18:17,18 19:8,9
19:10,22 20:1,2
20:2,16,17 21:7
21:22 22:2
24:13 25:5,19
26:24 27:6,7,12
27:15,20 28:15
28:16 29:12
32:25 33:1,1
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51:1,3 55:1
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86:12
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37:6,11 40:20
71:11
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88:8
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95:1
CERTIFICATE
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Certified 114:6,6
114:8
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41:6 45:23 72:6
Chairman 6:7
33:14,19 48:12
99:6,11
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93:15
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9:6,13 10:5,13
20:25 28:7 29:3
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48:25 49:1,12
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54:1,6,8,25
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108:25 111:21
112:3
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76:11
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8:1 27:10,22
34:21
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39:14 58:8 60:3
60:7
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Chapter 106:1
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charge 11:14
27:16 33:1 43:9
69:12 76:8
82:16,20 107:8
107:10
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81:12 111:2
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68:6
chart 15:10
17:20 26:21
31:2,7,7,10
Charter 7:5,9
48:22 54:16
65:13 99:14
105:2
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106:11
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40:2 58:6 59:16
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110:20
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Coalition 10:19
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Commission 5:1
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COMMISSIO...
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Commissioners
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39:12 44:5
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Conference 8:11
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99:19
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103:11
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53:20 54:3
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102:2,8,20
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51:5 77:22
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84:15
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50:23 51:3
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77:12
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42:18
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111:6,8
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62:12
construction
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Consultant 5:5
107:25 108:7
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96:15
consumers 5:12
6:24 8:10 45:1
94:1,8 95:18
96:19 98:18
99:20
contaminates
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80:11
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103:17
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42:16 50:18
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23:1 26:8,12,13
30:24 31:8 50:6
50:7,12 51:8
52:9,11,23
69:12 70:25
71:10,15 72:14
72:24 73:20
75:6,17,25
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89:20 90:6
92:12 93:7
96:12 101:22
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106:7,8,12
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23:7,17,18,22
24:3,3 25:16
30:6 53:9,10
74:12 75:8
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79:2,7,15 81:7
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98:14,16 102:4
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Council 6:24 7:1
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48:14 99:4
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114:13,17
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35:10 36:15
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54:12 58:15,17
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100:13
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39:13
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104:9
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52:20 53:7
100:20
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36:10,11,16,16
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43:22 44:4,7
58:3 59:14,17
59:23
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11:22 21:10,15
59:6 65:21
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CRR 3:13
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CSR 3:13
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59:11
cure 35:24
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15:21 24:21
26:22 33:10
50:3 61:5 68:12
69:13 71:1 77:4
81:2 85:14
89:15 108:5
currently 11:1,13
11:24 12:1 15:1
17:3 20:17,23
21:14,22,24
22:8 27:9 28:1
28:15 29:6,12
30:21 32:8 43:4
45:13 50:25
56:20,22 58:9
61:8,24 62:7
65:1 66:10
71:11 74:3
cushion 108:10
108:17
cushions 96:11
customer 19:10
19:11 28:21
30:11,15 76:12
customers 23:14
27:17,21 30:5
31:3,8 50:4,5
52:13 57:15
64:19 65:15
75:8 79:17
81:12
cut 105:17
cycle 15:22 26:5
108:19 109:7
109:10
D
D 2:1
dangerous 39:9
dark 22:4
data 18:25 19:15
20:5 54:11
date 33:18 74:20
dated 38:23
days 97:8
deal 63:14
102:12
dealing 44:12
debate 89:11
debris 43:21,23
78:15
debt 15:14,15,25
32:18 49:15
98:7,7,17
100:18,21
101:8 102:2,6,7
103:18,19
105:12,12
107:22 108:1,3
108:5,8,22
109:1,7 110:22
December 31:17
decide 17:11
32:16 63:11
decided 68:25
decision 32:10,20
82:3,9,15 83:24
113:4
decisions 76:6
94:12,19
109:14
decline 102:3,9
109:4
declining 109:2,3
decrease 28:8
97:22
decreases 97:21
decreasing 28:11
decree 10:17
74:14 95:3
103:17 104:5
deductible 50:3
deer 38:16,17
definitely 51:13
degree 57:2
deliberation
111:23
deliberations
49:17 113:16
delinquency
102:14
demand 75:22
106:8
demonstrated
57:18
demonstrates
54:24
Department
10:18
depending 12:6
18:6 57:6,14
deposition
114:10,15
depression 38:23
Des 77:10 85:25
describing 8:18
description 8:21
design 12:22
106:5
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designed 21:21
Despite 73:6
95:23
detailed 55:14
110:8
deteriorate 42:19
determine 48:20
82:22 108:14
determined
93:10 97:9
determining
50:13
detrimental 39:2
devastate 39:3
developed 79:18
developers 81:1
87:21
development
53:2 79:21
developments
80:9,13 87:3,6
88:3
devices 74:11
dialogue 86:21
88:5
diameter 40:9
difference 26:12
52:4,11 56:2
71:4 109:22
110:6
differences 56:1
different 18:5,6
33:13 52:7
55:25 56:17
57:13 88:11,20
90:11
difficult 59:2
96:13 102:5
dig 97:14
diligence 100:1
direct 76:23 79:1
directed 46:3
direction 46:16
82:5 114:13
directly 11:18
25:19 71:1
74:17,20 93:3
director 4:18,21
4:22,23 70:17
disagree 84:2
disagrees 74:1
discharge 66:17
discharged 13:18
discovery 9:9
94:16
discuss 58:5
discussed 66:10
73:25 103:12
discussion 67:8
85:3 92:6
106:22 109:19
112:8,10
discussions 68:17
disincentivize
95:20
disparate 77:2
dispute 89:14
District 1:1 3:1
4:16 6:5,8 7:5
7:11,13 9:14
10:4 12:5,6
18:6 21:4,4
23:3 27:18,23
28:3 30:24
44:19 46:17
47:1,2,24 48:6
48:8,15 49:13
50:15 55:11
71:25 73:8 74:7
74:13,16,17
75:6 76:3,7,9
76:17,21 77:4
78:5,21,23 79:8
79:12,19 80:6
80:12,18 81:4,8
81:19 83:19
85:15 86:7
91:22 93:7,11
95:1 101:15,20
102:21 103:1
103:15,23,25
105:7,11,19
106:16 108:16
109:24 111:12
districts 69:5
72:21 73:16
80:16 84:4 90:3
90:4,11 91:2
District's 7:16
48:18,20 53:8
54:7 63:10 72:9
75:4 77:14 78:2
78:5 79:4,15
80:2 94:25
100:21 102:13
103:8 108:1,5
District-wide
10:24 20:17
23:13 27:6,7,12
33:5 41:19 42:2
55:1 56:19 57:4
70:5 72:11 73:7
106:20
divided 26:12
division 110:2
document 113:5
documents 8:13
8:19 47:19
53:12 75:14
99:25 100:2
doing 13:14
14:19 29:22
31:18,21 59:10
66:14 87:18
dollar 15:16
16:23 25:11
32:13 71:20
dollars 12:15,24
13:3 15:8,10,18
15:19,20,23
16:2,24 17:16
17:19,25 23:6,9
23:20,23 24:11
24:24 25:4,12
25:17 26:1,4,5
29:1,5 30:9,14
30:20 32:2
37:15 41:14
43:14 50:8 52:9
66:3 71:2,6,10
71:22
door 9:20
dot 16:6
dots 16:7 21:10
double 14:21
15:2,3,4 23:21
24:2 98:10
100:24 108:11
doubled 101:7
doubling 24:1
doubt 57:11
draft 113:6
drainage 22:21
drains 11:9
dramatically
100:18 101:6
drastically 76:20
draw 26:10
drive 43:12
driven 10:20
13:12
driver 22:1
drivers 11:4
75:25
driving 10:15
23:11 41:4
101:18 104:4
drove 22:22
due 23:25 31:13
102:9
duly 114:10
dumped 94:11
dumping 36:12
36:14 44:3
duplicate 10:8
duty 96:14
E
E 2:1 4:1,1
earlier 29:2 41:7
60:10 64:2
66:10
earth 75:21
easel 34:1
easement 62:9
easily 75:20 81:9
east 85:23
Eastern 5:9 8:9
44:23
easy 76:1
economic 54:10
54:13 103:10
103:12
economy 23:25
101:24
edit 113:7
editing 113:5
effect 78:10 89:9
90:17
effective 14:15
effectively 90:6
104:12
efforts 13:6
55:10
eight 12:16 14:23
15:6
eighty 41:14,15
71:6,22
either 14:1 37:19
40:20 102:17
election 7:7,8
32:22
element 9:13
83:6 89:11
104:4 112:3
elements 55:14
elephant 107:5
eliminated 13:7
eliminates 69:14
email 46:2,9,10
46:11,12
emails 46:3
emergencies
101:23
emergency 18:25
19:15 20:6,22
employed 114:14
114:17
employee 114:16
enable 92:8
encourage 91:11
encouraged 83:2
encourages
81:17
encouraging
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80:24 81:1 98:7
ended 23:10
Energy 5:12 8:9
45:1 94:1,8
Engineering 4:21
enhance 53:7
72:18 81:11
enhancement
53:10
enhances 80:17
entering 79:2
enterprise 51:23
106:15 111:2
entire 24:4
entirely 88:16
entities 42:5,7
110:22
entitled 80:7
entity 52:2 60:17
61:18,20
entity's 60:18
environment
10:19 14:4
envy 94:11
EPA 10:19 74:14
75:15 76:24
80:16 95:2
101:13
equal 106:17,18
equalized 27:22
equally 74:25
equals 79:3
equipment 40:16
equitable 50:18
51:7 52:15,18
73:12,17 74:4
75:13 77:15,23
81:16 83:5
96:15 107:4
equitably 75:7
89:22 90:6
equity 91:19
equivalent 68:22
76:19
Eric 4:9 6:19
eroding 26:9
erosion 19:4,20
20:10 30:1 57:4
66:4,17 71:13
escalation 96:9
essence 79:12
86:1
established 7:9
67:11
estate 72:13
estimates 98:6
evaluating 49:18
54:7
events 13:9 60:4
everybody 31:6
35:17 40:12
64:17 66:21
everybody's
63:21
everyone's 49:18
evidence 9:6
46:18 47:21
49:4 53:9 54:21
55:13,14
evidenced 75:14
evidentiary
44:17
exact 38:7 61:25
88:11,19
examination
113:1
examining 76:17
example 26:11
65:6 68:20
95:23
examples 42:20
90:9
exceed 81:2
100:23
excess 103:15
104:18
excessive 94:25
96:16 102:24
104:11
excludes 50:4
excluding 69:18
Executive 4:18
112:19
exempt 110:17
110:22 111:1
111:10
exempted 110:19
exhibit 45:11,14
45:16,19,21,24
46:17,20 47:9
47:16,20 85:17
exhibits 47:1,7
47:13 55:13
76:25
exist 51:11 61:13
62:2
existence 88:19
existing 18:14
51:1,19 57:1
62:10 79:25
80:13 88:2
exists 30:21
exorbitant
104:16
expanded 50:5
expect 86:15
expedite 103:16
expenses 101:1
101:23 105:14
experiencing
95:14
expert 51:19
54:22
explain 59:3
explained 43:6
56:19 97:5
explanations
82:1
expressing 99:13
extend 29:9
extent 81:14
extra 24:12 38:13
41:2 95:10
extremely 53:13
F
facing 83:16 95:1
fact 23:14 35:3,5
49:2 65:10
89:14 95:25
106:23
factor 75:17
81:10 104:14
factored 54:12
factors 50:9
75:21 82:18
factual 54:11
55:12
fails 74:9
failure 72:18
fair 48:23 49:1
50:14,18 51:7
52:15,17 53:23
54:17,19 55:4
73:11,17,17
74:4 75:12,25
77:15 79:22
81:16 83:5,5
92:23 94:22
96:15 100:16
104:23 105:9
107:4,14
fairly 32:24
fairness 77:17
fall 88:8 111:15
familiar 60:1
family 17:1,4,21
far 42:14 66:2
105:1 109:16
fast 84:24
faster 100:3
fastest 54:14
favor 73:7
fear 50:10 69:8
83:21
fears 63:25 82:4
February 7:7,14
48:21 99:16
federal 20:18
103:16
fee 12:2 18:17
19:8 20:1 27:15
37:14 39:19,19
41:11 49:22,23
49:25 50:2,2,6
50:11 52:8
67:19,25 68:3
68:23 69:1,7,9
69:14,17,21
70:6,7 76:10
85:2 97:10
104:15,16,23
105:25 106:3
110:16,22
111:6
feedback 67:16
feel 82:7 83:18
fees 81:13 97:4
97:19
feet 35:16 36:24
94:11 100:2
felt 64:16 65:22
fewer 24:20
73:23 105:21
fictitious 35:3
Fifth 38:10
fifty 15:17
fighting 70:10
file 55:13
filed 8:8 46:17
97:7 100:4,5
final 47:9 48:5
111:24 112:1
finally 25:15
27:11 29:7
finance 4:24
49:16
financial 14:17
14:18 101:25
financially 14:19
114:18
financing 15:18
15:19 49:19
52:14 107:23
find 17:22 22:25
31:7 57:13
109:23
finds 80:2
fine 34:14 36:13
102:17
fines 104:1
fire 51:15
first 10:3,10 14:7
16:19 26:15
27:24 43:9 58:1
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58:8 66:23 78:2
78:5 89:11
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fiscal 17:22,23
18:1 23:9,17
30:10 103:2,5
105:3
Fitch 15:3 100:19
five 12:11 14:8
71:11
fix 36:1,3
flat 12:2
float 37:2
floated 40:16
floating 41:4
flood 36:22 58:17
58:20 59:8,13
60:4,5,6
flooded 36:20
41:3
flooding 19:4,20
20:10 30:1 35:8
36:5 40:15 57:3
58:13,16 59:7,8
60:4,5,6 66:4
71:13
floods 36:19
flowing 78:16
flows 11:23
flushes 13:21
focus 56:11 72:9
78:1
focused 100:6
folks 23:1 24:13
28:14 29:8,14
32:10 62:5
69:18 110:19
follow 84:23
following 6:1
49:19 62:25
91:1 103:5
follow-up 97:24
footage 88:20
footnote 107:7
forcing 79:12
84:4
forecast 95:7
forecasts 103:15
foregoing 114:9
foremost 94:24
forgive 102:15
form 77:21
forth 59:23 71:1
109:17
forward 64:6
81:19 98:9
103:16 112:9
112:11
founder 51:20
four 9:13 14:8
15:9,9,12,13,17
16:25 17:6 23:7
26:5,18 27:1
28:6 33:8 57:18
95:17 98:1
109:15,16
fourth 104:13
Fox 5:2 45:3
front 29:25
full 36:16
fully 51:1 55:11
function 62:12
78:20
functioned 62:15
fund 15:16 25:7
29:10 51:23
52:14 55:2
73:14 98:16
106:16
fundamental
74:22
fundamentally
84:6
funded 11:14
12:2 20:23
21:14,22,24,25
22:8 24:12 27:9
43:5 51:1 52:1
funding 10:25
11:2,3 12:4,7
20:12 22:12
26:19,22 52:16
52:18 55:3
56:21 64:7
65:11 70:4,12
73:24 89:15
108:18
funds 25:8,11
78:13 98:6
103:3,4 105:5
further 46:23
71:24 74:13
77:2 106:22
110:12 111:16
114:15
future 32:15,19
54:3 66:9,20
67:2 76:5 103:6
103:10,20
105:22,22
107:9 108:5
FY17 1:4 3:4
G
gain 13:8
garage 26:11
garden 6:14
87:19
gather 99:19
gathered 38:4
40:20,21
general 4:19 7:8
48:14 54:9
59:13 82:7,19
88:15 108:15
112:19
generates 58:17
gentleman 41:9
65:20
getting 12:20
13:15 14:7
25:23 35:12
38:19 41:3
67:17 86:12
geyser 35:15 58:7
give 33:16 60:7
93:15 110:24
111:7
given 10:8 103:5
103:9 108:21
gives 66:25 67:2
Global 34:25
go 12:10 16:4,16
16:21 17:5 18:1
18:3,4 20:14
23:4,22 24:3,18
25:19 26:2,23
27:5,19 28:20
30:3 31:17 32:5
32:8 34:23
39:16,17 59:16
62:15 64:3
68:11 69:11,25
82:5 85:6 89:8
90:17,24 91:24
108:10
goals 101:21
goes 11:18 13:17
30:13
going 16:5,10
18:13 24:8 31:3
32:16,17 33:14
35:9 36:1 59:7
62:13 63:6,14
63:17,18 64:7
65:25 66:3,8,13
67:1 68:17
69:25 88:7,9,12
88:21 89:4 91:7
93:22 94:12
98:9 101:13
102:14,21
105:17 112:5,8
112:11
good 6:3 12:19
19:16,18 48:13
60:25 62:3 67:7
67:8,10 81:15
113:10
Goss 84:19
gotten 36:8
govern 7:18
government 52:2
grant 16:20
17:12 92:8,25
93:2
granted 8:10
40:6
grass 39:22 89:5
grate 35:25 36:2
gravity 78:9
Gravois 39:18
gray 21:5
grease 13:21
great 35:6
greater 7:1 73:5
78:24 92:10
108:2,3
greatly 52:8
green 19:21
20:11 21:4,10
24:9,13 26:16
27:3,24 28:1
58:2 85:24 86:6
99:9 106:23,24
106:25
gross 65:16
ground 11:17
61:9 76:16 89:2
Groves 77:10
86:1
growing 54:15
guards 21:12,19
guess 64:14
82:23 84:25
86:2 87:2 91:6
93:12 97:25
98:1,4,7
guilty 44:3
gutters 64:14
guys 43:15,24
65:5
H
half 10:25 22:15
24:24,24,25
25:10,17 26:3
28:8 31:5,9
65:10 66:3
100:2
Hancock 104:24
hand 10:1 100:22
103:21 105:13
handed 60:14
handle 35:19
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40:4
hands 34:11
happen 26:1
82:14
happening 35:3
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happens 16:20
17:21 26:22
60:17,19
harm 36:3
hauler 97:4,10
97:19
Hawes 4:7 6:17
6:17
HBA 74:1,1 75:9
75:14 76:2,3,24
76:25 77:11,18
78:17 79:22
80:2,21 81:17
83:1 92:18
HBA's 75:3 78:3
79:20 84:16
header 98:1
hear 20:9 60:21
64:23 67:9
heard 38:23
45:25 106:17
hearing 1:5 3:5
9:3,18 10:3
44:17 72:2
84:19 93:22
111:20 113:12
113:14
hearings 8:25
10:9 99:18
heavily 101:14
heavy 36:5
held 9:4
help 92:11
helping 44:11
helps 108:20
113:10
herring 78:24
hey 32:16
high 11:23 35:16
95:8,18,20
108:21
higher 51:8
108:16
highest 26:14,17
86:14
highlighted
55:15
Highway 39:17
historical 97:17
97:23
historically
85:20
hit 38:21
Hoelscher 4:18
10:7 33:21 37:8
37:23 38:1,6
41:6,9,16 42:1
42:6,9,12,17
45:10,12 46:1
54:24 56:3,18
58:4,24 59:19
59:24 60:25
61:4 64:1 67:13
67:22,24 68:1
69:24 70:15,18
70:21 71:5 87:4
hold 34:12,13
hole 65:7
holes 42:20 65:3
Home 5:8 8:8
44:22 72:2
homeowners
91:11
honestly 64:23
hope 40:19
Hopefully 67:5
house 36:10
37:12 43:11
household
101:11
houses 62:3
hundred 12:14
12:16,24 13:2
15:10,13,17,20
15:23 16:23
17:18,24 23:8
30:9,14,19 32:2
hundreds 63:8
Hurricane 38:21
hybrid 83:17
hypothetical
74:23
Hypothetically
92:2
I
idea 66:11 98:6
ideas 54:3
identified 12:14
12:18 13:20
24:9,23 25:16
29:1 47:20 66:5
identify 6:11
9:22 46:9 62:6
identifying 8:12
ignorant 76:2
90:8
Ike 38:21
IL 114:7
illegally 43:15
illustrated 77:2
immediate
101:11
immediately
57:11 62:13
69:5
impact 17:1
27:21 28:12
30:5 31:3 53:4
64:19 65:15
77:3 78:6 79:1
82:3 95:17,19
109:11
impacting 109:7
impacts 11:23
impervious
41:11 49:22
50:11 52:8,12
52:14,17 55:25
56:4 68:3,6,11
68:23 69:17,21
70:6 71:3,7
73:7,20,23
75:12,16,19,23
75:24 76:8,10
76:16 77:12
82:16 85:1,2
89:2 93:14
105:19 106:7
106:15,19
107:10
implement 50:6
52:7 82:17
83:22 91:12,14
implementation
50:11
implemented
43:9 74:3 77:15
89:7 90:5,11,16
91:3 92:21 93:1
93:5
implementing
80:23
importance
94:19
important 50:13
53:14 65:22
66:23 77:21
81:10 108:4
importantly
95:13
impose 75:4
imposed 94:22
imposing 73:5
impossible 82:17
improve 78:19
80:18,19
improvement 1:2
3:2 26:9
improvements
14:14 16:3 32:4
improves 79:23
improving 74:15
inabilities 103:24
inappropriate
78:7
incentive 77:19
86:25 87:25
91:11 92:11
93:16 102:4
incentivized
80:19 87:16,20
inch 40:8,9 43:20
inches 35:20,21
include 50:5
51:24 78:4
included 14:24
51:22
includes 85:24
112:22
including 54:22
58:6 72:25
79:25 80:17
81:5
inclusion 77:18
77:19
income 31:3,5,8
85:10,20 86:11
101:11
Incorporated 7:3
increase 14:9
17:6 23:24
28:23 29:4,5
32:18 46:5
50:12 63:7,7
76:11 77:7
85:19,21 86:17
95:15 101:5,8
102:14 105:8
105:15
increased 102:2
102:7,14
increases 34:22
81:7 100:18
104:21
increasing 81:7
109:14
incur 36:13
incurred 79:14
89:21 98:14
incurring 108:22
Indenture
100:24
indicate 91:23
indicated 96:4
indicates 25:22
individual 16:15
27:21 30:24
58:19 72:25
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81:2 87:14 91:6
individuals 31:5
Industrial 5:12
8:9 45:1 94:1,8
industry 15:5
inequality 77:1
85:5 91:13
inequity 77:1
84:25 86:5
inflated 95:15
inflates 95:14
influence 75:21
influenced 75:18
information
14:24 38:7 41:7
49:5 53:12
54:23 55:7
76:22 94:10
97:12,14 99:19
infrastructure
22:24 73:15
78:8 79:3,17
initial 92:12,15
inlets 65:2
innovations
76:18
innovative 72:19
81:18 84:5
inside 16:8
insight 82:14
install 74:10 87:4
87:6
installation
79:24
installed 83:8
instance 59:11
88:1
insure 94:21,24
103:1
integrated 66:11
integrity 14:13
intend 94:13
intended 79:20
interest 99:21
interested 16:15
114:18
interpretation
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intervene 8:6,7
8:23
Intervenor 44:22
45:1 47:24
59:25
intervenors 9:15
48:7 51:18 52:3
52:7 53:6,21
54:4,13 74:21
102:1
introduced 94:16
introduction
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invariably 31:23
investigation
20:22
investment 92:15
involved 99:16
issue 8:22 9:11
13:12 23:13
42:21 44:8
57:10 59:3
60:10 64:23
77:18 83:21
84:8 91:16,20
112:2
issues 8:12,18
13:19 14:15
19:3,14,19
20:10,11 21:13
21:16 25:14
44:12 46:23
50:24 56:6,14
56:15,21 57:3,8
58:13 59:6,7
63:5,8 64:21
65:16,19 66:2,5
66:19 89:15,20
100:6,14
item 97:3,25
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J
J 4:3
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John 5:2 45:3
join 99:12
joints 42:19
Jonathon 4:22
Jones 4:12 6:21
6:21 67:15,16
67:20,25 69:22
70:13 86:19,20
86:24 87:8,11
87:21,24 88:5
88:17,25 89:6
89:18,24 90:7
90:13,20,22
journey 94:10
July 1:6 3:6 8:17
17:3 46:17,25
113:16
June 8:14 46:16
46:19
Justice 10:18
justify 95:12
K
Kansas 68:22,22
69:2 70:17,17
70:18,20 80:17
Kathleen 3:12
114:5,22
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32:13 49:19
50:20 52:6
53:14 69:23
100:7 101:4
keeping 19:18
42:15,18
Keller 104:14
Kennard 4:12
6:21
kept 13:16
kids 44:6
kind 18:24 22:10
31:17,21 32:11
42:22 43:6
58:10 62:25
64:3,6,19 67:2
68:14 82:10
83:16 85:2,6,7
97:5 98:9
kinds 58:14
Kirkwood 77:9
85:25
know 14:21 26:9
34:5 35:10,17
35:23 36:12,18
38:4,13 39:6,15
39:17,19 40:2,2
40:5,14,22,24
41:1,24 43:8
44:2,3 58:1,25
60:2 61:6 63:4
63:5,6,20 64:13
65:3 66:7 68:10
69:17 70:8
82:13,24,25
83:8,12,12 84:6
90:18 91:7,18
91:18 93:3
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112:11
knowing 32:18
knowledge 19:3
57:24
L
L 4:18
Labor 7:1
lack 60:6 80:13
86:25
lacking 19:17
80:2
Ladue 77:9
85:25
lady's 65:4
landed 65:12
lane 39:23
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larger 32:17
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Lashly 45:4
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67:24 107:15
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110:5
League 6:18
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Leeds 68:21 69:4
70:16
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30:8 43:21 57:1
legal 9:15 45:5
47:24 69:23
82:6 99:4 104:1
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69:13,18
105:22 110:19
110:23 111:5
111:14
Lemoine 5:6
108:13 109:9
109:25 112:22
lengthy 95:2
Leonard 4:3 6:6
let's 10:4 12:10
16:4,16 18:3
20:14 23:4 30:3
34:17 40:1 44:6
44:6 88:18
90:14,15
level 28:5 61:24
62:21 76:12
100:18 105:12
108:22
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lightly 39:4
limit 93:7
Lindbergh 39:18
line 40:8,9 67:3
lines 21:9 22:4,14
42:15
links 106:8
Lisa 5:3 45:4
46:8
list 13:4,5 16:4,8
16:22 26:21
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listed 9:21
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Litigation 3:14
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108:11
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18:16,20 19:5
19:21 28:14
34:19 36:22
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58:11
locations 33:17
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longer 27:1
109:12
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18:14 21:2
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94:10 106:17
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4:16 5:9 6:5,8
6:17,20,23 7:1
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77:5 80:11
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114:4
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85:10
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M
machines 11:10
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7:2 55:20,21
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83:14 84:9
112:4,5 113:10
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14:12,13,17
15:4 19:14 20:5
20:6,24 22:13
23:15,22 24:2,4
29:24 33:9 65:1
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98:10,11,20
102:5 108:1,11
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maintaining
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28:5 42:15 70:5
109:1
maintenance
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15:11 19:1 22:3
22:7,9,10,19
23:7,12,17,18
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41:19 42:13,18
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105:14 107:2
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110:8,10
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96:13
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93:18
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112:20
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113:1
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4:7,8,9,10,11
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16:11 47:3 48:2
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112:20
memorandum
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110:16
mentioned 20:15
26:24 57:25
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108:8
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92:21
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109:23
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52:12,14,17
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104:9
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3:1 4:16 6:5,7
44:18
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31:12 39:22
Midwest 3:14
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96:18 108:8
MIEC's 94:18
95:24 96:18
Mike 4:10 6:25
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12:24 13:2,3
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52:6 53:14 58:5
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Missouri 3:16
5:9,12 6:14 8:9
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103:11
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98:2
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112:17 113:16
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19:19 20:8 22:9
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39:5,10 40:6,17
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45:21 46:17
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103:14
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22:23 34:24
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62:20 64:4 75:1
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68:19
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N
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100:11,13,15
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106:2
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106:24
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74:5,18
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113:16
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105:25,25
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108:23
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97:23
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90:4
O
O 45:4
Oakville 35:10
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observations
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Obviously 90:3
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Oh 38:3 67:22
70:18
okay 10:7 32:17
38:9 47:9,18
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26:24
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42:9 59:9 61:12
96:18
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Opening 2:3
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22:13 24:2
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78:8
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12:25 15:11
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23:17,18 24:18
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33:5 41:19
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9:2
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111:24
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21:4
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104:5
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103:22
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79:25 81:2
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65:23,24 71:15
71:16,21 78:6
78:14
O'Connell 4:10
6:25,25
P
P 4:1,1
page 2:2 12:10
18:3 20:14
61:25 85:17
107:22
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29:6 38:12
51:11 71:7
104:18 107:15
110:16
Pam 5:6
parameters
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parcel 75:18,19
76:17 82:22
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22:4 26:10
46:20 50:21
51:11 56:16
58:1,2,2,2 59:1
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85:12,13 105:2
112:10
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47:6
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8:21
participate 8:24
23:1
participating
48:16 73:24
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particularly
108:4
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114:14,17
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105:4
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101:13
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18:20 19:8,21
19:25 25:5
29:18 30:15,23
31:5 32:14,19
33:12 49:13
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100:13 105:25
106:4
PAYGO 49:16
98:1,6
paying 17:4,8
22:18 28:2,15
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29:12,14 31:10
37:6,15 41:2
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106:25 110:22
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69:1
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30:11
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98:14
pejorative
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36:12 39:8 41:1
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69:15 73:23
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92:8,12,13
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109:20,21
111:8
people's 38:15,17
39:3 63:25
percent 12:17
17:5 23:24 24:4
28:9 29:4,21
52:13 76:10,12
101:8,12,12,13
106:14 109:22
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percolate 75:20
Peres 77:10
85:25
perfect 95:23
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75:4
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14:23 16:25
23:7 41:22 42:3
109:12
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44:1
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112:20,21
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103:9
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83:22
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43:23
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59:13
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109:1
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Poeling 46:11
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36:25
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108:1
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109:9
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39:3
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91:13,24
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88:24
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present 9:24
33:23 45:3 47:3
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PRESIDING 4:3
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39:7,10
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21:6 31:7,10
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23:18
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68:3
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26:25 27:10
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8:24 9:3,18,18
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22:20,23 23:2
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29:10,24 33:5
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putting 25:4
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P-O-E-L-I-N-G
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question 47:15
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112:14
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REPLACEME...
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Secondly 53:6
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seventy-seven
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87:14 89:7
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street 3:15 35:15
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