HomeMy Public PortalAboutExhibit MSD 3C - Direct Testimony, Richard Unververth, MSDMSD Exhibit No. MSD 3C
2015 Rate Change Proceeding
RICHARD L. UNVERFERTH
Direct Testimony
Metropolitan St. Louis Sewer District
February 26, 2015
Table of Contents
Page
Witness Background and Experience ........................................................................................... 1
Wastewater Capital Improvement & Replacement Program (CIRP) ........................................... 2
Wastewater Additional Funding Sources ...................................................................................... 6
Future Wastewater Regulatory Requirements .............................................................................. 6
Stormwater Regulatory Services................................................................................................... 7
Future Stormwater Regulatory Requirements .............................................................................. 9
Stormwater Capital Improvement and Replacement Program ..................................................... 9
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Witness Background & Experience 1
Q1. Please state your name, business address, telephone number, and email address. 2
A. Richard L. Unverferth, 2350 Market, St. Louis, Missouri 63103, 314-768-6204, 3
rlunve@stlmsd.com 4
Q2. What is your occupation? 5
A. I am the Director of Engineering for the Metropolitan St. Louis Sewer District 6
Q3. How long have you been associated with the District? 7
A. I have been associated with the District for 28 years. 8
Q4. What is your professional experience? 9
A. I have been with the District since January of 1987. I held numerous staff –level 10
engineering positions early in my career, I was promoted to Engineering Manager in 11
September of 1993, was transferred to Operations/Maintenance Department from 1995 12
through 2001 as an Associate Director responsible for the Operations Technical Division, 13
returned to the Engineering Department in 2001 as a Program Manager in the Planning 14
Division, and promoted to Assistant Director of Engineering/ Planning in 2006 15
overseeing the long range planning of the District’s Capital Improvement and 16
Replacement Program currently being implemented. I was promoted to my present 17
position of Director of Engineering on May 18, 2013. Prior to joining the District I held 18
staff -level engineering positions with the City of St. Louis and the City of St. Charles. 19
Q5. What is your educational Background? 20
A. I hold a Bachelor of Science degree in Civil Engineering from the University of Missouri 21
– Rolla (Missouri University of Science and Technology). 22
Q6. Are You a Registered Professional Engineer? 23
A. Yes, I am a registered Professional Engineer in the state of Missouri. 24
2015 Rate Change Proceeding 1 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Wastewater Capital Improvement & Replacement Program (CIRP) 1
Q1. What is the purpose of MSD’s wastewater CIRP? 2
A. The wastewater CIRP provides a listing, schedule and cost of needed repairs, additions 3
and improvements to the wastewater system to maintain the system in operating order 4
and to ensure the system operates in a manner that complies with all State and Federal 5
Regulatory requirements and the CD. 6
Q2. Why is the CIRP needed? 7
A. The CIRP is needed to provide the project identification, planned fiscal year and 8
anticipated annual costs associated with system improvements. This will then provide 9
the basis for required annual revenue and resources needed to plan, design, and construct 10
these improvements. 11
Q3. Does the District have a list of projects that comprises the wastewater CIRP? 12
A. Yes, it has been provided as Appendix 7.2.2 in the Rate Change Proposal. 13
Q4. What is the size of the wastewater CIRP reflected in the Rate Change Proposal? 14
A. Approximately $1.5 billion in improvements over the four fiscal years 2017 to 2020. 15
Q5. How much of the wastewater CIRP is required to comply with State or Federal 16
requirements? 17
A. The wastewater CIRP is required to comply with the CD or other regulatory 18
requirements. There are asset management related projects planned that are not 19
specifically listed in the CD. These projects will upgrade and renew wastewater assets to 20
prevent failure, improve operational efficiencies, and ensure we continue to meet plant 21
permit requirements. Without upgrades and system renewal there is inherent risk of 22
system failure leading to non-compliance. 23
24
2015 Rate Change Proceeding 2 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Q6. Are all of the wastewater CIRP projects necessary? 1
A. Yes 2
Q7. If the proposed rate change is not implemented, will the District be able to construct 3
all of the programs required by the Consent Decree (CD)? 4
A. No 5
Q8. Do all of the improvement projects shown in the wastewater CIRP need to be 6
constructed in the timeframe shown or could some of the projects be delayed? 7
A. Both the scope and timing of all the projects in the wastewater CIRP are designed to meet 8
defined regulatory schedules, and schedules required by the CD. 9
Q9. What are the ramifications of projects being delayed? 10
A. Any delays could result in fines or penalties due to system failure or inability to meet CD 11
or other regulatory deadlines. These fines or penalties are clearly defined within the CD 12
and associated regulatory permits. 13
Q10. What are the components of the CIRP? 14
A. The majority of the CIRP is made up of projects required to meet the CD or other 15
regulatory requirements. The program will provide for the elimination of Sanitary Sewer 16
Overflows (SSO) in the separate sewer system, address system capacity issues causing 17
building back-ups in the separate sewer system, and reduce or eliminate Combined Sewer 18
Overflows (CSO) in the District’s combined sewer system. The program also includes 19
Green Infrastructure solutions to reduce stormwater flow to the combined sewer system 20
to reduce overflows to the Mississippi River. City-shed projects will be built to reduce 21
local structure flooding and building back-ups in the combined sewer area primarily in 22
the City of St. Louis and near North and South St. Louis County. The program also 23
includes Asset Management projects to address infrastructure renewal and upgrades at 24
2015 Rate Change Proceeding 3 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
our Wastewater Treatment Plants, Pump Stations, and Collections systems to provide 1
operational efficiencies and to meet O & M requirements of the CD. More details on the 2
O & M will be provided in the testimony of Jonathan Sprague, Director of Operations. 3
Q11. How are costs for the Wastewater CIRP determined? 4
A. For sewer work, cost estimates are based on historical District bid prices using conceptual 5
and preliminary design information. For facility work, estimates are based on the 6
technical expertise of consulting engineers and past data on similar District projects. 7
Q12. Does the District have the resources to successfully manage, construct, and complete 8
the portions of the CIRP presented in this rate proposal? 9
A. Yes. The Engineering Department has developed a program delivery model that utilizes 10
eight multi-year consulting contracts to assure proper resources are maintained to provide 11
engineering design and construction management services based on various watershed 12
locations, facility types, and engineering disciplines. Program and contract management 13
is being handled by District Design and Construction Management staff. The combined 14
in-house and contracted resources for construction management and construction 15
inspection provides for early project bid document and constructability review to identify 16
potential issues, identify risks, and avert potential change orders prior to bidding and 17
construction. 18
Q13. How successful has the District been in meeting the budget and schedule of prior 19
wastewater CIRPs? 20
A. The District anticipates successfully completing the FY 13-16 CIRP as presented in the 21
previous rate proposal. This is following the successful completion of the two previous 22
CIRP programs and rate cycles. The District has managed the program within budget 23
and on schedule while complying with a number of specific deadlines for early action 24
2015 Rate Change Proceeding 4 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
projects, program implementation and significant reporting required by the CD. The 1
delivery of the program within and under budget because of a favorable bid environment 2
and cost efficient steps taken by the District, has allowed the District to complete the 3
design and eventual construction of improvements to District incinerator facilities to meet 4
unanticipated air quality regulations with no impact to the ratepayers. This favorable 5
environment also allowed for the design and construction of a number of “contingency” 6
projects annually approved by the District’s Board of Trustees; early delivery of these 7
projects when possible helps the regulatory program to stay on track. 8
Q14. What cost efficient steps have been taken by the District to reduce program costs? 9
A. The District has structured construction contracts for bidding in an efficient manner, 10
bundling together like work in bid package sizes that are efficient to build and manage. 11
The District structures its bid opening schedule to allow for adequate time for bidders to 12
develop competitive pricing. The District at times phases construction contracts with 13
multiple bid packages when it benefits the District to do so. The eight multi-year 14
consultant contracts mentioned earlier have led to an efficient and expeditious design 15
process for the program. 16
Q15. Have wastewater related capital improvements been delayed recently due to lack of 17
funding? 18
A. No 19
Q16. Does the proposed wastewater rate change enhance the District’s ability to provide 20
adequate sewer and drainage systems and facilities, or related services? 21
A. Yes 22
23
24
2015 Rate Change Proceeding 5 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Wastewater Additional Funding Sources 1
Q17. Are there any other contributions or grants the District could possibly obtain? 2
A. The District does not anticipate other contributions during the upcoming rate cycle but 3
the District regularly monitors MDNR, EPA, and other entities for possible grant 4
opportunities. While having been able to take advantage of some MDNR 319 and EPA 5
State and Tribal Assistance Grants (STAG) in the past, there are very few grant 6
opportunities that match and could support the District’s core business and compliance 7
activities. 8
Also in the past, the District has been successful in obtaining federal authorization for the 9
Corps of Engineers to construct improvements to certain District infrastructure. This 10
authorization has led to approximately $20 Million in infrastructure repairs by the Corps 11
within the District’s combined sewer area, over the last ten years. The District works 12
with the Corps on an ongoing basis to maximize this federal benefit. 13
The District does obtain low interest financing from MDNR, through the State’s 14
Revolving Loan Fund, for its wastewater infrastructure capital program. Though not 15
strictly a grant, this program currently provides capital program financing for the 16
ratepayers at a lower cost than bond financing. The District works with MDNR on an 17
ongoing basis to maximize this state benefit. 18
The District also maintains state and federal lobbying activities, one of the main goals of 19
which is to seek financial assistance for the District. 20
21
Future Wastewater Regulatory Requirements 22
Q18. What additional future wastewater regulatory requirements may be anticipated? 23
A. Although not anticipated within this Rate Cycle, there are several pending regulatory 24
2015 Rate Change Proceeding 6 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
requirements on the planning horizon. The following regulations would primarily impact 1
our Wastewater Treatment Plants and Processes: New EPA ammonia limits to protect 2
freshwater mussels, requirements for enhanced Nutrient treatment to meet future limits 3
on Total Nitrogen (TN) and Total Phosphorus (TP) from our discharges, and the potential 4
for future limits on certain viruses. Regulatory impacts on the Collections system could 5
be the requirement for further CSO controls on the Mississippi River and River Des Peres 6
beyond the current approved Long Term Control Plan to meet instream bacteria, virus, 7
and dissolved oxygen criteria. Although sludge incinerator improvements are currently 8
underway to meet new air quality and emission control Standards, new source 9
performance standards are in effect which would require complete replacement of our 10
existing sewage sludge incinerators with new technology or alternative sludge disposal 11
methods when current equipment needs replacement. 12
13
Stormwater Regulatory Services 14
Q19. What are the Districts obligations for Stormwater Regulatory Services? 15
A. MSD is a co-permittee in a State-issued Municipal Separate Storm Sewer System (MS4) 16
permit. Under this permit, MSD must implement Best Management Practices to address 17
stormwater quality issues. MSD is required to have a public education and outreach 18
program, illicit discharge detection and elimination program, and stormwater pollution 19
prevention program. MSD and the co-permittees are also required to regulate and 20
enforce the construction and continued maintenance of water quality features 21
(Stormwater BMPs) to control pollutants in stormwater runoff from development projects 22
both during and after construction is complete. 23
24
2015 Rate Change Proceeding 7 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Q19. Are the Stormwater Regulatory Services currently provided sufficient to meet its 1
regulatory obligations for the entire District? 2
A. Yes 3
Q20. What is the District’s source of funding for Stormwater Regulatory Services? 4
A. There is currently a District Wide ad valorem tax of $.0197 per $100 Assessed Value 5
referenced in the Rate Change Proposal as the regulatory tax levied by the District that 6
provides adequate funding to meet our current regulatory obligations. Under the new tax 7
structure and rate change proposal, this tax will remain in place to maintain these 8
services. 9
Q21. Are Regulatory Services equivalent within the entire District Boundaries? 10
A. Yes, under the new rate change proposal, the regulatory tax will remain in place to 11
maintain these services District wide. This includes providing regulatory services within 12
specific Missouri River Levee District areas where by separate agreements MSD will not 13
have O & M responsibility. 14
Q22. What do the separate agreements with the Levee District consist of? 15
A. MSD recognizes that the existing Missouri River Levee District’s possess the authority to 16
provide stormwater services within their respective service areas. With that, as was 17
previously agreed to as part of the impervious fee assessment, it is anticipated that MSD 18
and the Levee Districts will seek agreements that will require MSD to continue providing 19
regulatory services within the Levee Districts. Revenues to cover this expense will be the 20
continuation of the regulatory tax currently assessed throughout the MSD service area, 21
including the Levee Districts. The Levee Districts will execute their powers and duties 22
by assuming all O & M activities within their areas to ensure adequate stormwater and 23
drainage systems. MSD will not provide funding for capital improvements of stormwater 24
2015 Rate Change Proceeding 8 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
or drainage systems with the Levee Districts. MSD will in turn not assess proposed O & 1
M tax within the Levee Districts for these services. 2
3
Future Stormwater Regulatory Requirements 4
Q23. What additional future Stormwater regulatory requirements may be anticipated? 5
A. Although not anticipated within this Rate Cycle, there are several pending stormwater 6
regulatory requirements on the planning horizon. The issuance of Total Maximum Daily 7
Load requirements (TMDLs) on area streams to comply with limits on bacteria/viruses, 8
chloride and dissolved oxygen. This regulation will require the development of TMDL 9
Implementation Plans to address specific pollutant criteria. There will be a need for 10
additional water quality monitoring on area streams. There is always a potential for 11
revised requirements within our current stormwater permits. 12
13
Stormwater Capital Improvement and Replacement Program 14
Q24. What is the purpose of MSD’s stormwater CIRP? 15
A. The stormwater CIRP provides a listing, schedule and cost of needed repairs, additions 16
and improvements to the stormwater and drainage system to ensure the system operates 17
in a manner that protects the public health and welfare. 18
Q25. Why is the CIRP needed? 19
A. The CIRP is needed to provide the project identification, planned fiscal year and 20
anticipated annual costs associated with system improvements. This will then provide 21
the basis for required annual revenue to plan, design, and construct these improvements. 22
23
24
2015 Rate Change Proceeding 9 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
Q26. Does the District have a list of projects that comprises the stormwater CIRP? 1
A. Yes, it has been provided as Appendix 7.5.2 in the Rate proposal. 2
Q27. What is the size of the stormwater CIRP reflected in the Rate Proposal? 3
A. Approximately $70 million in improvements over fiscal years 2017 to 2020 as indicated 4
in table 5-5 in the Rate Change Proposal. 5
Q28. What type of projects make up the Stormwater CIRP? 6
A. The stormwater CIRP is primarily made up of projects identified to address customer 7
complaints about flooding and erosion. Types of stormwater flooding problems listed in 8
order of severity include: structure flooding, roadway flooding, and yard flooding. 9
Types of erosion problems listed in order of severity include: stream erosion threatening 10
a structure, stream erosion threatening a road, and yard erosion. These problems are 11
addressed by projects that may require design and construction of new storm sewer 12
systems, storm system upgrades, storm system extensions, channel protection and 13
restoration, or green infrastructure improvements. The program also includes Asset 14
Management projects to address existing stormwater infrastructure repairs, renewal and 15
upgrades to keep existing systems at an operable level. 16
Q29. What is the funding source for stormwater capital projects? 17
A. There is currently an ad valorem tax of $.0682 per $100 Assessed Value levied by the 18
District within the Original Boundaries of the District, which is the City of St. Louis and 19
St. Louis County primarily within the highway I-270 boundary. This tax provides 20
revenue for O & M expenses in this area. There is also watershed specific taxing within 21
this same area which varies from $.055 to $0.10 per $100 assessed value depending on 22
the location. The watershed specific taxes referred to as OMCI funds are the District’s 23
current source of revenue for Stormwater capital improvement projects. These funds are 24
2015 Rate Change Proceeding 10 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
required to be spent within the designated taxing District when collection occurs. The 1
proposed spend down of fund balances match the Capital Improvement expenses 2
provided for in the new Rate Change Proposal. 3
Under the new Rate Change Proposal, the OMCI taxes will be reduced to zero, fees will 4
be eliminated, and remaining balances will be spent on priority projects within the 5
specific areas. Additionally, the Original area O & M tax will be set to zero and replaced 6
with a proposed District-wide O & M tax that will primarily be used for operations and 7
maintenance throughout the District, but will also have some funds available for system 8
repairs, upgrades and capital projects throughout the District. 9
Q30. If the Proposed Rate Change is not implemented, will the District be able to 10
construct the stormwater CIRP? 11
A. No, projects identified in the stormwater CIRP that are not within an existing OMCI 12
taxing area will not be funded. 13
Q31. How are costs for the Stormwater CIRP determined? 14
A. For sewer work, cost estimates are based on historical District bid prices using conceptual 15
and preliminary design information. For channel restoration and green infrastructure 16
improvements, estimates are based on the technical expertise of consulting engineers and 17
past data on similar District projects. 18
Q32. Are there any other contributions or grants the District could possibly obtain? 19
A. The District does not anticipate other contributions during the upcoming rate cycle but 20
the District regularly monitors MDNR, EPA, and other entities for possible grant 21
opportunities. While having been able to take advantage of some MDNR 319 and 22
MDNR stormwater grants in the past, there are very few grant opportunities that match 23
and could support the District’s core business and compliance activities. 24
2015 Rate Change Proceeding 11 MSD Exhibit No. MSD 3C
Direct Testimony of Richard L. Unverferth, MSD February 26, 2015
The District also maintains state and federal lobbying activities, one of the main goals of 1
which is to seek financial assistance for the District. 2
Q33. Does the proposed stormwater rate change enhance the District’s ability to provide 3
adequate sewer and drainage systems and facilities, or related services? 4
A. Yes 5
Q34. Does this conclude your prepared direct testimony in this matter? 6
A. Yes 7
8
2015 Rate Change Proceeding 12 MSD Exhibit No. MSD 3C