HomeMy Public PortalAboutExhibit MSD 74 - Transcript of Technical Conference for District Testimony - April 26, 2023Page 1
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·6· · · · · · ·MEETING OF THE RATE COMMISSION
·7· · · · · · · · · · · · · OF THE
·8· · · · · METROPOLITAN ST. LOUIS SEWER DISTRICT
·9· ·2023 STORMWATER AND WASTEWATER RATE CHANGE PROCEEDING
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14· · · · · · · · · ·TECHNICAL CONFERENCE
15· · · · · · · · · · ·APRIL 26, 2023
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Exhibit MSD 74
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·1· · · · · · · · · · · · I N D E X
·2· · · · · · · · · · · · · · · · · · · · · · · · · ·PAGE
·3· ·Roll Call· · · · · · · · · · · · · · · · · · · · · 5
·4· ·WITNESS:· SUSAN MYERS
· · · ·Examination by Mr. Malone...................20, 59
·5· · ·Examination by Mr. Palans.......................42
· · · ·Examination by Mr. Goss.........................48
·6· · ·Examination by Mr. Faul.........................66
· · · ·Examination by Mr. Mahfood......................10
·7· · ·Examination by Mr. Jearls.......................70
· · · ·Examination by Mr. Mahfood......................73
·8· · ·Examination by Mr. Toenjes......................75
·9· ·WITNESS:· BRIAN HOELSCHER
· · · ·Examination by Mr. Malone.......................76
10· · ·Examination by Mr. Perkins...........103, 152, 166
· · · ·Examination by Mr. Palans.................112, 149
11· · ·Examination by Mr. Goss...................135, 162
· · · ·Examination by Mr. Jearls......................156
12· · ·Examination by Mr. Toenjes.....................163
13· ·WITNESS:· RICH UNVERFERTH
· · · ·Examination by Mr. Malone......................169
14· · ·Examination by Mr. Jearls......................187
· · · ·Examination by Mr. Palans......................188
15· · ·Examination by Mr. Goss........................210
16· ·WITNESS:· MARION GEE
· · · ·Examination by Mr. Malone......................215
17· · ·Examination by Mr. Goss........................226
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· · ·Adjournment· · · · · · · · · · · · · · · · · · · 228
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·1· · · · · · · MEETING OF THE RATE COMMISSION
· · · · · · · · · · · · · · OF THE
·2· · · · · METROPOLITAN ST. LOUIS SEWER DISTRICT
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·5· · · · · MSD TECHNICAL CONFERENCE FOR DISTRICT
·6· ·TESTIMONY AND RATE SETTING DOCUMENTS, with witnesses
·7· ·produced, sworn, and examined on April 26, 2023,
·8· ·between the hours of 9:30 a.m. and 3:19 p.m. on that
·9· ·day, at the Metropolitan St. Louis Sewer District,
10· ·2350 Market Street, St. Louis, Missouri 63103,
11· ·before Suzanne M. Zes, a Certified Court Reporter of
12· ·the State of Missouri and Registered Professional
13· ·Reporter.
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·1· · · · · · · · · A P P E A R A N C E S
·2· ·COMMISSIONERS:
·3· ·Mr. Leonard Toenjes, Chairman
· · ·Mr. Matt Muren, Vice-Chairman
·4· ·Mr. Bill Clarke
· · ·Mr. Paul Ziegler
·5· ·Mr. Brad Goss
· · ·Mr. Stephen Mahfood
·6· ·Ms. Lisa Savoy
· · ·Mr. Mark Perkins
·7· ·Mr. Lou Jearls
· · ·Mr. Lloyd Palans
·8· ·Mr. Jim Faul
· · ·Mr. Jack Stein
·9· ·Ms. Mickey Croyle
10· ·COUNSEL FOR THE RATE COMMISSION:
11· ·Ms. Lisa Stump
· · ·Mr. Brian Malone
12· ·Lashly & Baer
· · ·714 Locust Street
13· ·St. Louis, Missouri 63101
14· ·COUNSEL FOR METROPOLITAN ST. LOUIS SEWER DISTRICT:
15· ·Mr. Brian Stone
· · ·Ms. Susan Myers
16· ·Metropolitan St. Louis Sewer District
· · ·2350 Market Street
17· ·St. Louis, Missouri 63103
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· · ·The Court Reporter:
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· · ·Suzanne Zes, CCR, RPR
22· ·Lexitas Legal
· · ·711 North Eleventh Street
23· ·St. Louis, Missouri 63101
· · ·314.644.2191
24· ·314.644.1334 Fax
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·1· · · · · IT IS HEREBY STIPULATED AND AGREED by and
·2· ·between all parties that the MEETING OF THE RATE
·3· ·COMMISSION, 2023 STORMWATER AND WASTEWATER RATE
·4· ·CHANGE PROCEEDING may be taken in shorthand by
·5· ·Suzanne Zes, a Certified Court Reporter and
·6· ·Registered Professional Reporter, and afterwards
·7· ·transcribed into printing by agreement of all
·8· ·parties.
·9· · · (Whereupon, the proceeding began at 9:30 a.m.)
10· · · · · · · · · · · · * * * * *
11· · · · · · · ·CHAIRMAN TOENJES:· It is 9:30 in 30
12· ·seconds, so we will call the meeting to order. I
13· ·believe we have resolved some technical issues,
14· ·which we will discuss after the roll call.· So I
15· ·will ask Mr. Clarke to take the roll.
16· · · · · You may borrow the mike.
17· · · · · · · ·COMMISSIONER CLARKE:· Thank you.
18· · · · · Leonard Toenjes?
19· · · · · · · ·CHAIRMAN TOENJES:· Present.
20· · · · · · · ·COMMISSIONER CLARKE:· Lou Jearls?
21· · · · · · · ·COMMISSIONER JEARLS:· Here.
22· · · · · · · ·COMMISSIONER CLARKE:· Lloyd Palans?
23· · · · · · · ·COMMISSIONER PALANS:· Present.
24· · · · · · · ·COMMISSIONER CLARKE:· Paul Ziegler?
25· · · · · · · ·COMMISSIONER ZIEGLER:· Here.
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·1· · · · · · · ·COMMISSIONER CLARKE:· Patrick Moynihan?
·2· ·Brad Goss?
·3· · · · · · · ·COMMISSIONER GOSS:· Present.
·4· · · · · · · ·COMMISSIONER CLARKE:· Steve Mahfood?
·5· ·Jack Stein?
·6· · · · · · · ·COMMISSIONER STEIN:· Present.
·7· · · · · · · ·COMMISSIONER CLARKE:· Lisa Savoy?
·8· · · · · · · ·COMMISSIONER SAVOY:· Here.
·9· · · · · · · ·COMMISSIONER CLARKE:· Mark Perkins?
10· ·Ryan Barry?· Mickey Croyle?· Matt Muren?
11· · · · · · · ·VICE-CHAIRMAN MUREN:· Present.
12· · · · · · · ·COMMISSIONER CLARKE:· Jim Faul?
13· · · · · · · ·COMMISSIONER FAUL:· Faul.· Yes.
14· · · · · · · ·COMMISSIONER CLARKE:· Faul.· Excuse me.
15· · · · · Bill Clarke, here.
16· · · · · We have a quorum.
17· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
18· ·Secretary.· We have a quorum.
19· · · · · Ms. Stump, will you provide us the background
20· ·on the changes we have made in our technical
21· ·operations for today related to the court reporter
22· ·and the witnesses.
23· · · · · · · ·MS. STUMP:· The District --
24· ·(inaudible) -- the rules require that there be a
25· ·transcript and this is being recorded, so the
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·1· ·District will provide that to the court reporter who
·2· ·will make a transcript.
·3· · · · · It is a requirement that the witnesses be
·4· ·sworn in.· It is usually done by the court reporter
·5· ·but Stephanie is a notary and so she has volunteered
·6· ·and --
·7· · · · · · · ·UNIDENTIFIED SPEAKER:· Wendi.
·8· · · · · · · ·MS. STUMP:· Wendi.· Oh, I thought it was
·9· ·Stephanie.· I'm sorry.· Wendi has volunteered.
10· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Wendi.
11· · · · · · · ·MS. STUMP:· (Inaudible) -- so we are
12· ·going to start with stormwater and Ms. Myers has
13· ·a -- (inaudible).
14· · · · · · · ·CHAIRMAN TOENJES:· And I will remind
15· ·everyone to utilize a microphone in all your
16· ·questions and answers in order that the recording is
17· ·accurate so that the court reporter can utilize that
18· ·accurately.
19· · · · · Item No. 2: Approval of the Minutes.
20· · · · · Are there any comments on the Minutes of the
21· ·March 31st meeting?
22· · · · · · · ·COMMISSIONER JEARLS:· I'll move to
23· ·approve.
24· · · · · · · ·CHAIRMAN TOENJES:· All right.· Mr.
25· ·Jearls made a motion to approve.· Is there a second?
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·1· · · · · · · ·COMMISSIONER CROYLE:· Second.
·2· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Ms.
·3· ·Croyle.· Ms. Croyle made a motion to second.· Is
·4· ·there any discussion on the motion?
·5· · · · · All signify by saying "Aye."
·6· · · · · · · ·(All said aye.)
·7· · · · · · · ·CHAIRMAN TOENJES:· Opposed?· Abstain?
·8· · · · · It looks like the court reporter is trying to
·9· ·get in now.
10· · · · · Motion carries.
11· · · · · Item 3: 2023 Stormwater and Wastewater
12· ·Proceedings.
13· · · · · My name is Leonard Toenjes and I am a
14· ·Commissioner of the Rate Commission of the
15· ·Metropolitan St. Louis Sewer District and will serve
16· ·as Chair of this Proceeding.
17· · · · · The Charter Plan of the District was approved
18· ·by the voters of St. Louis and St. Louis County at a
19· ·special election on February 9th, 1954, and amended
20· ·at a general election on November 7th, 2000, at a
21· ·special election on June 5th, 2012 and again at a
22· ·special election on Tuesday, April 6th, 2021.
23· · · · · The amendment to the Charter Plan in 2000
24· ·established the Rate Commission to review and make
25· ·recommendations to the District regarding changes in
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·1· ·wastewater rates, stormwater rates, and tax rates
·2· ·proposed by the District.
·3· · · · · The Charter Plan requires the Board of
·4· ·Trustees of the District to select organizations to
·5· ·name delegates to the Rate Commission to ensure a
·6· ·fair representation of all users of the District's
·7· ·services.
·8· · · · · The Rate Commission representative
·9· ·organizations are to represent
10· ·commericial-industrial users, residential users, and
11· ·other organizations interested in the operation of
12· ·the District, including organizations focusing on
13· ·environmental issues, labor issues, socioeconomic
14· ·issues, community-neighborhood organizations and
15· ·other non-profit organizations.
16· · · · · The Rate Commission currently consists of
17· ·representatives of Associated General Contractors of
18· ·Missouri, St. Louis Realtors, the City of
19· ·Florissant, St. Louis Council of Construction
20· ·Consumers, Greater St. Louis Labor Council, North
21· ·America's Building Trades Union, Mound City Bar
22· ·Association, the League of Women Voters of Metro St.
23· ·Louis, Home Builders Association of St. Louis, the
24· ·City of Creve Coeur, and Missouri Coalition for the
25· ·Environment, the City of Ladue, the Engineers Club
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·1· ·of St. Louis, Missouri Industrial Energy Consumers,
·2· ·and Education Plus.
·3· · · · · Upon receipt of a Rate Change Notice from the
·4· ·District, the Rate Commission is to recommend to the
·5· ·Board of Trustees changes in a wastewater,
·6· ·stormwater or tax rate necessary to, number one, pay
·7· ·interest and principal falling due on bonds issued
·8· ·to finance assets of the District; two, the costs of
·9· ·operation and maintenance; and three, such amounts
10· ·as may be required to cover emergencies and
11· ·anticipated delinquencies.
12· · · · · Further, any change in a rate recommended to
13· ·the Board of Trustees by the Rate Commission is to
14· ·be accompanied by a statement that the proposed
15· ·change, number one, is consistent with
16· ·constitutional, statutory, or common law as amended
17· ·from time to time; number two, enhance the
18· ·District's ability to provide adequate sewer and
19· ·drainage systems and facilities or related services;
20· ·number three, is consistent with and not in
21· ·violation of any covenant or provision relating to
22· ·any outstanding bonds or indebtedness of the
23· ·District; number four, does not impair the ability
24· ·of the District to comply with applicable Federal or
25· ·State laws or regulations as amended from time to
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·1· ·time; and number five, considers the financial
·2· ·impact on all classes of ratepayers in determining a
·3· ·fair and reasonable burden.
·4· · · · · The Rate Commission received a Rate Change
·5· ·Notice from the District on March 24th, 2023. Under
·6· ·the District's Charter Plan the Rate Commission must
·7· ·on or before September 5th, 2023, issue its report
·8· ·on the Proposed Rate Change Notice to the Board of
·9· ·Trustees of the District.
10· · · · · Under Procedural Rules adopted by the Rate
11· ·Commission on March 24th, 2023, any person affected
12· ·by the Rate Change Proposal had an opportunity to
13· ·submit an application to intervene in these
14· ·Proceedings no later than April 14th, 2023.· The
15· ·Rate Commission received no applications to
16· ·intervene.
17· · · · · On March 24th, 2023, the District submitted
18· ·to the Rate Commission prepared direct testimony of
19· ·Brian L. Hoelscher, Susan M. Myers, Richard L.
20· ·Unverferth, Bret A. Berthold, Marion M. Gee, Tim R.
21· ·Snoke, Bethany Pugh, William Stannard, Thomas A.
22· ·Beckley and William Zieburtz.
23· · · · · On April 4th, 2023, the Rate Commission
24· ·submitted its first discovery request to the
25· ·District.· On April 14th, 2023, the District filed
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·1· ·its responses.· On April 7th, 2023, the Rate
·2· ·Commission submitted its second discovery request to
·3· ·the District, to which the District responded on
·4· ·April 17th, 2023.· On April 14th, 2023, the Rate
·5· ·Commission submitted its third discovery request to
·6· ·the District, to which the District responded on
·7· ·April 20th, 2023.
·8· · · · · This Technical Conference will be held on the
·9· ·record regarding the Rate Setting Documents and the
10· ·direct testimony filed with the Rate Commission by
11· ·the District.· The purpose of this Technical
12· ·Conference is to provide the District an opportunity
13· ·to answer questions propounded by Lashly & Baer,
14· ·legal counsel to the Rate Commission; and then by
15· ·members of the Rate Commission.
16· · · · · Following this Technical Conference the Rate
17· ·Commission consultants will, on or before May 12th,
18· ·2023, submit prepared rebuttal testimony.
19· · · · · Who is here on behalf of St. Louis
20· ·Metropolitan Sewer District?
21· · · · · · · ·MS. MYERS:· Susan Myers as the General
22· ·Counsel.
23· · · · · · · ·CHAIRMAN TOENJES:· Also present are
24· ·consultants to the Rate Commission: Pamela Lemoine
25· ·of Burns & McDonnell, Anna White of Black & Veatch.
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·1· · · · · Anyone else from Black and Veatch?
·2· · · · · · · ·MS. BUI:· On the phone -- on the phone
·3· ·is Ann Bui with Black & Veatch.
·4· · · · · · · ·CHAIRMAN TOENJES:· Thank you.
·5· · · · · And legal counsel to the Rate Commission,
·6· ·Lisa Stump and Brian Malone of Lashly & Baer.
·7· · · · · The Rate Change Proposal consists of a
·8· ·stormwater and wastewater rate change.· We will be
·9· ·separating them for the purposes of this Technical
10· ·Conference.· We will begin today with the questions
11· ·regarding the testimony on the Proposed Stormwater
12· ·Rate Change and when that is completed, we will
13· ·proceed with testimony on the Wastewater Rate Change
14· ·Proposal.
15· · · · · Under the Rate Commission's Operational
16· ·Rules, no person shall be required to answer
17· ·questions for a total period of more than three
18· ·hours.
19· · · · · Are there any procedural matters to be
20· ·addressed?
21· · · · · · · ·COMMISSIONER GOSS:· Mr. Chairman?
22· · · · · · · ·CHAIRMAN TOENJES:· Yes, Mr. Goss?
23· · · · · · · ·COMMISSIONER GOSS:· The website lists
24· ·all the exhibits and that sort of thing.· It might
25· ·be helpful, when you begin your testimony, just to
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·1· ·guide folks who may be watching remotely on Zoom or
·2· ·whatever as to how they can see that -- those
·3· ·exhibits, where they need to go, that sort of thing,
·4· ·just so they're not kind of fumbling around trying
·5· ·to find it.· Because you folks have done a really
·6· ·nice job laying them all out, so you may as well get
·7· ·the credit for that as well.· All right.· Thank you.
·8· · · · · · · ·CHAIRMAN TOENJES:· Good reminder, Mr.
·9· ·Goss.· Thank you.
10· · · · · Are there any other procedural matters?
11· · · · · There being no further procedural matters,
12· ·Ms. Myers, would you like to make an opening
13· ·statement?
14· · · · · · · ·MS. MYERS:· I would.· Thank you.
15· · · · · Good morning.· My name is Susan Myers and I
16· ·am the General Counsel for the Metropolitan St.
17· ·Louis Sewer District.· I would like to thank you all
18· ·for serving on the Rate Commission in this rate
19· ·setting process and allowing me the opportunity to
20· ·provide an opening statement on behalf of the
21· ·District.
22· · · · · As you heard in orientation, MSD serves about
23· ·1.3 million people in a service area of 520 square
24· ·miles.· MSD was formed pursuant to the Missouri
25· ·Constitution in 1954 and began operation in 1956.
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·1· ·MSD gains its powers from the Missouri Constitution
·2· ·and from the MSD Charter Plan.
·3· · · · · You're here today per Section 7.040 of the
·4· ·MSD Charter, whereby the Rate Commission is to
·5· ·review and make recommendations to the Board
·6· ·regarding all proposed changes in wastewater rates,
·7· ·stormwater rates and tax rates or change in the
·8· ·structure of the forgoing.
·9· · · · · The current Rate Proposal before you proposes
10· ·a change in the Wastewater Rates and a new
11· ·Stormwater Capital Program consisting of an ad
12· ·valorem tax to be charged to residential customers
13· ·and a rate charged to non-residential customers
14· ·based on the amount of each property's impervious
15· ·area.· The funding will be used to address flooding
16· ·and erosion issues.
17· · · · · It is also important to understand which MSD
18· ·rates and taxes are not being changed and therefore
19· ·are not part of the current Rate Proposal.
20· · · · · There are two existing revenue sources and
21· ·services that are not part of this Rate Proposal.
22· · · · · Stormwater taxes for regulatory issues is
23· ·what we refer to as MSD's 2-cent property tax used
24· ·to fund stormwater regulatory services.· Neither the
25· ·tax rate, nor the structure, are being changed in
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·1· ·any way and are therefore not part of the current
·2· ·Rate Proposal.· The District expects the current
·3· ·funding and structure to be sufficient for the
·4· ·foreseeable future.· This tax has been in place
·5· ·since the creation of the District.
·6· · · · · Two, stormwater taxes for the operation and
·7· ·maintenance of the public stormwater system.· MSD's
·8· ·10-cent property tax is used to fund stormwater
·9· ·operation and maintenance of the existing system.
10· ·Neither the tax rate, nor the structure, are being
11· ·changed in any way and therefore are not part of the
12· ·current Rate Proposal.· The District expects this
13· ·current funding and structure to be sufficient for
14· ·the foreseeable future.· This tax was passed by the
15· ·voters in 2016.
16· · · · · Throughout these Technical Conferences please
17· ·keep the following in mind:
18· · · · · The current Rate Proposal before you
19· ·recommends the creation of a new Stormwater Capital
20· ·Program to be used to address flooding and erosion
21· ·control issues.· Funding for a new Stormwater
22· ·Capital Program is the final piece needed to fund a
23· ·complete Stormwater program.
24· · · · · By "complete" I mean MSD would have funding
25· ·for: one, regulatory services; two, O&M services;
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·1· ·and finally to address flooding and erosion issues.
·2· · · · · The proposed stormwater rate is currently
·3· ·scheduled to be presented to the voters for their
·4· ·consideration in April of 2024.
·5· · · · · The Wastewater Rate Change Proposal proposes
·6· ·to increase rates an average of 7.25 percent over
·7· ·the 4-year Rate Proposal period.· This rate
·8· ·structure follows the same parameters as in the
·9· ·previous Rate Proposals and will not require a vote
10· ·of the people.· To fund a portion of the CIRP with
11· ·bonds, the District will go to the voters requesting
12· ·authority to bond in April of 2024.· This is in
13· ·addition to taking advantage of loans and grants
14· ·that are available.
15· · · · · During the 2019 Wastewater Rate Change
16· ·Proposal Proceedings the District committed to
17· ·performing a new Infiltration and Inflow -- we refer
18· ·to it as I&I -- study.· That has been done and is
19· ·MSD Exhibit No. 66.· The new I&I study supports no
20· ·change to the allocation that has been used in the
21· ·past.
22· · · · · MSD also had an updated analysis done of the
23· ·volume contribution based on property attributes for
24· ·unmetered customers.· This updated analysis
25· ·recommends a reduction in the volume assigned to
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·1· ·each attribute.· See MSD Exhibit No. 65 for that
·2· ·study.
·3· · · · · To provide for the recovery of costs
·4· ·associated with above-average strength wastewater,
·5· ·extra-strength surcharge rates are applied to
·6· ·wastewater loading that exceed normal strength
·7· ·limits.· The current Proposal indicates the need for
·8· ·a significant increase in these surcharge rates.
·9· · · · · It is the District's opinion that both the
10· ·proposed Stormwater Rate Change Proposal and the
11· ·Wastewater Rate Change Proposal considers the
12· ·financial impact on all classes of ratepayers in
13· ·determining a fair and reasonable burden.
14· · · · · Today the District will provide testimony to
15· ·the Stormwater Capital Proposal.· This testimony
16· ·will provide clarification regarding the detailed
17· ·aspects of the District's Rate Change Proposal and
18· ·demonstrate how the proposed rates are a result of
19· ·our customers' needs and wants.
20· · · · · Throughout this testimony we are happy to
21· ·answer any questions you may have prior to moving on
22· ·to the wastewater testimony.
23· · · · · The order of appearance of MSD witnesses
24· ·testifying to the Stormwater Capital Program will be
25· ·myself, as MSD's General Counsel; Brian Hoelscher,
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·1· ·MSD's CEO and Executive Director; Rich Unverferth,
·2· ·MSD's Director of Engineering; and Marion Gee, MSD's
·3· ·Director of Finance.
·4· · · · · Following the stormwater testimony, we will
·5· ·move into the District's wastewater testimony.· The
·6· ·order of appearance there will be myself, MSD's
·7· ·General Counsel; Rich Unverferth, MSD's Director of
·8· ·Engineering; Bret Berthold, MSD's Director of
·9· ·Operations; Marion Gee, MSD's Director of Finance;
10· ·Tim Snoke, MSD's Secretary-Treasurer, Bethany Pugh,
11· ·PFM Financial Advisors; William Stannard, Raftelis
12· ·Financial Consultants; Thomas Beckley, Raftelis
13· ·Financial Consultants; and William Zieburtz with
14· ·Stantec Consulting Services.
15· · · · · This concludes my opening remarks.· I ask
16· ·that my opening remarks be accepted by the Rate
17· ·Commission as Exhibit MSD No. 72.· Thank you.
18· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Ms. Myers.
19· · · · · I'd like for the record to show that
20· ·Mr. Perkins and Mr. Mahfood have joined the meeting
21· ·-- joined the proceedings.
22· · · · · Ms. Stump or Mr. Malone, do you wish to make
23· ·any opening statements?
24· · · · · Hearing none, Ms. Myers, are you ready to
25· ·present those persons for whom you filed direct
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·1· ·testimony?· It's my understanding we'll start with
·2· ·the testimony -- with your testimony, so we will go
·3· ·ahead and we will have you sworn in and then
·4· ·proceed.
·5· · · · · · · ·MS. MYERS:· Thank you.
·6· · · · · · · ·(Whereupon, SUSAN MYERS was sworn in.)
·7· · · · · · · ·CHAIRMAN TOENJES:· Thank you.
·8· · · · · Mr. Malone, do you have questions for
·9· ·Ms. Myers on behalf of the Rate Commission?
10· · · · · · · ·MR. MALONE:· I do.
11· · · · · · · ·CHAIRMAN TOENJES:· Please proceed.
12· · · · · · · · · · · · * * * * *
13· · · · · · · · · · · SUSAN MYERS,
14· ·having been duly sworn testifies as follows:
15· · · · · · · · · · · ·EXAMINATION
16· · · · · QUESTIONS BY MR. MALONE:
17· · · · · Q.· ·Good morning, Ms. Myers.
18· · · · · A.· ·Good morning.
19· · · · · Q.· ·I'm going to be asking you some
20· ·questions about the Stormwater Rate --
21· · · · · · · ·CHAIRMAN TOENJES:· Pull it a little
22· ·closer to you.
23· · · · · Q.· · (MR. MALONE) I'm going to be asking you
24· ·some questions about the Stormwater Rate Change
25· ·Proceeding and then my colleague, Lisa Stump, will
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·1· ·ask questions --
·2· · · · · · · ·CHAIRMAN TOENJES:· Pull it a little
·3· ·closer to you, Brian.
·4· · · · · · · ·MR. MALONE:· Is that better?· Can
·5· ·everyone hear me online?
·6· · · · · · · ·COMMISSIONER FAUL:· Yes.
·7· · · · · · · ·COMMISSIONER SAVOY:· Yes.
·8· · · · · Q.· · (MR. MALONE) Do you have the testimony
·9· ·that you submitted in this proceeding with you
10· ·today?
11· · · · · A.· ·I do.
12· · · · · Q.· ·And I understand you've been general
13· ·counsel for MSD since 2011; is that correct?
14· · · · · A.· ·That's correct.
15· · · · · Q.· ·And how many rate change proceedings
16· ·have you been involved with in that time?
17· · · · · A.· ·A handful.· I would say four or five.
18· ·This may be the fifth one.
19· · · · · Q.· ·Okay.· And how many of those have
20· ·involved stormwater?
21· · · · · A.· ·This will be the second one -- third
22· ·one.
23· · · · · Q.· ·So you understand that our role as the
24· ·Commission's legal counsel is primarily to assist
25· ·the Commission in preparing its report on the Rate
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·1· ·Change Proceedings and that these Technical
·2· ·Conferences serve to define the issues to be covered
·3· ·in the report?
·4· · · · · A.· ·Yes, I do.
·5· · · · · Q.· ·So I have some questions for you to
·6· ·clarify and expand upon the testimony that the
·7· ·District's witnesses have submitted.· The purpose is
·8· ·to provide some guidance in terms of the three
·9· ·factors and the five criteria that the Commission
10· ·are to consider and address in its report.
11· · · · · And just so that the record is clear, when I
12· ·refer to the three factors, you understand that I'm
13· ·referring to the three factors in Section 7.040 of
14· ·the Charter Plan that the Commission must review?
15· · · · · A.· ·Yes.
16· · · · · Q.· ·Likewise, when I refer to the five
17· ·criteria, you understand that I'm referring to the
18· ·five criteria in Section 7.020 of the Charter Plan
19· ·that the Commission will evaluate?
20· · · · · A.· ·Yes.
21· · · · · Q.· ·And if one of my questions should be
22· ·directed to another District witness will you please
23· ·let me know?
24· · · · · A.· ·I will.
25· · · · · Q.· ·And I realize that some of the factors
Page 23
·1· ·and the criteria are not going to be necessarily
·2· ·relevant to the stormwater aspect of the Rate Change
·3· ·Proposal but I still need to ask about these so we
·4· ·have that on the record.· If it's the District's
·5· ·opinion that criteria or a factor aren't relevant or
·6· ·an issue in the stormwater aspect of this Rate
·7· ·Change Proposal will you please so state?
·8· · · · · A.· ·Yes.
·9· · · · · Q.· ·You spent some time in your opening
10· ·statement talking about the existing stormwater
11· ·funding mechanisms in the District: the 2-cent ad
12· ·valorem tax for regulatory requirements and the
13· ·10-cent property tax for O&M to the public
14· ·stormwater system.
15· · · · · Will you please let the Commission know what
16· ·the -- what the regulatory requirements -- where do
17· ·those come from, whether those are from Federal,
18· ·State law or both?
19· · · · · A.· ·Both.· The Clean Water Act is a Federal
20· ·law that the State of Missouri then implements
21· ·through the Missouri Clean Water Law and that
22· ·is primary -- the primary obligation that we have as
23· ·a District.
24· · · · · Q.· ·Okay.· And then the 10-cent O&M is to
25· ·maintain public assets of the District related to
Page 24
·1· ·stormwater, correct?
·2· · · · · A.· ·Correct.
·3· · · · · Q.· ·And both of those are authorized by
·4· ·Section 3.020, Subsection 20 of the Charter Plan; is
·5· ·that correct?
·6· · · · · A.· ·20 or 16.· I would have to look at the
·7· ·Charter.
·8· · · · · Yes, you're correct, it's 20.
·9· · · · · Q.· ·And neither of those are going to be
10· ·affected by the current Rate Change Proposal,
11· ·correct?
12· · · · · A.· ·Correct.
13· · · · · Q.· ·As far as operating reserves for
14· ·stormwater, are those -- are those reserves
15· ·collected from the existing property taxes?
16· · · · · A.· ·You will need to ask Marion Gee
17· ·regarding that.
18· · · · · Q.· ·And it's not -- the current Rate Change
19· ·Proposal is not intended to I guess bolster the
20· ·operating reserves; is that correct?· Or is that
21· ·also for Marion?
22· · · · · A.· ·I would ask Marion that one also.
23· · · · · Q.· ·All right.· Let's move to the proposed
24· ·Stormwater Capital Rate.· Can you please describe
25· ·how the Stormwater Capital Rate will be collected
Page 25
·1· ·from residential and from non-residential properties
·2· ·within the District?
·3· · · · · A.· ·The Stormwater Capital Rate Proposal
·4· ·proposes an ad valorem tax be charged to residential
·5· ·properties with an impervious rate being charged to
·6· ·the non-residential properties.
·7· · · · · Q.· ·And do you know offhand how much the ad
·8· ·valorem tax will be?
·9· · · · · A.· ·That's another Marion question.
10· · · · · Q.· ·And I guess the same goes for the
11· ·impervious surface fee?
12· · · · · A.· ·Correct.
13· · · · · Q.· ·And it's contemplated that non-profits
14· ·and governmental entities both also pay the
15· ·non-residential impervious surface fee; is that
16· ·correct?
17· · · · · A.· ·Correct.
18· · · · · Q.· ·Okay.· And it's also proposed that as
19· ·part of the Rate Change Proposal the existing OMCI
20· ·district tax rates will all be set to zero; is that
21· ·correct?
22· · · · · A.· ·That is correct.
23· · · · · Q.· ·And the purpose is to establish a fund
24· ·that will be used for Stormwater Capital Projects
25· ·throughout the District; is that correct?
Page 26
·1· · · · · A.· ·To address flooding and erosion.
·2· · · · · Q.· ·And will those be -- projects be on
·3· ·public and private property?
·4· · · · · A.· ·Probably best to ask Rich Unverferth
·5· ·about the list of projects.
·6· · · · · Q.· ·Okay.· And so is it fair to state the
·7· ·payment is going to differ for residential and
·8· ·non-residential properties but the money is all
·9· ·going to go into the same fund?
10· · · · · A.· ·Correct.
11· · · · · Q.· ·And the District intends to seek voter
12· ·approval of both the residential and the
13· ·non-residential taxes or charges?
14· · · · · A.· ·Correct.
15· · · · · Q.· ·And you're familiar with the Missouri
16· ·Growth Association versus MSD case; is that correct?
17· · · · · A.· ·Correct.
18· · · · · Q.· ·And in that case the Court of Appeals
19· ·determined that rates and charges collected by the
20· ·District don't require voter approval?
21· · · · · A.· ·That is correct.
22· · · · · Q.· ·But you intend to seek voter approval of
23· ·the rate and charge for non-residential property
24· ·anyway?
25· · · · · A.· ·Yes.
Page 27
·1· · · · · Q.· ·All right.· Turning to the three
·2· ·criteria and the five factors -- and, again, if some
·3· ·of these aren't relevant or should be addressed by
·4· ·another witness let me know.
·5· · · · · Is the Stormwater Rate Change Proposal
·6· ·necessary to pay interest and principal falling due
·7· ·on bonds issued to finance assets of the District?
·8· · · · · A.· ·That is best answered by Tim Snoke.
·9· · · · · Q.· ·Okay.· And is it necessary to pay the
10· ·cost for operation and maintenance?
11· · · · · A.· ·That is best answered by Rich
12· ·Unverferth.
13· · · · · Q.· ·And is it necessary to provide funds to
14· ·cover emergencies and delinquencies?
15· · · · · A.· ·That would best be answered by Marion
16· ·Gee.
17· · · · · Q.· ·Okay.· Is the Stormwater Rate Change
18· ·Proposal consistent with the constitutional,
19· ·statutory or common laws amended from time to time?
20· · · · · A.· ·Yes, it is.
21· · · · · Q.· ·Okay.· I'll get into that further with
22· ·you later.· I'll go into the other factors now.
23· · · · · A.· ·Okay.
24· · · · · Q.· ·Does the Rate Change Proposal enhance
25· ·the District's ability to provide adequate sewer and
Page 28
·1· ·drainage systems, facilities and related services?
·2· · · · · A.· ·That's best answered by Rich Unverferth.
·3· · · · · Q.· ·Is the Rate Change Proposal consistent
·4· ·with and not in violation of any covenant or
·5· ·provision relating to outstanding bonds or
·6· ·indebtedness of the District?
·7· · · · · A.· ·Best answered by Tim Snoke.
·8· · · · · Q.· ·And does the Rate Change Proposal, does
·9· ·it not impair the ability of the District to comply
10· ·with applicable Federal and State laws as amended
11· ·from time to time?
12· · · · · A.· ·No, it does not.
13· · · · · Q.· ·And does the Rate Change Proposal
14· ·consider all classes of ratepayers in determining a
15· ·fair and reasonable burden?
16· · · · · A.· ·That is best answered by Brian
17· ·Hoelscher.
18· · · · · Q.· ·Thank you.
19· · · · · And the Stormwater Rate Change Proposal will
20· ·not impact the District's obligations under the
21· ·Consent Decree; is that correct?
22· · · · · A.· ·No, it will not.
23· · · · · Q.· ·Has the District taken steps to ensure
24· ·that the cost of constructing and maintaining its
25· ·facilities and services are being incurred in a
Page 29
·1· ·reasonable and sufficient manner?
·2· · · · · A.· ·Yes, it has.
·3· · · · · Q.· ·Has the District conducted any internal
·4· ·or external audits to address that matter?
·5· · · · · A.· ·That's probably best answered by Marion
·6· ·Gee.
·7· · · · · Q.· ·All right.· Turning to the consistency
·8· ·with constitutional, statutory or common law, with
·9· ·regard to the residential property tax, like the
10· ·other property tax, that's authorized under Section
11· ·3.020, Subsection 20 of the Charter Plan, correct?
12· · · · · A.· ·Correct.
13· · · · · Q.· ·And the non-residential, the District is
14· ·characterizing impervious surface charge as a rate,
15· ·rental or other charge, correct?
16· · · · · A.· ·Correct.
17· · · · · Q.· ·And that would be pursuant to the
18· ·District authority under 3.020, Subsection 16?
19· · · · · A.· ·Correct.
20· · · · · Q.· ·And you'd agree that neither of these
21· ·are special assessments under Subsection 21 of that
22· ·section, correct?
23· · · · · A.· ·Correct.
24· · · · · Q.· ·Can you briefly explain why?
25· · · · · A.· ·Because we feel that the ad valorem tax
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·1· ·is a tax under the Missouri Constitution and the
·2· ·rate is not a special assessment.· It's the rate
·3· ·that we are charging under our Charter.
·4· · · · · Q.· ·With regard to the residential ad
·5· ·valorem tax, are you familiar with Section 204.700
·6· ·of the Missouri Statutes?
·7· · · · · I'm passing you a copy of a printout of the
·8· ·subsection of the statute.· This statute was
·9· ·discussed in some depth at the 2018 Rate Change
10· ·Proceeding and I'm going to paraphrase that the
11· ·statute states that no residential property in MSD's
12· ·territory shall be assessed any fee, charge or tax
13· ·for stormwater management services if the District
14· ·doesn't provide sanitary sewer service and runoff or
15· ·stormwater isn't -- does not flow or conveyed to a
16· ·sewer maintained by the District?
17· · · · · A.· ·Yes, I am familiar with this.
18· · · · · Q.· ·And assuming that statute is valid, does
19· ·the District know how many properties this would
20· ·apply to?
21· · · · · A.· ·That is probably a Marion question.
22· · · · · Q.· ·So assuming this statute is valid, would
23· ·you agree that properties which this subsection
24· ·applies to would not be subject to the ad valorem
25· ·tax; is that correct?
Page 31
·1· · · · · A.· ·That would also be a Marion question.
·2· · · · · Q.· ·And you opined during the 2018
·3· ·Stormwater Rate Change Proceeding that this invalid
·4· ·and that the statute was invalid and void for a
·5· ·couple reasons.· One, that it was a special law in
·6· ·violation of the Missouri Constitution, that the
·7· ·statute enacting it -- or the House Bill enacting it
·8· ·violated the single-subject requirement and that it
·9· ·conflicted with the District's Charter and was
10· ·therefore void.· Do you recall that testimony?
11· · · · · A.· ·Yes, I do.
12· · · · · Q.· ·Are those still the District's
13· ·positions?
14· · · · · A.· ·Yes, they are.
15· · · · · Q.· ·And you're aware that in 2019 the
16· ·Missouri Supreme Court dramatically altered how they
17· ·evaluate special laws, it's no longer a question of
18· ·whether the classification is open-ended or closed,
19· ·the only issue is whether applied here there's a
20· ·rational basis for treating sewer ratepayers within
21· ·MSD's territory different from other sewer customers
22· ·throughout the State?
23· · · · · A.· ·I am not familiar with that but this
24· ·statute would still be not in compliance with the
25· ·MSD Charter.
Page 32
·1· · · · · Q.· ·So the District hasn't conducted any
·2· ·reevaluation as to whether it's a special law since
·3· ·the 2018 proceedings?
·4· · · · · A.· ·We have not.
·5· · · · · Q.· ·And the same is true of the
·6· ·single-subject requirement, has there been any
·7· ·update since -- new case law 2018?
·8· · · · · A.· ·No, there has not.
·9· · · · · Q.· ·And it remains the position that the
10· ·statute is void because it conflicts with MSD's
11· ·Charter Plan, correct?
12· · · · · A.· ·That is correct.
13· · · · · Q.· ·All right.· Moving on to the
14· ·non-residential charge, you characterize this as a
15· ·rate or a charge under Subsection 16 of 3.020,
16· ·correct?
17· · · · · A.· ·Correct.
18· · · · · Q.· ·And Subjection 16 provides that rate,
19· ·rentals or other charges are to be collected from
20· ·all properties served by the sewer facilities of the
21· ·District, correct?
22· · · · · A.· ·Correct.
23· · · · · Q.· ·And a rate or charge is not defined in
24· ·the Charter anywhere; is that correct?
25· · · · · A.· ·No, it is not.
Page 33
·1· · · · · Q.· ·In the wastewater context, the District
·2· ·charges properties connected to the sewer based on
·3· ·number of rooms, number of bathrooms, water usage
·4· ·and then bills the resident according to their
·5· ·usage; is that correct?
·6· · · · · A.· ·Correct.
·7· · · · · Q.· ·And that's a rate or a charge?
·8· · · · · A.· ·Correct.
·9· · · · · Q.· ·Because the property is -- is connected
10· ·to the District's pipes and served by the District's
11· ·sewer facilities, correct?
12· · · · · A.· ·Correct.
13· · · · · Q.· ·And the amount you pay is related to the
14· ·amount of service you receive; is that correct?
15· · · · · A.· ·Correct.
16· · · · · Q.· ·What is the corresponding service or
17· ·activity that's being charged to a non-residential
18· ·property for stormwater?
19· · · · · A.· ·The amount of impervious area that they
20· ·have on their property.
21· · · · · Q.· ·So I guess my question is, is that a
22· ·service, the amount of impervious area they have on
23· ·their property?
24· · · · · A.· ·No, it's not.
25· · · · · Q.· ·Does producing the runoff equate to
Page 34
·1· ·being served by the District's sewer facilities?· Is
·2· ·that the District's position?
·3· · · · · A.· ·That is probably a better Rich question.
·4· · · · · Q.· ·Would -- I guess what I'm getting at is,
·5· ·is a property being served by the District's sewer
·6· ·facilities if for instance stormwater is captured on
·7· ·site or absorbed onto the property elsewhere before
·8· ·going into MSD's public sewer system?
·9· · · · · A.· ·The amount of impervious area on
10· ·property increases the amount of runoff from a
11· ·property.· And the amount of runoff from a property
12· ·can be a basis for determining the size of the
13· ·system.
14· · · · · Q.· ·And so non- -- that's true of both
15· ·residential and non-residential property, correct?
16· · · · · A.· ·That's correct.
17· · · · · Q.· ·And I understand residential properties
18· ·are being taxed but they're not going to be charged
19· ·for the same service as non-residential properties,
20· ·correct?
21· · · · · A.· ·They are all being charged for flooding
22· ·and erosion issues.
23· · · · · Q.· ·So I guess what I'm getting at is both
24· ·residential property and non-residential property
25· ·are going to produce stormwater, correct?
Page 35
·1· · · · · A.· ·Correct.
·2· · · · · Q.· ·The idea is that residential properties
·3· ·aren't going to be -- pay this charge because
·4· ·they're paying the ad valorem tax, correct?
·5· · · · · A.· ·That's correct.
·6· · · · · Q.· ·Everyone gets the service but only
·7· ·non-residential properties are charged for the
·8· ·service?
·9· · · · · A.· ·The Proposal contemplates two different
10· ·methods of charging to provide funding for the
11· ·District to address flooding and erosion
12· ·District-wide.
13· · · · · Q.· ·In the Missouri Growth Association case
14· ·that I mentioned earlier didn't the court determine
15· ·that the rate at issue was a rate under Subsection
16· ·16 rather than a tax because it was measured against
17· ·the customer's water usage and therefore bore a
18· ·direct relationship to the service provided?
19· · · · · A.· ·That is correct for wastewater.
20· · · · · Q.· ·Okay.· I guess what I'm getting at is,
21· ·is it still -- is the stormwater charge still a
22· ·charge or a rate instead of a tax if it doesn't --
23· ·if the amount of the charge doesn't vary based on
24· ·the amount of service being provided?
25· · · · · A.· ·The Missouri Growth case that you
Page 36
·1· ·mentioned evaluated the wastewater rate that was
·2· ·being charged by five factors -- they're called the
·3· ·Five Keller Factors -- and determined that based
·4· ·upon that analysis the rate did not need to be voted
·5· ·on to meet the Missouri Constitution, the Hancock
·6· ·Amendment.
·7· · · · · With our stormwater impervious rate we did
·8· ·not evaluate it against the Five Keller Factors.· We
·9· ·have determined that to meet the Missouri
10· ·Constitution Hancock Amendment we would take it to a
11· ·vote of the people.
12· · · · · Q.· ·But I guess my question is even if
13· ·you're submitting this to the voters, aren't the
14· ·Hancock or the Keller Factors relevant to
15· ·determining whether the proposed Stormwater Capital
16· ·Rate is a fee or a rate or a charge instead of a
17· ·tax?
18· · · · · A.· ·I would say no.
19· · · · · The MSD Charter Plan provides us the ability
20· ·to charge a rate.· The Missouri Growth case and --
21· ·well, not the Missouri Growth case but the Missouri
22· ·Constitution Hancock Amendment requires that a tax
23· ·or a rate be voted on by the people.· The only
24· ·exception to that is if you can meet the Five Keller
25· ·Factors that are outlined in the Missouri Growth
Page 37
·1· ·case.
·2· · · · · With the stormwater impervious fee we did
·3· ·not -- we didn't even evaluate the Keller Factors.
·4· ·We just said to meet the Hancock Amendment we will
·5· ·take it to a vote of the people.
·6· · · · · Q.· ·I guess what I'm getting at is isn't the
·7· ·purpose of the Keller Factors to determine the true
·8· ·nature of the Charter rather than citing by its name
·9· ·whether it's a user fee or a tax?· And I -- you're
10· ·familiar with the Zweig versus Metropolitan Sewer
11· ·District case in 2013, correct?
12· · · · · A.· ·Yes.
13· · · · · Q.· ·And that was also a Hancock Amendment
14· ·case filed and it found the impervious surface
15· ·charge and whether it was a fee or a tax, correct?
16· · · · · A.· ·The Zweig case was a case about an
17· ·impervious fee that we tried to implement without
18· ·taking it to a vote of the people.· My opinion of
19· ·the Zweig case is that the ruling was that an
20· ·impervious fee -- that impervious fee was
21· ·unconstitutional because we did not take it to a
22· ·vote of the people.· Therefore to sidestep that
23· ·analysis we decided to take this impervious rate for
24· ·a vote.
25· · · · · Q.· ·All right.· But there's one quote -- I
Page 38
·1· ·get what you're saying but there's one quote I guess
·2· ·I just want to highlight.
·3· · · · · Where there are no individual users and no
·4· ·readily identifiable transaction which the political
·5· ·subdivision renders the relevant service in exchange
·6· ·for a fee, the charge cannot be a valid user fee.
·7· ·And then they determined that the fee was a tax
·8· ·requirement.
·9· · · · · I guess my question for you is, is there a
10· ·readily identifiable transaction involved in the
11· ·assessment of the rate or the charge to
12· ·non-residential property?
13· · · · · A.· ·It's called the MSD Charter gives us the
14· ·authority to charge a rate.· The Hancock Amendment
15· ·requires a vote of the people and that's what we're
16· ·proposing to do.
17· · · · · Q.· ·Okay.· But like the District's
18· ·wastewater rates would still be -- if you decided
19· ·we're going to take those to a vote of the public,
20· ·it would still be a rate or a charge, correct?
21· · · · · A.· ·The wastewater charges are different
22· ·because they were litigated back in the 90s and
23· ·there's -- the Missouri Growth case, as you alluded
24· ·to earlier, was about MSD wastewater rates.· And it
25· ·was ruled by that court that those rates did not
Page 39
·1· ·have to be voted upon.· Therefore, we have tried
·2· ·very, very hard and have been successful at not
·3· ·changing the methodology of our wastewater rates,
·4· ·therefore not having to take the wastewater rates to
·5· ·a vote of the people.
·6· · · · · Q.· ·And if it were determined by a court at
·7· ·some later date that the rate or charge is an actual
·8· ·tax, then government properties and non-profits
·9· ·would be exempt from it, correct?
10· · · · · A.· ·Without knowing the specifics of a
11· ·ruling, in general, yes.
12· · · · · Q.· ·If a property has zero impervious
13· ·surface, a non-residential property, it's still
14· ·going to pay the rate or charge; is that correct?
15· · · · · A.· ·That's a Rich Unverferth question.
16· · · · · Q.· ·All right.· I want to -- most of my
17· ·questions about the Rate Change Proposal imposing a
18· ·fair and reasonable burden I'm going to reserve for
19· ·other District witnesses but I want to go over one
20· ·aspect of this with you as the District's counsel.
21· · · · · As you know the Charter was amended by the
22· ·voters in 2021, correct?
23· · · · · A.· ·Correct.
24· · · · · Q.· ·And one of the amendments in 2021
25· ·affected the fair and reasonable burden criteria; is
Page 40
·1· ·that correct?
·2· · · · · A.· ·Correct.
·3· · · · · Q.· ·Prior to 2021 this fifth factor was
·4· ·basically:· Does the Rate Change Proposal propose a
·5· ·fair and reasonable burden on all classes of
·6· ·taxpayers?
·7· · · · · And now it's:· Does the Rate Change Proposal
·8· ·consider all classes of ratepayers in determining a
·9· ·fair and reasonable burden; is that correct?
10· · · · · A.· ·No.· The fifth factor is: Does the Rate
11· ·Change consider the financial impact on all classes
12· ·of ratepayers in determining a fair and reasonable
13· ·burden?
14· · · · · Q.· ·All right.· Thank you.
15· · · · · Were you involved with the discussions or the
16· ·decisions to amend this clause?· Was that debated
17· ·internally at MSD?
18· · · · · A.· ·This -- the change in this clause was
19· ·discussed by the Charter Commission back in -- I
20· ·don't remember the date.· We could get the date for
21· ·you.· Anyway, there is a requirement in the MSD
22· ·Charter for the Charter Plan to be reviewed by a
23· ·Charter Commission every -- I forget the
24· ·timeframe -- 10 years.· We went through that process
25· ·and this particular criteria was changed by -- was
Page 41
·1· ·recommended to be changed by the Charter Change
·2· ·Commission and then it was voted on by the people.
·3· · · · · Q.· ·Were you involved in those proceedings
·4· ·with the Charter Commission?
·5· · · · · A.· ·Yes.
·6· · · · · Q.· ·Can you explain how in the District's
·7· ·view the inquiry for the Rate Commission is
·8· ·different under the amended language?
·9· · · · · A.· ·I will let Brian Hoelscher answer that
10· ·for you.
11· · · · · Q.· ·All right.· Did MSD consider whether it
12· ·was inequitable or I guess not fair and reasonable
13· ·for residential property and non-residential
14· ·property -- if a residential property has a large
15· ·amount of impervious surface is it I guess
16· ·consistent to treat such a property consistent with
17· ·non-residential property, where residential property
18· ·is going to pay based on their assessed valuation
19· ·and a similar -- a non-residential property with a
20· ·similar amount of impervious surface is going to pay
21· ·based on impervious surface?
22· · · · · A.· ·I will let Brian Hoelscher answer that
23· ·for you.
24· · · · · · · ·MR. MALONE:· I have no further questions
25· ·at this time.
Page 42
·1· · · · · · · ·MS. MYERS:· Okay.· Thank you.
·2· · · · · · · ·CHAIRMAN TOENJES:· Thank you,
·3· ·Mr. Malone.
·4· · · · · Do any of the Rate Commissioners have any
·5· ·questions for Ms. Myers?· Mr. Goss?
·6· · · · · · · ·COMMISSIONER GOSS:· Let Lloyd go first.
·7· · · · · · · ·CHAIRMAN TOENJES:· Mr. Palans?
·8· · · · · · · · · · · ·EXAMINATION
·9· · · · · QUESTIONS BY COMMISSIONER PALANS:
10· · · · · Q.· ·Good morning, Ms. Myers.
11· · · · · A.· ·Good morning.
12· · · · · Q.· ·In the packet of testimony that was
13· ·provided to us, in support of your testimony there
14· ·are two memorandums and a case cite or an actual
15· ·case.· A memorandum being, first, the legal
16· ·rationale for charging the proposed Stormwater
17· ·Capital Rate to non-profit and governmental
18· ·entities.· The second being a legal rationale for
19· ·constitutionality of residential ad valorem tax
20· ·component.· And the third being the Zweig case,
21· ·correct?
22· · · · · A.· ·Correct.
23· · · · · And for those folks online, that's Exhibit
24· ·MSD 3B1, 3B2 and 3B3.
25· · · · · Q.· ·I guess the nature of my questions is
Page 43
·1· ·really going to be focused on the fairness of
·2· ·allocation of stormwater cost to residential
·3· ·customers and a different basis of allocation of
·4· ·stormwater water cost to non-residential customers.
·5· ·That's really the gist of it, the differentiation.
·6· · · · · A.· ·Okay.
·7· · · · · Q.· ·In preparing your two memorandums did
·8· ·you rely upon any opinion of counsel in forming your
·9· ·opinions?
10· · · · · A.· ·Yes, we did.· Yes.
11· · · · · Q.· ·And could you identify the name of the
12· ·counsel which opined to you?
13· · · · · A.· ·Bob Murray.· He is with Shands, Elbert,
14· ·Gianoulakis & Giljum.
15· · · · · Q.· ·And he provided was it one opinion or
16· ·was it more than one opinion?
17· · · · · A.· ·More than -- well, one of -- each of
18· ·these exhibits, 3B and 3B2 -- 3B1 and 3B2 are a
19· ·robust summary of the full legal opinion that the
20· ·District has.
21· · · · · Q.· ·And so in preparing your two memoranda
22· ·that are exhibits, you relied on the opinion of
23· ·counsel -- I forgot the name of the --
24· · · · · A.· ·Bob Murray.
25· · · · · Q.· ·-- Bob Murray?
Page 44
·1· · · · · A.· ·Yes, you're correct.
·2· · · · · Q.· ·And in your testimony on page 2, Line
·3· ·19, you say, "First, the impervious area-based
·4· ·charge can be properly interpreted as not being a
·5· ·property tax or any other form of tax, but instead
·6· ·is a charge or rate authorized by the Charter.
·7· ·Consequently tax-exempt, non-profit, and
·8· ·governmental customers would not be exempt from
·9· ·paying the rate."
10· · · · · You have that statement?
11· · · · · A.· ·I do.
12· · · · · Q.· ·And is that a statement that you relied
13· ·upon or created based upon the opinion of counsel?
14· · · · · A.· ·Correct.
15· · · · · Q.· ·And let me ask you also, if we go on and
16· ·you say, "The impervious area-based charge is not in
17· ·any way based on the value of the property, so it is
18· ·not an ad valorem tax," is that also based upon an
19· ·opinion of counsel?
20· · · · · A.· ·Yes.
21· · · · · Q.· ·And was the opinion of counsel a
22· ·reasoned opinion or was it an unequivocal opinion?
23· · · · · A.· ·Could you explain the difference for me?
24· · · · · Q.· ·A reasoned opinion would be that without
25· ·a specific expression of a court to identify that
Page 45
·1· ·statement, that it was reasoned from case law.
·2· ·That's what I would call a reasoned opinion.
·3· · · · · A.· ·I don't know the answer to that.
·4· · · · · Q.· ·Was the opinion that was given to you,
·5· ·that you relied upon, was it unequivocal?
·6· · · · · A.· ·Yes, I believe.
·7· · · · · Q.· ·And would you be willing to share that
·8· ·opinion with our Commission so that we can review
·9· ·that opinion?
10· · · · · A.· ·The District is a public entity, so
11· ·under the Sunshine Law we have the ability to close
12· ·records if they fit one of the exemptions.· So the
13· ·full legal opinion of -- which this is a very robust
14· ·summary of that full legal opinion -- is a closed
15· ·record.· Therefore, no, I would not be willing to
16· ·share it with the Commission.
17· · · · · Q.· ·And you're aware -- I think you had
18· ·mentioned the five factors if I have that correct?
19· · · · · A.· ·The Five Keller Factors.
20· · · · · Q.· ·The Five Keller Factors.· Who is Keller
21· ·by the way?
22· · · · · A.· ·Keller was a case -- Keller was a case
23· ·prior to the Missouri Growth case.· And that is
24· ·where these five factors fell out of, that case law.
25· ·I could get the site for you if you'd like.
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·1· · · · · Q.· ·Okay.· Well, the first Keller Factor, as
·2· ·I understand it, is that the proposed rate change,
·3· ·quote, is consistent with constitutional, statutory
·4· ·or common law as amended from time to time.
·5· · · · · Are we in agreement that that is the first
·6· ·Keller Factor?
·7· · · · · A.· ·I have not looked at the individual
·8· ·Keller Factors for quite some time, so I do not
·9· ·know.
10· · · · · Q.· ·Well, you're aware that our Commission,
11· ·when it's asked to make findings, must find that the
12· ·proposed rate change is consistent with
13· ·constitutional, statutory or common law as amended
14· ·from time to time, correct?
15· · · · · A.· ·Yes, that is a requirement of the MSD
16· ·Charter.
17· · · · · Q.· ·As so as a requirement for our
18· ·Commission to make that finding, don't you believe
19· ·that our Commission should have access to an opinion
20· ·that opines that that is a fact with regard to this
21· ·rate change?
22· · · · · A.· ·That is why the District decided to
23· ·provide such a robust summary of our full opinion.
24· ·Therefore, if the Commission is not comfortable with
25· ·the summary being provided you have legal counsel
Page 47
·1· ·being provided to you that could evaluate, you know,
·2· ·different pieces of it that you're not comfortable
·3· ·with.
·4· · · · · Q.· ·If we were to ask you to provide that
·5· ·opinion and provide for you a protective order so
·6· ·that that opinion would be filed either under seal
·7· ·or only visible by members of our Commission, its
·8· ·consultants and legal counsel and would prohibit the
·9· ·dissemination of that opinion in the public, would
10· ·you have objection to that?
11· · · · · A.· ·I would prefer not to release the full
12· ·opinion.· Under the circumstances you're talking
13· ·about we would have to discuss and negotiate the
14· ·specifics of that before I would be willing to say
15· ·yes.
16· · · · · Q.· ·And that would be a request that I would
17· ·make, that our Commission -- that our Rate
18· ·Commission make of you, so with adequate protections
19· ·and safeguards.· And I say that because of the
20· ·requirement that we must make a finding that this
21· ·proposed Rate Change is consistent with
22· ·constitutional, statutory or common law and we
23· ·should have access to that.
24· · · · · A.· ·Well, and my objection includes that the
25· ·District, for your uses, has provided a robust
Page 48
·1· ·summary of the opinion and you do have legal counsel
·2· ·representing you for your purposes.
·3· · · · · · · ·COMMISSIONER PALANS:· I understand.
·4· · · · · I have no further questions.
·5· · · · · · · ·MS. MYERS:· Okay.· Thank you.
·6· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
·7· ·Palans.
·8· · · · · Mr. Goss, did you have questions?
·9· · · · · · · ·COMMISSIONER GOSS:· I just have a few,
10· ·Mr. Chairman.
11· · · · · · · · · · · ·EXAMINATION
12· · · · · QUESTIONS BY COMMISSIONER GOSS:
13· · · · · Q.· ·Ms. Myers, I think you said in your
14· ·testimony that voter approval was not required to
15· ·authorize the stormwater rate being requested; is
16· ·that right?· Did I hear you right about that?
17· · · · · A.· ·State that again.
18· · · · · Q.· ·What I recall you saying was that voter
19· ·approval was not required to authorize the
20· ·stormwater rate that you're proposing?
21· · · · · A.· ·No, that is not what I stated.· The
22· ·Missouri Constitution Hancock Amendment requires
23· ·taxes and rates to be voted on by the public.· We
24· ·are considering this a rate under our Charter.· If
25· ·we would have gone through the five Keller Factors
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·1· ·and evaluated this rate against those, that is -- if
·2· ·you can meet the Five Keller Factors then that's
·3· ·when you can feel comfortable to not take it to a
·4· ·vote of the people.· We did not do that.
·5· · · · · We did that back in 2008 with the
·6· ·impervious -- or I don't know -- the Rate Commission
·7· ·was probably in 2006 or '7.· The impervious rate we
·8· ·proposed at that time, we did evaluate it against
·9· ·the Five Keller Factors and we decided not to take
10· ·it to a vote of the people.· We implemented that
11· ·impervious rate District-wide.· That resulted in the
12· ·Zweig versus MSD case that I'm sure you're all
13· ·familiar with, which, in our opinion, resulted in
14· ·the fact that an impervious rate needed to be voted
15· ·on by the people.
16· · · · · Q.· ·So it's still your opinion today that
17· ·this impervious rate is required to be voted on by
18· ·the people; is that correct?
19· · · · · A.· ·This particular rate that we are
20· ·proposing in this Proposal, yes.
21· · · · · Q.· ·And if the voters reject this rate would
22· ·MSD then undertake an analysis of the Keller Factors
23· ·and determine whether in fact this election was
24· ·required?
25· · · · · A.· ·We would have to evaluate the outcome of
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·1· ·the election and really that -- we would have to
·2· ·meet internally and figure out what the next
·3· ·steps -- what we thought the next best steps should
·4· ·be.· But, no, I do not -- I'm not going to sit here
·5· ·today and say we would go back and evaluate it per
·6· ·the Keller Factors.
·7· · · · · Q.· ·Because the -- we've talked a lot about
·8· ·how the stormwater rate is important, that MSD needs
·9· ·to, you know, have this revenue stream in order to
10· ·address serious stormwater problems in the St. Louis
11· ·area.· And if this election isn't required because
12· ·the Keller Factors would, if analyzed, say it's not
13· ·required then why would MSD put this rate at risk by
14· ·having an election when in fact it may not be
15· ·required?
16· · · · · A.· ·Based upon the outcome of the previous
17· ·impervious rate that we implemented and the ruling
18· ·of Zweig we do feel that the impervious rate, as its
19· ·proposed, would need to be voted on.· So we are
20· ·trying to eliminate the challenge of not having it
21· ·voted on.
22· · · · · Q.· ·Now, as I understand the rate, the
23· ·non-profit, government entities, tax-exempt
24· ·entities, they're not being charged -- or you're not
25· ·assessing an ad valorem tax against those entities?
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·1· · · · · A.· ·That is correct.
·2· · · · · Q.· ·Instead you're proposing that you have
·3· ·this fee?
·4· · · · · A.· ·Correct.
·5· · · · · Q.· ·Is the service that MSD is providing to
·6· ·residential customers that are being charged the ad
·7· ·valorem tax the same as the service that will be
·8· ·provided to these tax-exempt entities with respect
·9· ·to stormwater?
10· · · · · A.· ·I think that's a better question for
11· ·Rich Unverferth.· I would say that this Proposal
12· ·attempts to collect a similar amount of funding from
13· ·residential and non-residential to create a fund
14· ·whereby MSD can use that fund to address erosion and
15· ·flooding throughout the District.
16· · · · · Q.· ·Let me rephrase.· If the service being
17· ·provided to residential customers and tax-exempt
18· ·entities is in fact the same with respect to
19· ·stormwater treatment by MSD, would that make this
20· ·Rate Proposal illegal?· Would that be improper?
21· · · · · I'm asking a legal question, not a Rich
22· ·Unverferth question.
23· · · · · A.· ·Yeah.· Can you restate that?
24· · · · · Q.· ·I'll try.
25· · · · · So if the service that MSD is providing --
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·1· ·wait -- if the service that MSD is providing to
·2· ·tax-exempt entities and residential customers is the
·3· ·same, does that make the proposed rate illegal?· Is
·4· ·it valid in Missouri law?· Can you do that?
·5· · · · · A.· ·I think it is valid in Missouri law
·6· ·based upon the Missouri Constitution Uniformity
·7· ·Clause.· And I have some information in my -- the
·8· ·MSD Exhibit 3B1 speaks to the Uniformity Clause of
·9· ·the Constitution and establishes a real property
10· ·"class" of taxable properties and creates
11· ·residential, agricultural and other property and
12· ·that is the analysis that we followed to distinguish
13· ·between what classes we would charge the ad valorem
14· ·tax to and what class we would charge the impervious
15· ·rate to.
16· · · · · Q.· ·Okay.· And I read that memo. I
17· ·appreciate that.
18· · · · · A.· ·Okay.
19· · · · · Q.· ·So but just as from a layman's
20· ·perspective, not a lawyer's perspective, doesn't it
21· ·seem that -- can someone make the argument and would
22· ·it be a valid argument that in fact what's occurring
23· ·is that because MSD can't tax these tax-exempt
24· ·entities or the government for this service they're
25· ·instead creating a rate to get around that problem?
Page 53
·1· · · · · A.· ·I don't agree with that because the
·2· ·Charter anticipates and provides MSD the authority
·3· ·to charge a rate.· And then you have that supported
·4· ·by different sections of the Missouri Constitution,
·5· ·one regarding the uniformity and, you know, there's
·6· ·other sections that speak to specific ad valorem
·7· ·taxes and that sort of thing.· So, no, I think what
·8· ·we are proposing is a valid rate proposal.
·9· · · · · Q.· ·Okay.· And I appreciate that.
10· · · · · So and you don't see an issue or a problem
11· ·with not charging residential customers a rate as
12· ·opposed to an ad valorem tax when you're charging
13· ·tax-exempt entities a rate?
14· · · · · A.· ·I do not.
15· · · · · Q.· ·And can you elaborate as to why?
16· · · · · A.· ·It's the same argument.· The residential
17· ·and non-residential are subclasses under the
18· ·umbrella of real property in accordance with the
19· ·Uniformity Clause.· So as long as the charges to a
20· ·specific subclass is consistent, the charge does not
21· ·have to be the same from one subclass to another
22· ·subclass.
23· · · · · Q.· ·And in fact you can choose not to a
24· ·charge a subclass?
25· · · · · A.· ·Correct.
Page 54
·1· · · · · Q.· ·Okay.· Even though both -- even though
·2· ·the two different subclasses are receiving the same
·3· ·service?
·4· · · · · A.· ·You keep speaking of "service."· I have
·5· ·a little hesitation with that because this Proposal
·6· ·is to create a fund for District-wide flooding and
·7· ·erosion.· So when you say, "service," I don't want
·8· ·individuals to envision that everyone paying an ad
·9· ·valorem tax or an impervious rate, you know, has a
10· ·creek in their -- in the back of their property
11· ·that's eroding their property.· That's not the
12· ·situation.· But the District as a whole has issues
13· ·with erosion and flooding and that's what this fund
14· ·will support.
15· · · · · Q.· ·Okay.· And I appreciate that.
16· · · · · But MSD is going to use this money to pay
17· ·contractors or its own personnel to address
18· ·stormwater problems, correct?
19· · · · · A.· ·That deal with erosion and flooding,
20· ·yes.
21· · · · · Q.· ·And that's a service in my book.
22· · · · · A.· ·Okay.
23· · · · · Q.· ·So that's how I look at it as a service.
24· ·And MSD doesn't have an obligation to provide that
25· ·-- if I don't need that service on my property I
Page 55
·1· ·certainly don't expect MSD to provide it, you know?
·2· ·So I'm not sure I'm understanding your concern there
·3· ·but maybe I'm -- am I missing something?
·4· · · · · A.· ·I just want people to understand what
·5· ·the proposed fund is for.
·6· · · · · Q.· ·Okay.
·7· · · · · A.· ·And it's District-wide erosion and
·8· ·flooding.
·9· · · · · Q.· ·And just to change gears a little bit,
10· ·you mentioned -- you mentioned in your testimony and
11· ·also in the memorandum that the statute that the
12· ·legislature passed a number of years ago regarding
13· ·MSD's ability to charge tax-exempt entities a rate
14· ·was in violation of MSD's Charter.· Do you recall
15· ·that?
16· · · · · A.· ·Are you speaking to the properties that
17· ·do not receive MSD sanitary service?
18· · · · · Q.· ·Yeah.
19· · · · · A.· ·Okay.· Yes.
20· · · · · Q.· ·And is there a statute of limitations by
21· ·which you have to challenge that law or --
22· · · · · A.· ·I don't know.
23· · · · · Q.· ·-- or MSD, not you personally?
24· · · · · A.· ·I do not know.
25· · · · · Q.· ·Okay.· Has MSD looked at that issue or
Page 56
·1· ·investigated it?
·2· · · · · A.· ·We did not challenge that statute.
·3· · · · · Q.· ·I understand that but one of the
·4· ·rationales in the memorandum in support is that this
·5· ·was improper because it violates MSD's Charter.
·6· · · · · A.· ·Correct.
·7· · · · · Q.· ·And I think that's the second argument
·8· ·that you folks say you can make.· So kind of the
·9· ·logical question in follow up is well, all right, is
10· ·that argument now barred because of the statute of
11· ·limitations?
12· · · · · A.· ·The argument that MSD's Charter -- it's
13· ·in violation of MSD's Charter?
14· · · · · Q.· ·Yeah, that specific law because it has
15· ·been on the books for, I don't know, a number of
16· ·years.
17· · · · · A.· ·Right, but if I understand your question
18· ·correctly, if it's in violation of MSD's Charter,
19· ·there's case law that says the Charter is the
20· ·organic law of the land.
21· · · · · Q.· ·Understood.
22· · · · · A.· ·So if a statute is in conflict with the
23· ·Charter, then we follow what the Charter says.
24· · · · · Q.· ·Okay.· But there's no time limitation,
25· ·no statute of limitation by which MSD would be
Page 57
·1· ·barred to raise that argument and say if the --
·2· · · · · A.· ·I do not know.· I have not looked at
·3· ·that.
·4· · · · · Q.· ·And that's not something that MSD's
·5· ·counsel has given you any opinion on to your
·6· ·knowledge?
·7· · · · · A.· ·No.
·8· · · · · Q.· ·And I think you answered this question
·9· ·just a few minutes ago in a different way but I'm
10· ·going to re-follow up.· I made a note asking myself
11· ·as to what is the specific service that MSD is
12· ·providing with respect to stormwater to any given
13· ·tax-exempt parcel?· And I think your -- so can you
14· ·answer that question?
15· · · · · A.· ·Again, we are providing flooding and
16· ·erosion services District-wide.· So if you own a
17· ·non-residential property then your -- the amount
18· ·that you pay per the impervious rate will go into
19· ·that fund to address the list of, you know, projects
20· ·and issues we have District-wide.
21· · · · · Q.· ·And so there's no specific stormwater
22· ·service that's being provided to any particular
23· ·parcel of property that's non-residential.· Would
24· ·that be a fair statement?
25· · · · · A.· ·I believe that's a fair statement and
Page 58
·1· ·Rich Unverferth will get into the list of projects
·2· ·we have for the stormwater flooding and erosion.
·3· · · · · Q.· ·And I see Brian kind of looking at
·4· ·me like -- you're giving me this fish-eye.· So let
·5· ·me try and explain my question a little bit better.
·6· · · · · So if I have a specific commercial piece of
·7· ·property and this stormwater rate passes, there's no
·8· ·particular stormwater problem associated with my
·9· ·particular property that I'm going to be able to
10· ·say, yes, MSD's stormwater rate is addressing that
11· ·particular problem on my property, it's a more
12· ·general scope, is that --
13· · · · · A.· ·I'm going to let Brian answer that
14· ·question.
15· · · · · Q.· ·I was trying to give him a preview of
16· ·where I was going.
17· · · · · So the same -- and with respect to tax-exempt
18· ·parcels with the same -- I have the same question as
19· ·it relates to that, so...
20· · · · · A.· ·I would ask that you ask Brian those
21· ·questions.
22· · · · · · · ·COMMISSIONER GOSS:· Yeah.· Thank you.
23· · · · · I think that's it.· Thank you, Mr. Chairman.
24· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Goss.
25· · · · · Questions from other Rate Commissioners for
Page 59
·1· ·this witness?
·2· · · · · Mr. Malone, Ms. Stump, do you have further
·3· ·questions for this witness?
·4· · · · · · · ·MR. MALONE:· Just briefly, Mr. Toenjes.
·5· · · · · · · · · · · ·EXAMINATION
·6· · · · · QUESTIONS BY MR. MALONE:
·7· · · · · Q.· ·Ms. Myers, I want to do a few follow-up
·8· ·questions about the Hancock Amendment in light of
·9· ·Commissioner Goss' questions.
10· · · · · You stated a moment ago I believe that it's
11· ·the District's position that it is required to get
12· ·voter approval for both aspects, the residential and
13· ·non-residential of the Stormwater Rate Change
14· ·Proposal, correct?
15· · · · · A.· ·Yes.
16· · · · · Q.· ·Okay.· My understanding of the Hancock
17· ·Amendment is that it requires that any tax increase
18· ·be put to the voters but the case law says that if
19· ·the quote-unquote tax is actually a user fee it
20· ·doesn't require voter approval.· Is that a fair
21· ·statement?
22· · · · · A.· ·Correct.
23· · · · · Q.· ·And I believe in the Zweig case they use
24· ·the analogy of a swimming pool.· If a municipality
25· ·is collecting money from all of its residents to
Page 60
·1· ·construct a swimming pool, that's a tax.· If they're
·2· ·charging five dollars to everyone that comes through
·3· ·the door to use the swimming pool, that's a user
·4· ·fee, correct?· Is that your basic understanding of
·5· ·the Hancock Amendment?
·6· · · · · A.· ·I don't recall that specific from the
·7· ·Zweig case.
·8· · · · · Q.· ·Okay.· But you'd agree that if it's
·9· ·truly a user fee, the Hancock Amendment doesn't
10· ·require voter approval, correct?
11· · · · · A.· ·That's correct.
12· · · · · Q.· ·Okay.· And so I think the ad valorem tax
13· ·obviously is a tax and it's going to require voter
14· ·approval?
15· · · · · A.· ·Correct.
16· · · · · Q.· ·Is it the District's position that the
17· ·impervious surface charge for non-residential
18· ·property, even though we're characterizing it as a
19· ·rate or a charge, is it the District's position that
20· ·it's required to get voter approval rather than
21· ·voluntarily doing so I guess?
22· · · · · A.· ·The District is choosing to take the
23· ·impervious rate to a vote.
24· · · · · Q.· ·Okay.· But is it your position that it's
25· ·required to do so?
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·1· · · · · A.· ·To form that opinion I believe that we
·2· ·would have had to do some other analysis that we did
·3· ·not do that I spoke about earlier with the Keller
·4· ·Factors and such.· Therefore, my opinion is the
·5· ·District is choosing to take the impervious rate to
·6· ·a vote.
·7· · · · · Q.· ·Okay.· And then with regard to
·8· ·Commission Palans had some questions for you about
·9· ·the legal opinions the District received and whether
10· ·the District would be willing to produce that under
11· ·a protective order.· And I understand your
12· ·preference is to not do so, correct?
13· · · · · A.· ·Correct.
14· · · · · Q.· ·And the Operational Rules that the
15· ·District enacted provided some avenues to address
16· ·discovery disputes and I guess potentially if a --
17· ·if it were felt that a discovery response or an
18· ·inquiry was not adequately answered, the witness's
19· ·testimony on that topic could be disregarded.· Is
20· ·that your understanding?
21· · · · · A.· ·I'd have to look at the Operational
22· ·Rules.
23· · · · · Q.· ·And the Operational Rules also made
24· ·provisions, for instance, where a claim of
25· ·confidentiality is made or evidence to be received
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·1· ·under seal or pursuant to a protective order,
·2· ·correct?
·3· · · · · A.· ·Again, I'd have to look at the specific
·4· ·rule.
·5· · · · · Q.· ·I guess what I'm getting at is if we
·6· ·find ourselves in a situation where a claim of
·7· ·confidentiality or privilege has been made and the
·8· ·Commission feels to evaluate factors it needs to
·9· ·evaluate that it needs to see that information and
10· ·the District is unwilling to do so, I guess could we
11· ·find ourselves in a legal dispute amongst the
12· ·Commission and the District?
13· · · · · A.· ·I would say yes, the Operational Rules
14· ·are the Rate Commission's rules that they set.· MSD
15· ·is following the Missouri Sunshine Law.· There are
16· ·reasons for disclosing documents to protect the
17· ·District.· I understand that, you know, the members
18· ·of the Rate Commission would prefer to see the full
19· ·legal memo, that is one reason why we tried -- the
20· ·District tried really hard to provide such a robust
21· ·summary in the information that we have provided to
22· ·you all in preparation that if you didn't agree or,
23· ·you know, needed clarification on something that
24· ·then you have your own legal counsel to support that
25· ·for you.
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·1· · · · · So my opinion is that MSD is following the
·2· ·Missouri Sunshine Law and that it would probably
·3· ·take a legal proceeding for us to disclose this
·4· ·document.
·5· · · · · Q.· ·Okay.· The Rate Commission owes its
·6· ·existence -- it exists by virtue of the District's
·7· ·Charter Plan, correct?
·8· · · · · A.· ·Correct.
·9· · · · · Q.· ·Okay.· So it is I guess a related or a
10· ·subsidiary in some aspects of the District.· Is that
11· ·a fair statement?
12· · · · · A.· ·There's no requirement in the Charter or
13· ·the specifics in the Operational Rules of the Rate
14· ·Commission, so I would say no.
15· · · · · Q.· ·What I'm getting at I guess is in the
16· ·sense that the Commission is a component or it
17· ·exists by virtue of the District existing under the
18· ·Charter Plan, is it your position that producing a
19· ·document that is privileged to the District, that
20· ·that privilege would be waived if it were presented
21· ·to the Rate Commission?
22· · · · · A.· ·That is my opinion.
23· · · · · Q.· ·Okay.
24· · · · · A.· ·And that is supported somewhat by the
25· ·fact that, you know, MSD is a public authority.· The
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·1· ·Rate Commission I believe acts as a public entity by
·2· ·which -- I mean, the Rate Commission has gone into
·3· ·closed session.· The District is not invited into
·4· ·those closed sessions.· So I view the Rate
·5· ·Commission as a separate public entity from the
·6· ·District and if I were to release the full legal
·7· ·opinions then I would be waiving the confidentiality
·8· ·of that agreement -- or of that opinion.
·9· · · · · · · ·MR. MALONE:· Okay.· Understood.· I think
10· ·that's all I have.
11· · · · · · · ·MS. MYERS:· All right.· Thank you.
12· · · · · · · ·CHAIRMAN TOENJES:· Mr. Palans?
13· · · · · · · ·COMMISSIONER PALANS:· Thank you.
14· · · · · Mr. Chairman, based upon the testimony and
15· ·based upon the law that our Commission is required
16· ·to make a finding that the proposed Rate Change is
17· ·consistent with constitutional, statutory or common
18· ·law as amended from time to time and in as much as
19· ·we have a statement of the witness denying our
20· ·request to have access to legal opinion upon which
21· ·she relies and upon which she is presenting to us
22· ·today, that I think this constitutes hearsay and
23· ·that under our rules, as we are constituted, any
24· ·person who fails to answer relevant questions
25· ·regarding their testimony or to provide other
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·1· ·information properly requested pursuant to these
·2· ·discovery procedures -- and I'm talking about
·3· ·protective order, along the lines that I identified
·4· ·that would not be accessible by the public -- that
·5· ·that testimony be stricken.· And I so move.
·6· · · · · · · ·CHAIRMAN TOENJES:· There's a motion on
·7· ·the floor.· Is there a second?
·8· · · · · · · ·COMMISSIONER GOSS:· I'll second it for
·9· ·purposes of discussion.
10· · · · · · · ·CHAIRMAN TOENJES:· So a motion made and
11· ·seconded.· Discussion on the motion?
12· · · · · · · ·COMMISSIONER FAUL:· This is Jim Faul. I
13· ·think that position is a little premature.· I think
14· ·we do have a good -- or what's presented to us under
15· ·oath and I have no reason to doubt the presentation
16· ·under oath if it's a robust assessment of that
17· ·opinion for the purposes of our job.· We also have
18· ·access to our own learned counsel to provide
19· ·opinions to us for the similar purposes.
20· · · · · If I may ask the witness one question before
21· ·I make my final point, I'd appreciate it.
22· · · · · · · ·CHAIRMAN TOENJES:· Please proceed,
23· ·Mr. Faul.
24· · · · · · · ·COMMISSIONER FAUL:· Thank you.
25· · · · · · · · · · · ·EXAMINATION
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·1· · · · · QUESTIONS BY COMMISSIONER FAUL:
·2· · · · · Q.· ·Counsel Myers, is there -- in the brief
·3· ·provided to us, would you be willing to or able to
·4· ·confirm that any citations to the State of Missouri
·5· ·or whatever political subdivision authority is cited
·6· ·therein to our counsel so that we could get an
·7· ·opinion and compare these apples to apples?· I'm not
·8· ·asking for the evaluation but at least see what --
·9· ·or have access of what citations and authority is
10· ·relied upon, not even the interpretation of that but
11· ·the authority, to give our legal counsel an idea --
12· ·or an opportunity to view it independently and give
13· ·this Commission an opinion based on that same
14· ·authority?
15· · · · · A.· ·Yes, I would be willing to do that.· And
16· ·I will say that a majority, if not all, the
17· ·authority is included in these robust summaries that
18· ·I have provided.
19· · · · · · · ·COMMISSIONER FAUL:· And I assumed as
20· ·much.· And I assumed as much, Counsel, but if we
21· ·could just get a confirmation of yes, that is all of
22· ·it or, you know what, here are two cites that
23· ·weren't in there.· I think before we move down a
24· ·road to infringe or attempt to infringe on
25· ·attorney-client confidentiality I think giving our
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·1· ·counsel a chance to review the authority themselves
·2· ·and give us an opinion as to whether or not there
·3· ·maybe is some wiggle room or something outside of
·4· ·what we need to consider that's not presented in
·5· ·there, I think that would be a more cautious and
·6· ·probably a more diplomatic approach.
·7· · · · · For the record, I'm not a -- I fully
·8· ·appreciate the idea that the Missouri Sunshine Act
·9· ·doesn't say anything has to be redacted or withheld.
10· ·It only says that certain things may be.· So my
11· ·position isn't one on the meaning or the efficacy of
12· ·closing records but it is a position why I'll be
13· ·opposing this motion to make sure this proceeding
14· ·runs civilly, efficiently and, you know, not
15· ·infringe on any kind of other communications, such
16· ·as attorney-client privilege, through the use of
17· ·that.· So thank you for your answer, Counsel.
18· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Faul.
19· · · · · Mr. Goss?
20· · · · · · · ·COMMISSIONER GOSS:· Given where we are
21· ·in these proceedings at this time and I think there
22· ·would be a benefit of having some conversation with
23· ·our counsel, as well as conversation amongst the
24· ·Commission about the issue Mr. Palans has raised, I
25· ·would make a motion to table his motion at this time
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·1· ·so that it can be taken up at a later time without
·2· ·prematurely considering it and also without
·3· ·derailing the proceedings that we're engaged in at
·4· ·this point.· So that's a motion.· I'm making a
·5· ·motion to table.
·6· · · · · · · ·UNIDENTIFIED SPEAKER:· I'll second that
·7· ·motion.
·8· · · · · · · ·CHAIRMAN TOENJES:· Is there a discussion
·9· ·on the motion to table?· Mr. Palans?
10· · · · · · · ·COMMISSIONER PALANS:· Let me just make a
11· ·preliminary statement.· What we have is a statement
12· ·of a witness who relies upon a third-party document
13· ·that we are not being provided access to.· Our
14· ·Operational Rules provide for a means to create
15· ·protection in such a situation and that is what this
16· ·request is focused upon.· We have -- this is hearsay
17· ·and we want to see the actual opinion, which is not
18· ·hearsay.
19· · · · · In light of the need to continue with our
20· ·hearings and to move forward, I'm hopeful that we
21· ·can reach a resolution on a protective order that
22· ·gives the District the comfort that they need and I
23· ·would encourage our counsel to work with Ms. Myers
24· ·to see if we can obtain that and on that basis I
25· ·would support the motion to table my motion to
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·1· ·strike at this time.
·2· · · · · · · ·CHAIRMAN TOENJES:· Is there any further
·3· ·discussion on the motion to table?
·4· · · · · Hearing none, I don't believe we need a voice
·5· ·call vote on this.· We will -- all those in favor of
·6· ·tabling the motion signify by saying "Aye."
·7· · · · · · · ·(All said aye.)
·8· · · · · Opposed?· Abstain?
·9· · · · · Motion carries.
10· · · · · Am I of the understanding at this point that
11· ·the Rate Commission's counsel will work with
12· ·Ms. Myers to clarify the basis for the inability to
13· ·provide those documents?
14· · · · · · · ·MS. STUMP:· That is correct.· We will
15· ·have discussions with Ms. Myers and report back.
16· · · · · · · ·COMMISSIONER FAUL:· And if I may, I
17· ·would -- this is Mr. Faul again.· I would appreciate
18· ·a confirmation of the total citations at least so
19· ·that our counsel can get a preliminary review of at
20· ·least the authority because to a certain extent us
21· ·Commissioners are a certain bit of laypeople here,
22· ·so, you know, I'd appreciate the opinion of our own
23· ·legal counsel saying based on the authority they
24· ·reviewed if they have any reason to doubt either --
25· ·you know, any legal disagreement of the presentation
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·1· ·provided by counsel for MSD.· If our learned counsel
·2· ·agrees with the statement, you know, this all may be
·3· ·for naught as well.· Thank you.
·4· · · · · · · ·CHAIRMAN TOENJES:· Mr. Goss?
·5· · · · · · · ·COMMISSIONER GOSS:· Yeah, one -- one
·6· ·other thing.· I'd request that our counsel give us
·7· ·an opinion regarding whether Ms. Myers' testimony
·8· ·would be considered hearsay as has been suggested
·9· ·and if it were considered hearsay, is there an
10· ·exception that would apply to the hearsay rule.· And
11· ·if no exception applies, what's the import of that,
12· ·the fact that it is hearsay.· And if the testimony
13· ·were stricken, does that have any impact on the
14· ·validity of this rate or the rate proceedings.
15· · · · · · · ·CHAIRMAN TOENJES:· Any further questions
16· ·from any of the Rate Commissioners for this witness?
17· · · · · · · ·COMMISSIONER JEARLS:· Yes, Chairman.
18· · · · · · · ·CHAIRMAN TOENJES:· Proceed.
19· · · · · · · · · · · ·EXAMINATION
20· · · · · QUESTIONS BY COMMISSIONER JEARLS:
21· · · · · Q.· ·Ms. Myers, to just clarify for myself,
22· ·the Five -- I'm not that familiar with the Five
23· ·Keller Factors and I assume you are; is that
24· ·correct?
25· · · · · A.· ·Yes, but I did not review them before
Page 71
·1· ·this hearing.
·2· · · · · Q.· ·Okay.· So my question was I guess
·3· ·basically the Five Keller Factors are used to
·4· ·determine if the rate is either a user fee or a tax?
·5· · · · · A.· ·Correct.
·6· · · · · Q.· ·Okay.· So the rate that you're proposing
·7· ·for stormwater for a non-residential property you
·8· ·haven't review -- you have reviewed the Five Keller
·9· ·Factors and in light of the Five Keller -- and
10· ·determined that it doesn't meet all Five Factors?
11· · · · · A.· ·We did not review the Five Keller
12· ·Factors with relation to this Stormwater Capital
13· ·Program.
14· · · · · Q.· ·I'll give you a minute.
15· · · · · A.· ·We -- in 2008 -- prior to 2008 the Rate
16· ·Commission looked at an impervious rate that we
17· ·proposed to implement District-wide.· That was moved
18· ·forward and the District implemented that.· We were
19· ·challenged in the Zweig versus MSD case and out of
20· ·that came a Supreme Court ruling.· That's what we
21· ·refer to as Zweig versus MSD.
22· · · · · That particular -- for that particular
23· ·impervious rate the District did evaluate it per the
24· ·Keller Factors, thought we had, you know, a good
25· ·chance of meeting it being determined to be a user
Page 72
·1· ·fee and not a tax.· The Supreme Court went through
·2· ·and did their own evaluation of those Five Keller
·3· ·Factors and found that it was not -- found that it
·4· ·needed to be voted on.
·5· · · · · The case, some folks -- some think it
·6· ·interprets that the actual impervious fee was a tax
·7· ·and not a user fee.· There are other opinions that
·8· ·the ruling of the Supreme Court was that it needed
·9· ·to be voted on per the Hancock Amendment, that it
10· ·didn't come as far as to say it was an actual tax.
11· · · · · Therefore, when we brought forward the
12· ·impervious fee back in 2015, the previous one,
13· ·again, we didn't -- we didn't evaluate it per the
14· ·Keller Factors.· We just decided at that time that
15· ·the most conservative approach was just to let the
16· ·people vote on it and then move forward if it
17· ·passed.
18· · · · · Q.· ·Okay.· I guess what I'm thinking is that
19· ·the Commission would like to know your opinion on
20· ·whether the rate would meet the Keller Factors and
21· ·if you could assume for the Supreme Court's opinion,
22· ·if they thought it would meet the Keller Factors?
23· · · · · And I can I get a copy or can we get a copy
24· ·of the Keller Factors?
25· · · · · A.· ·Sure.
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·1· · · · · Q.· ·Okay.· Thank you.
·2· · · · · A.· ·So we -- the District will evaluate the
·3· ·Keller Factors in relation to this impervious rate
·4· ·that we have proposed.· And I'm not sure I can
·5· ·predict what any court, let alone the Supreme Court,
·6· ·will rule, so I may hold off on that one.
·7· · · · · And we will also provide a copy of the Five
·8· ·Keller Factors.
·9· · · · · · · ·CHAIRMAN TOENJES:· Mr. Mahfood?
10· · · · · · · · · · · ·EXAMINATION
11· · · · · QUESTIONS BY COMMISSIONER MAHFOOD:
12· · · · · Q.· ·Ms. Myers, can you address the fact that
13· ·your decision-making -- and I'm going to ask this
14· ·question as not an attorney of course because I'm
15· ·not, but as a layperson listening to this discussion
16· ·could you say part of your decision-making in going
17· ·for a vote had something to do with openness and
18· ·transparency to the public and community trust
19· ·issues that have been -- nagged all public agencies
20· ·and kind of caution given previous court decisions?
21· ·I mean, could you say that there's some subjective,
22· ·non-legal factors that went into making that
23· ·decision?
24· · · · · A.· ·You just did a great job of summarizing
25· ·what I have been trying to say for the last hour and
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·1· ·a half.· Yes, definitely.
·2· · · · · After the -- the Zweig was a very lengthy and
·3· ·very expensive case for the District.· We understand
·4· ·that we need stormwater funding to address issues.
·5· ·We understand that charging a tax is in somewhat an
·6· ·easier method for us to collect that amount but it
·7· ·also exempts certain entities that have a lot of
·8· ·impervious area.
·9· · · · · Therefore, when we started strategizing about
10· ·this Proposal, those were a lot of considerations
11· ·just as you said, Mr. Mahfood, that the -- we feel
12· ·the public has somewhat of a negative connotation
13· ·with impervious fees, impervious rates, therefore we
14· ·want the public to be in agreement.· We have done a
15· ·lot of public meetings, public education.· Brian
16· ·goes out and Rich's group and a lot of the District
17· ·staff and talk to many folks trying to educate them
18· ·on, you know, the funding we need and how we're
19· ·trying to go about it.
20· · · · · So it does very much have a big part of being
21· ·-- trying to be transparent with the public and
22· ·providing the program that they would like to see.
23· · · · · · · ·COMMISSIONER MAHFOOD:· Thank you.
24· · · · · · · ·CHAIRMAN TOENJES:· Are there further
25· ·questions for Ms. Myers?
Page 75
·1· · · · · · · · · · · ·EXAMINATION
·2· · · · · QUESTIONS BY CHAIRMAN TOENJES:
·3· · · · · Q.· ·One final question that -- for you, Ms.
·4· ·Myers, that I have based on Mr. Mahfood's questions
·5· ·that has been bouncing around in my mind, that in
·6· ·essence your reason for not previously evaluating
·7· ·this Proposal against the Five Keller Factors was
·8· ·the outcome of the Zweig decision?
·9· · · · · A.· ·Correct.
10· · · · · · · ·CHAIRMAN TOENJES:· Thank you.
11· · · · · Any further questions for this witness?
12· · · · · Ms. Myers, thank you.· We will talk to you
13· ·again when we get to stormwater -- I mean to
14· ·wastewater.· Pardon me.· When we get to wastewater.
15· · · · · We will take a 10-minute break before we
16· ·start with Mr. Hoelscher.· We will go into a break
17· ·until 11:20.
18· · · · · · · · · · · (Break taken.)
19· · · · · · · ·CHAIRMAN TOENJES:· According to MSD time
20· ·it is 11:20.· We will assume our meeting of the Rate
21· ·Commission.
22· · · · · Ms. Myers, are you ready to present your next
23· ·witness?
24· · · · · · · ·MS. MYERS:· Yes.· Our next witness is
25· ·Brian Hoelscher.
Page 76
·1· · · · · · · ·CHAIRMAN TOENJES:· Mr. Hoelscher, will
·2· ·you take the oath.
·3· · · · · · · ·(Whereupon, BRIAN HOELSCHER was sworn
·4· ·in.)
·5· · · · · · · ·CHAIRMAN TOENJES:· Thank you.
·6· · · · · Mr. Malone, do you have questions for
·7· ·Mr. Hoelscher on behalf of the Rate Commission?
·8· · · · · · · ·MR. MALONE:· I do.
·9· · · · · · · ·CHAIRMAN TOENJES:· Please proceed.
10· · · · · · · · · · · · * * * * *
11· · · · · · · · · · BRIAN HOELSCHER,
12· ·having been duly sworn testifies as follows:
13· · · · · · · · · · · ·EXAMINATION
14· · · · · QUESTIONS BY MR. MALONE:
15· · · · · Q.· ·Good morning, Mr. Hoelscher.· You have
16· ·your testimony that you submitted in this matter
17· ·with you today?
18· · · · · A.· ·Yes, I do.
19· · · · · Q.· ·And what -- you're the executive
20· ·director for MSD; is that correct?
21· · · · · A.· ·That's correct.
22· · · · · Q.· ·And how long have you served in that
23· ·position?
24· · · · · A.· ·Ten years and one month.
25· · · · · Q.· ·And as I mentioned to Ms. Myers earlier,
Page 77
·1· ·our role as legal counsel is primarily to assist the
·2· ·Commission in preparing its report and to go over
·3· ·the three criteria and the five factors in the
·4· ·Charter for Rate Change Proposals.
·5· · · · · I'm going to spend most of my time with you
·6· ·talking about the fifth criteria, that is whether
·7· ·the Rate Change Proposal considers the financial
·8· ·impact on all classes of ratepayers in determining a
·9· ·fair and reasonable burden.· And as with Ms. Myers,
10· ·I'll be asking questions about the stormwater only.
11· · · · · A.· ·Thank you.
12· · · · · Q.· ·Okay.· So you were present when I
13· ·questioned Ms. Myers about what the current
14· ·Stormwater Rate Change Proposal would be and what
15· ·kind of projects it would fund, correct?
16· · · · · A.· ·Yes.
17· · · · · Q.· ·And is there anything else you would
18· ·like to add?
19· · · · · A.· ·No.
20· · · · · Q.· ·And you'd agree that the Stormwater
21· ·Proposal does not affect the District's obligations
22· ·under the Consent Decree, correct?
23· · · · · A.· ·That's correct.
24· · · · · Q.· ·Can you explain to the Commission why
25· ·MSD decided to go with an ad valorem tax for
Page 78
·1· ·residential property and an impervious surface
·2· ·charge for non-residential property?
·3· · · · · A.· ·Sure.· And the answer is fully -- it's
·4· ·actually in my testimony and the Rate Proposal but I
·5· ·think it's -- I'll go to the Rate Proposal page 5.9
·6· ·and that is Exhibit No. 1.
·7· · · · · Q.· ·Okay.· Could you summarize that briefly?
·8· · · · · A.· ·Yes, I think I will.· So what we were
·9· ·looking to do was to really wrap our hands
10· ·around the new -- can everybody hear me, seems like
11· ·-- okay -- is the new factor five that the Rate
12· ·Commission needs to consider and that is whether or
13· ·not it considers a financial impact on all classes
14· ·of ratepayers to determine a fair and reasonable
15· ·burden.
16· · · · · So to clarify myself ahead of time, I'm going
17· ·to make references to legal conclusions that were
18· ·made and I'm not going to go back and -- you've had
19· ·that with Susan, so...
20· · · · · So what we wanted to do -- the first thing we
21· ·wanted to do is make sure that this could pass.
22· ·That's probably the most important piece of what we
23· ·considered on the Rate Proposal.
24· · · · · So we have included in some of the exhibits
25· ·and discussions we found that the voters themselves
Page 79
·1· ·are willing to spend -- to get above a majority of
·2· ·the voters that we would need to charge no more than
·3· ·$2 per month for any kind of stormwater service.
·4· ·That's exactly the same number we came to with in
·5· ·the 2019 -- or 2018 Stormwater Proposal.
·6· · · · · So that was the starting point.· We backed in
·7· ·for a median price in the St. Louis area of
·8· ·$175 million home in order to get to that $25 a year
·9· ·or $2 a month, the cost would be 7.5 cents per $100
10· ·valuation in property tax.
11· · · · · The numbers are still the same.· I put a lot
12· ·of weight to the fact that we thought it was a 50/50
13· ·proposition going into 2019 and it proved to be a
14· ·50/50 proposition since we lost 47/53.· So that was
15· ·our starting point.
16· · · · · We decided under the financial -- number
17· ·five, consider financial impact on all classes of
18· ·ratepayers in determining a fair and reasonable
19· ·burden.· So taking those voters or the residential
20· ·customers we decided that in order to do that -- and
21· ·especially around the issue of Environmental
22· ·Justice, which I really think is part of fair and
23· ·reasonable burden, we found that by using property
24· ·tax for the residential customers that would give us
25· ·the opportunity to provide an Environmental Justice
Page 80
·1· ·component and also a fair and reasonable burden on
·2· ·all of our ratepayers.
·3· · · · · When you pay property tax, obviously those
·4· ·with higher value property pay a little bit more,
·5· ·those with lower value property pay a little bit
·6· ·less.· And so that was the concept of why we're
·7· ·going for that portion of the residential customers
·8· ·to be voted on as part of a property tax.
·9· · · · · Next came how do we be fair and reasonable in
10· ·financial impact on all classes of ratepayers.· So I
11· ·think from all the results we've done in the past,
12· ·from the findings of the Rate Commission from the
13· ·last Stormwater Proposal where you found impervious
14· ·area is a fair and reasonable way, whatever the
15· ·previous standard was to distribute costs, we took
16· ·the amount of money that was going to be generated
17· ·by the -- by the -- and I'm using approximate
18· ·numbers here -- the residential customers would
19· ·generate approximately $19 million.
20· · · · · We took what was the billable impervious area
21· ·for the residential customers, compared it to the
22· ·billable area -- impervious area for the
23· ·non-residential customers and came up with how many
24· ·dollars we should charge the non-residential
25· ·customers.· And that number came out to be about
Page 81
·1· ·$14.8 million per year.· And, again, that's all
·2· ·non-residential customers whether they're for-profit
·3· ·or not-for-profit or anybody else.
·4· · · · · So we thought that was a way to be fair and
·5· ·reasonable through all classes.· The subclasses are
·6· ·paying based on a -- they're sharing their cost or
·7· ·methodology that this body and our ourselves have
·8· ·found to be fair as well as how to distribute the
·9· ·cost of the program.
10· · · · · So we then backed into the number of amount
11· ·of impervious area on all those properties and
12· ·that's how we came up with rate of -- that will be
13· ·testified to later -- I believe it's slightly above
14· ·a dollar per thousand square feet per month.· And I
15· ·probably have that wrong but Marion Gee will give
16· ·you exactly what that is.
17· · · · · But, again, the idea is we are collecting on
18· ·two different ways, but to be equitable amongst the
19· ·different classes we're making sure that that
20· ·distribution amongst the classes is based on
21· ·impervious area.· That gives us 34-plus-million
22· ·dollars per month -- per year.· That's about
23· ·15 percent more than what we were proposing back in
24· ·2019.· That's what we're putting in place and that's
25· ·what we're proposing.
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·1· · · · · And hopefully the answer to your question was
·2· ·somewhere in that answer.
·3· · · · · Q.· ·I think so.
·4· · · · · So just to maybe hone in on that a little
·5· ·more, did the District consider doing a universal
·6· ·impervious charge as we did in 2018?
·7· · · · · A.· ·We -- there was a probably 15-minute
·8· ·discussion.· I know you've asked for legal basis but
·9· ·for mine, as the CEO, knowing I had the Supreme
10· ·Court of the State of Missouri saying that you have
11· ·to vote if you have an impervious rate based on our
12· ·2008 Proposal and the impervious part of this
13· ·Proposal is exactly the same as what we were
14· ·proposing in 2008, I made the decision that we're
15· ·not even going to take the chance.
16· · · · · I know lawyers can always argue after the
17· ·fact.· This is an important enough issue I didn't
18· ·want to put something in place that would get
19· ·overturned immediately, so we decided to go with
20· ·voting for everything.
21· · · · · Q.· ·Understood.· And I guess flipping that,
22· ·did the District consider doing an ad valorem tax
23· ·District-wide to fund Stormwater Capital Projects?
24· · · · · A.· ·So we did that.· We considered doing
25· ·that.· That ad valorem tax is collected for our
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·1· ·other two services.· Right now that's the way we
·2· ·collect those taxes.· We considered it.
·3· · · · · The place we run into a problem there is with
·4· ·the not-for-profits.· And so without going in depth,
·5· ·a provision that allows us, as I understand the
·6· ·legal decision, that as long as we treat each
·7· ·subclass the same we can have a different type of
·8· ·fee we're collecting for residential customers and
·9· ·non-residential.
10· · · · · So for all the reasons I gave residential is
11· ·a property -- an ad valorem property tax, now we're
12· ·using impervious area for all other customers.
13· · · · · Q.· ·And without I guess getting back into
14· ·the topic of whether the non-residential charge is a
15· ·tax or a rate or a user fee or something else, the
16· ·import of that obviously is that, as you indicated,
17· ·non-profits and governmental entities are exempt
18· ·from tax but not from rates and charges; is that
19· ·accurate?
20· · · · · A.· ·Correct.
21· · · · · Q.· ·So if it were later determined by a
22· ·court that for whatever reason governmental entities
23· ·and non-profits are exempt from this new Stormwater
24· ·Capital Rate, has the District calculated what the
25· ·impact would be and what modifications it would need
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·1· ·to make to the CIRP or the programs it funds?
·2· · · · · A.· ·So using some words Susan has asked, we
·3· ·have had the discussion about severability of
·4· ·anything we vote on.· That obviously is up to
·5· ·argument from anybody, whichever side they want to
·6· ·argue that.· So it would probably depend on what the
·7· ·results of that were.
·8· · · · · So, for instance, my opinion right now, it
·9· ·would depend on the results, is if it was found that
10· ·not-for-profits don't have to pay impervious area, I
11· ·suspect we would keep collecting for now and, you
12· ·know, where the residential pay property tax, the
13· ·for-profits, non-residential paid impervious area, I
14· ·suspect we may keep collecting the tax and then come
15· ·back to the Rate Commission because we'd have to go
16· ·there to fix it.
17· · · · · Q.· ·Okay.
18· · · · · A.· ·If it becomes extensive as you can only
19· ·collect property tax from residential customers or
20· ·you can only collect impervious rates from
21· ·non-residential customers, again, we'd have to see
22· ·what the decision was and then make a decision once
23· ·we knew what the rules were.
24· · · · · Q.· ·So under that I guess hypothetical
25· ·scenario where the ad valorem tax for residential is
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·1· ·in place, the rate or charge is in place for
·2· ·non-residential property but not governments and
·3· ·non-profits, big picture obviously is just less
·4· ·money to fund Capital Projects, correct?
·5· · · · · A.· ·And the driver there, the reason I'm
·6· ·confident on the one who are not-for-profit, is the
·7· ·change in revenue.· The change in revenue is
·8· ·somewhat insignificant compared to the overall
·9· ·program.· The need is huge and quite honestly would
10· ·almost put us back to really what the revenue
11· ·mechanisms look like for our other two services that
12· ·we're providing.
13· · · · · Q.· ·And of course a parcel of land with
14· ·impervious surface owned by a governmental entity or
15· ·a non-profit is going to produce stormwater runoff
16· ·just like a for-profit would, correct?
17· · · · · A.· ·Correct.· Right.· So, therefore, if that
18· ·decision came, we probably would have to figure what
19· ·do we do with that now --
20· · · · · Q.· ·Understood.
21· · · · · A.· ·-- under whatever conditions were laid
22· ·out.
23· · · · · Q.· ·Okay.· Referring to your testimony -- do
24· ·you have that in front of you?
25· · · · · A.· ·Yes.
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·1· · · · · Q.· ·On page 2, Question 8, and I'm looking
·2· ·at row 17, there's a statement that the primary
·3· ·purpose of the Stormwater Capital Proposal is to
·4· ·provide a District-wide revenue source to make
·5· ·capital improvements to address flooding and erosion
·6· ·not involving the existing public stormwater system.
·7· · · · · Could you define for the Rate Commission what
·8· ·constitutes the public stormwater system?
·9· · · · · A.· ·Yeah, the public -- and it's public
10· ·storm sewer system.
11· · · · · Q.· ·Storm sewer system.· Sorry.
12· · · · · A.· ·That's very important.
13· · · · · So it's the manholes, inlets, sewers,
14· ·occasional fully-paved channels.· Those are the
15· ·pieces that are part of the public storm sewer
16· ·system.
17· · · · · What's not part of the public storm sewer
18· ·system, the easiest example that we get approached
19· ·by are creeks and streams.· The only thing that
20· ·looks like a creek and stream that MSD en masse owns
21· ·is lower River Des Peres starting from where the
22· ·tubes come out from under Forest Park out to the
23· ·Mississippi River.· That was public right-of-way
24· ·deeded to us upon our creation in 1954.· So we own
25· ·all that property.
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·1· · · · · The rest of those creeks and streams, for
·2· ·example, the floodplains for example, they're owned
·3· ·by local property owners.· An example that came up a
·4· ·couple times, in University City the property
·5· ·owners, actually their property line goes down the
·6· ·middle of River Des Peres in University City.
·7· · · · · Many of them are surrounded by public
·8· ·easements that are accessible by different public
·9· ·entities.· Sometimes they're not.· Sometimes as the
10· ·area grew the property lines end at a public
11· ·easement, don't go any further.· That's the way they
12· ·were plotted.· And so there's this piece of ground
13· ·with a public easement with apparently no ownership.
14· ·And just me talking about it, I guess the previous
15· ·farmer still owns the property with the easement.
16· ·I'm not really sure.
17· · · · · MSD runs into these.· And I'm just bringing
18· ·them up to say I want to make sure when I give an
19· ·answer, it's not a hundred percent answer.· There's
20· ·odd things that we run into on occasion.· But in
21· ·essence it's the hard collection system: inlets,
22· ·manholes, storm sewers and select areas where we
23· ·have fully-paved vertical channels.· A lot of those
24· ·are up in North County.
25· · · · · Q.· ·Okay.· And so the revenue that's
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·1· ·collected from this new property -- the new
·2· ·Stormwater Capital Rate is not going to fund
·3· ·anything in the public storm sewer system, correct?
·4· · · · · A.· ·Right, it will not fund anything.
·5· · · · · The -- I think one question came up, an
·6· ·example to show the differentiation.· If we have a
·7· ·public storm sewer system that discharges to a creek
·8· ·or a stream and that discharge is causing erosion,
·9· ·say on the other bank, we'll make that part of O&M
10· ·because that's part of our public storm sewer
11· ·causing that problem.· If there's none of those
12· ·around and we have an erosion problem along the
13· ·creek, that will be funded by this program.
14· · · · · Q.· ·Okay.· So everything for the -- that
15· ·involves the public storm sewer system is going to
16· ·be funded out of the existing O&M property tax; is
17· ·that fair?
18· · · · · A.· ·Correct.
19· · · · · Q.· ·Okay.· Does the District plan to expand
20· ·the existing public storm sewer system?
21· · · · · A.· ·So the public storm sewer system gets
22· ·expanded with redevelopment.· So there's no plan to
23· ·-- I'll change that -- there's no plan to expand it
24· ·with the O&M tax.· Any expansion of that usually
25· ·occurs because of private development by others.
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·1· ·We're then required by our Charter to turn those
·2· ·facilities over to us for operation and maintenance.
·3· · · · · There are occasions, specifically with the
·4· ·OMCI taxes and probably with the new tax, there may
·5· ·be part of the solution is the creation of something
·6· ·that would be defined eventually as a public part of
·7· ·the system.
·8· · · · · So, for example, if one of the solutions here
·9· ·is to put curb, gutter, storm sewer with detention
10· ·in to solve a local flooding problem, parts of that
11· ·may then become part of the public system but then
12· ·the O&M of that would then be taken care of as part
13· ·of 10-cent tax.· It depends what gets built in order
14· ·to solve the individual issues.
15· · · · · Q.· ·All right.· So I think you just answered
16· ·my next question and let me make sure if I
17· ·understood it correctly.
18· · · · · So am I correct in stating that an expansion
19· ·of the public storm sewer system would be built and
20· ·financed by private developers and then transferred
21· ·to MSD upon completion?
22· · · · · A.· ·That's the way it's done now.· If one of
23· ·the solutions for flooding and erosion is the
24· ·construction and I suspect some of these are going
25· ·to have a small part -- will have part of a public
Page 90
·1· ·sewer system, after that work is done we will then
·2· ·assume responsibility for those.· I don't suspect --
·3· ·as a rule, flooding and erosion, the solution is not
·4· ·sewers but there may be a few of those that occur.
·5· · · · · Q.· ·And so that expansion of the system,
·6· ·that's going to be paid out of the 10-cent O&M,
·7· ·correct, basically?
·8· · · · · A.· ·So any anticipated expansion of the
·9· ·system would get paid out of either in the future
10· ·this new rate or right now some of it actually gets
11· ·paid for out of the OMCI taxes.
12· · · · · Q.· ·Okay.· And the OMCI taxes are going to
13· ·be set to zero as a result of this?
14· · · · · A.· ·That's the plan, yes.
15· · · · · Q.· ·All right.· Is anything that's financed
16· ·by the Stormwater Capital Rate, is any of that going
17· ·to go into public assets of the District or --
18· · · · · A.· ·Again, there may be a few pieces that do
19· ·if that's the solution.· The solution to flooding
20· ·and erosion -- and it will be minor -- is doing
21· ·something that would qualify as part of -- qualify
22· ·as being defined part of the public sewer system
23· ·that they wouldn't have to be turned over to MSD
24· ·that would -- a majority of this will not be
25· ·expansion of the public sewer system.
Page 91
·1· · · · · Q.· ·It will be done on -- work done on
·2· ·private property, correct?
·3· · · · · A.· ·Almost -- well, with as little property
·4· ·as we own, all of our work practically is done on
·5· ·private property.
·6· · · · · Q.· ·Gotcha.· And your testimony on page 3,
·7· ·row 19, you indicate that the District determined
·8· ·that the customers are willing to pay $25 per year
·9· ·for the Capital charge?
10· · · · · A.· ·Correct.
11· · · · · Q.· ·Can you summarize for the Commission
12· ·what public outreach the District undertook to reach
13· ·that conclusion?
14· · · · · A.· ·So we had outreach that we have it
15· ·defined here that occurred before the 2018 or '19 --
16· ·I'll mix up those dates -- but the previous
17· ·stormwater election, which showed that being the
18· ·number.
19· · · · · We have it included as an exhibit -- oh, here
20· ·we are -- MSD 70R.· And I think 70R is it where
21· ·there was recent evaluations done I think at the end
22· ·of calendar 2021 or 2022.· There's two documents
23· ·there.· The results come back the same showing $2
24· ·per month.· If you want to get over 50 percent of
25· ·the people to support it's about $2 a month.
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·1· · · · · Q.· ·So is it accurate to say that in
·2· ·formulating this Rate Change Proposal it sounds like
·3· ·the way you did it is you determined how much the
·4· ·customers are willing to pay and then calculated how
·5· ·much work you can get done with that money or is it
·6· ·saying we need to do $70 million worth of work a
·7· ·year and then calculating how much you're going to
·8· ·charge?
·9· · · · · A.· ·Yeah, that was my call.· It comes from
10· ·three things.· One -- one is the success we had with
11· ·some of the small taxing districts we have.· Once
12· ·the work gets done it's a very popular program.
13· · · · · Q.· ·Okay.
14· · · · · A.· ·The other part was I view it as it's
15· ·more important to make sure we get people to say yes
16· ·the first time and start a program, let them
17· ·experience it, especially with all the features we
18· ·put in here and allow then possibly in the future to
19· ·even expand on that assuming it's voted in place. I
20· ·think that's the way to proceed.
21· · · · · I think it's -- it was a policy discussion by
22· ·-- decision by me, we're not going to go for
23· ·something that knocks this whole thing out knowing
24· ·we will lose at the ballot box.· I think that's the
25· ·wrong way to go.
Page 93
·1· · · · · Q.· ·Understood.
·2· · · · · All right.· In your testimony on page 4, I'm
·3· ·looking at Question 12, so row 7, you indicate the
·4· ·cost -- recovering the cost of the Capital Program
·5· ·using property taxes is about half a million to a
·6· ·million dollars less than having a District-wide
·7· ·impervious surface fee.
·8· · · · · And that obviously -- that relates just to
·9· ·residential customers only, correct?
10· · · · · A.· ·Correct.
11· · · · · Q.· ·Okay.· Can you explain to the Commission
12· ·what the estimated cost would be billing
13· ·non-residential customers using an impervious
14· ·surface charge?
15· · · · · A.· ·It's -- I'm using estimated numbers
16· ·here.· I believe the non-residential impervious
17· ·customers would represent just under 10 percent of
18· ·our total customer base.· The 500,000 to a million
19· ·dollars, there wasn't additional work done but every
20· ·time we have gone to do this type of work,
21· ·especially the last time we voted, there is a pretty
22· ·extensive evaluation, overfly, take data, map-out
23· ·impervious area, verify every time somebody has a
24· ·question as to whether or not their impervious area
25· ·is right.· And there was an estimate that's proven
Page 94
·1· ·somewhat accurate that -- back for instance when we
·2· ·did the last impervious rate, it's in that range of
·3· ·the extra cost per year if we were to have that many
·4· ·of our residents being billed by an impervious rate,
·5· ·that that's where that question would come from.
·6· · · · · So there would be a savings.· It's a long
·7· ·range.· We did not do an exact calculation but that
·8· ·has been a consistent number since 2008.
·9· · · · · Q.· ·Does the District track on an annual
10· ·basis or a monthly basis, calls that it receives to
11· ·address the stormwater erosion problem?
12· · · · · A.· ·We track them whenever we get them.
13· · · · · Q.· ·Okay.· Is there a report or anything
14· ·generated to that effect or a log of some kind?
15· · · · · A.· ·So I will tell you, yes, there is and
16· ·that's where the number comes from but the overall
17· ·program details on that probably Rich Unverferth, if
18· ·you want more details of what that looks like.· He
19· ·may have actually already submitted something I
20· ·believe, so...
21· · · · · Q.· ·Can you explain for the Commission how
22· ·non-residential customers are going to be billed the
23· ·impervious based stormwater charge?· Is it going to
24· ·be on their wastewater bill?
25· · · · · A.· ·It will be a monthly charge.· I don't
Page 95
·1· ·want to answer it wrong.· Exactly what the mechanism
·2· ·is, you can check with Marion Gee.· I think the
·3· ·answer is it will be on their wastewater bill if
·4· ·they get a wastewater bill.· If they don't,
·5· ·obviously it would be a separate new bill if there's
·6· ·any properties that don't currently get a wastewater
·7· ·bill.
·8· · · · · Q.· ·Okay.· So it's fair to say that the
·9· ·impervious area charge would be billed on properties
10· ·that don't get -- that don't have wastewater service
11· ·from the District?
12· · · · · A.· ·True.· And I think to expand on this,
13· ·the reason we set it up the way we did, if this
14· ·passes we would spend all of calendar year 2015 on a
15· ·monthly basis collecting an impervious charge from
16· ·the non-residential customers that takes us through
17· ·the end of 2015.· At the end of --
18· · · · · · · ·CHAIRMAN TOENJES:· 2015.· You're having
19· ·deja vu all over again.
20· · · · · A.· ·2025.· Have I got it?· 2025.· So all of
21· ·2025 they would collect that.· You get to the end of
22· ·2025 we would then collect the ad valorem property
23· ·tax for the residential customers.· The idea being
24· ·that once program gets started all subclasses of
25· ·customers would start by paying a full charge for
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·1· ·calendar year 2025 and obviously that would then
·2· ·continue every year after that.
·3· · · · · Q.· · (MR. MALONE) And will there be a
·4· ·process for non-residential customers to appeal the
·5· ·determination of the amount of impervious area on
·6· ·their property?
·7· · · · · A.· ·Yes.
·8· · · · · Q.· ·Okay.
·9· · · · · A.· ·It will be similar, I assume, to the
10· ·process we set up before.
11· · · · · Q.· ·Okay.· Can you explain for the
12· ·Commission how this new Stormwater Capital Funding
13· ·Proposal would improve the stormwater sewer service
14· ·currently provided to existing customers?
15· · · · · A.· ·So it will not improve the stormwater
16· ·sewer system.· That it won't do.· What it will do is
17· ·it will address flooding and erosion issues that are
18· ·caused by the amount of runoff that everybody is
19· ·contributing to the local area.· Erosion is caused
20· ·by additional flows.· Flooding is caused by
21· ·additional flows.· This would allow the ability to
22· ·take those problems in the entire area and address
23· ·them.
24· · · · · Q.· ·Thank you.
25· · · · · And moving to the fifth criteria for the
Page 97
·1· ·Commission to consider in the Charter, I started --
·2· ·I questioned Ms. Myers about this a little bit but
·3· ·there was a Charter amendment in 2021 that changed
·4· ·the fifth factor which now reads: Does the Rate
·5· ·Change Proposal consider the financial impact on all
·6· ·classes of ratepayers in determining a fair and
·7· ·reasonable burden?
·8· · · · · And I understand that came about through the
·9· ·Charter Commission of MSD?
10· · · · · A.· ·Yes.
11· · · · · Q.· ·And you were involved in that process I
12· ·presume, correct?
13· · · · · A.· ·Yes.
14· · · · · Q.· ·I believe Ms. Myers directed this
15· ·question to you, which is can you explain in the
16· ·District's view how the inquiry is different from
17· ·the pre-2021 language which was "Does it impose a
18· ·fair and reasonable burden on all classes of
19· ·ratepayers" to the new language?
20· · · · · A.· ·So I will tell you how we get there. I
21· ·don't have the language in front of me that was
22· ·pre-2021 if I got the dates right.
23· · · · · But the process was there was actually an
24· ·issue brought up at the Rate Commission about the
25· ·previous language, which I think was absolute that
Page 98
·1· ·says must have a fair and equitable cost or burden
·2· ·on all classes of ratepayers.· And there was the
·3· ·opinion expressed that kind of clicked with me is
·4· ·you will never have a rate that's fair and
·5· ·reasonable to all classes of ratepayers.· It was
·6· ·kind of an absolute.
·7· · · · · So I thought, hey, that's something to
·8· ·consider.· I brought it to the Rate Commission --
·9· ·the Charter Change Commission to consider the
10· ·language, explain what we viewed as a problem and
11· ·what I had heard from the Rate Commission.· They
12· ·came up with a set of language on -- for the fifth
13· ·factor.· That language then and anything -- that
14· ·recommendation from the Charter Change Commission,
15· ·similar to the recommendation that will come from
16· ·the Rate Commission, the recommendation of the
17· ·Charter Change Commission went to the Board for
18· ·review to decide what they would accept and what
19· ·they would not accept.
20· · · · · That one probably had more action than any
21· ·others.· There were two of the trustees who really
22· ·got involved.· And I don't have in front of me the
23· ·various steps of the language but ultimately what
24· ·you see on No. 5 was an agreement by all of the
25· ·trustees that that should be the fifth factor that
Page 99
·1· ·goes into the Charter to be considered for any rate
·2· ·proposal.
·3· · · · · Q.· ·Okay.· So it sounds like -- my read I
·4· ·guess is in the old language the Commission was
·5· ·supposed to consider that the rate change had to be
·6· ·fair and reasonable as applied to each individual
·7· ·class and now it's -- now the inquiry is has each
·8· ·class been considered in determining if it's a fair
·9· ·and reasonable --
10· · · · · A.· ·That's a good description of the change,
11· ·yes.
12· · · · · Q.· ·All right.· And it's your -- it's the
13· ·District's position that the Stormwater Capital Rate
14· ·involving the ad valorem tax for residential
15· ·customers and the impervious surface charge for
16· ·non-residential customers represents a fair and
17· ·reasonable burden?
18· · · · · A.· ·I would say that it represents --
19· ·considers the financial impact on all classes of
20· ·ratepayers in determining a fair and reasonable
21· ·burden.· I think I use exactly the language that's
22· ·in the Charter.
23· · · · · Q.· ·Okay.· And the District took into
24· ·account cost of service considerations.· Is that a
25· ·fair statement?
Page 100
·1· · · · · A.· ·Cost of service consideration -- is that
·2· ·one of the questions?
·3· · · · · Q.· ·I'm looking at -- this comes from the
·4· ·some of the factors that the Rate Commission has in
·5· ·their Operational Rules.
·6· · · · · A.· ·Oh.· Give us just a minute if you would.
·7· · · · · Q.· ·Sure.
·8· · · · · A.· ·Do you recall which discovery request
·9· ·you had made that request?· That would help me.
10· · · · · Q.· ·I believe it's in the second discovery
11· ·request.
12· · · · · A.· ·That is Marion Gee would be the best one
13· ·to ask that question of.
14· · · · · Q.· ·And is Marion the best -- is he the best
15· ·person to ask about cost causation principles,
16· ·customer impact data, whether those factors were
17· ·considered as well?
18· · · · · A.· ·Yes.
19· · · · · Q.· ·Okay.· All right.· Did the District
20· ·evaluate whether it's -- whether it's equitable I
21· ·guess to have, for instance, a large residential
22· ·property with a large amount of impervious surface
23· ·pay a property tax whereas an otherwise similar
24· ·piece of residential or commericial property with a
25· ·similar amount of impervious surface is going to be
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·1· ·billed based on the amount of impervious surface
·2· ·rather than a property tax?
·3· · · · · A.· ·Ask the question again if you don't
·4· ·mind.· I'm sorry.
·5· · · · · Q.· ·Did the District consider I guess the
·6· ·fairness -- or whether it's fair and equitable for a
·7· ·large residential property with a large amount of
·8· ·impervious surface to be assessed property tax while
·9· ·a similar commercial property with a large amount of
10· ·impervious surface is going to pay presumably a
11· ·higher amount of revenue because they're being
12· ·assessed based on the amount of impervious area they
13· ·have?
14· · · · · A.· ·Yeah, so part of this goes to some of
15· ·the things Susan was talking about.· It really all
16· ·fits into Article 5.· So we wanted to make sure we
17· ·were fair to all the subclasses.
18· · · · · So we know that the residential customer
19· ·class, based on impervious area, is paying their
20· ·reasonable share of the burden and everybody else is
21· ·paying their reasonable share of the burden.
22· · · · · So we have the classes set up.· Are there
23· ·going to be differences between them?· Yes, there
24· ·are.· We feel it is equitable in the subclass of the
25· ·residential customers that we use property tax and
Page 102
·1· ·our opinion is it is equitable, fair and reasonable
·2· ·for the subclass that's not the residential
·3· ·customers to be billed on impervious area.
·4· · · · · Q.· ·Okay.· I think this is my final
·5· ·question.· I talked with Ms. Myers earlier about the
·6· ·Statute 204.700.· There's a category of residential
·7· ·properties in the District that aren't served by
·8· ·District wastewater service.
·9· · · · · When the District calculated how much revenue
10· ·it's going to be receiving, did we presume that
11· ·we're going to be receiving revenue from those
12· ·residential properties by virtue of being -- paying
13· ·an ad valorem property tax even though they're not
14· ·served by the District's wastewater service?
15· · · · · A.· ·So we did that back in 2018.· I recall
16· ·there was a calculation of what that would look
17· ·like.· But I think going back to Susan's point, that
18· ·law is contrary to our Charter --
19· · · · · Q.· ·Okay.
20· · · · · A.· ·-- and we haven't taken it into
21· ·consideration with any of our existing or our future
22· ·recommended revenues.
23· · · · · Q.· ·So it's fair to say we're presuming we
24· ·would receive the revenue from those properties that
25· ·are theoretically subject to that statute?
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·1· · · · · A.· ·Yes.
·2· · · · · Q.· ·Have you calculated what -- if a court
·3· ·were to determine otherwise that you can't collect
·4· ·stormwater revenue from those customers, what the
·5· ·impact would be?
·6· · · · · A.· ·We did not do that this time, no.
·7· · · · · · · ·MR. MALONE:· All right.· I think that's
·8· ·all I have.
·9· · · · · · · ·CHAIRMAN TOENJES:· Thank you,
10· ·Mr. Malone.
11· · · · · Are there questions for Mr. Hoelscher from
12· ·any of the Rate Commissioners?· Mr. Perkins?
13· · · · · · · ·COMMISSIONER PERKINS:· Thank you.
14· · · · · · · · · · · ·EXAMINATION
15· · · · · QUESTIONS BY COMMISSIONER PERKINS:
16· · · · · Q.· ·Mr. Hoelscher, you talked about the --
17· ·and the report also refers to anticipated split in
18· ·the revenue that's going to be received from the
19· ·residential and the non-residential: 19 million
20· ·versus about 14 million.· So just to clarify, is
21· ·that representative of the split of the land area of
22· ·impervious surface?
23· · · · · A.· ·Yes.· So we took the impervious area of
24· ·the residential customers, it was whatever 19 over
25· ·34 is, they were -- let me go back to my answer.
Page 104
·1· · · · · So if you look at page 5.9 of the Rate
·2· ·Proposal, which is Exhibit 1 -- I thought I put a
·3· ·percentage in here somewhere -- I believe the
·4· ·residential customers represented 57 percent of the
·5· ·impervious area was on their properties.· So we
·6· ·took -- so that was 57.· With the non-residential
·7· ·being 43 percent, we backed into the total revenue
·8· ·need by making those proportional to the amount of
·9· ·impervious area within each class -- each subclass.
10· · · · · Q.· ·Okay.· And then --
11· · · · · A.· ·And I'm sorry, it is 57 percent for the
12· ·residential and 43 percent for the non-residential.
13· · · · · Q.· ·Fifty-seven for --
14· · · · · A.· ·Fifty-seven percent if you were to do it
15· ·purely by an impervious area charge as we previously
16· ·proposed.· Fifty-seven percent of the impervious
17· ·area is on the residential customers.· Forty-three
18· ·percent of the impervious area is on the
19· ·non-residential customers, which includes
20· ·not-for-profits.
21· · · · · Now, that is on -- it is at the end of
22· ·exhibit -- end of Exhibit 3A.· Oh, my testimony.
23· ·Okay.· That's why I knew it.· Yeah, it's Question 14
24· ·on my testimony.
25· · · · · Q.· ·Thank you.
Page 105
·1· · · · · Also, there was -- you talked a little bit
·2· ·about the Environmental Justice component very
·3· ·briefly regarding the -- I think on the residential
·4· ·side that the tax is fair and reasonable.
·5· · · · · Can you talk a little bit more about how that
·6· ·Environmental Justice component fits into the
·7· ·review?
·8· · · · · A.· ·So MSD is being watched, asked,
·9· ·questioned by our regulators to make sure that we
10· ·consider Environmental Justice in a much more
11· ·aggressive way than we ever have in the past.· We
12· ·had Environmental Justice provisions in our Consent
13· ·Decree that we signed in 2011 based on whatever the
14· ·Environmental Justice was at the time.
15· · · · · We ran into that most recently with the ARPA
16· ·funding.· The American Recovery and something Act.
17· ·I forgot what the "P" stood for.· So we don't get
18· ·lump sums but we do have to make proposals on those.
19· ·The State set out a lot of money, I think
20· ·$147 million of stormwater money to make grant
21· ·proposals.· One of factors that made it possible or
22· ·really bumped up your score was to do the work in
23· ·Environmental Justice areas.
24· · · · · So it's one thing -- there's a practical
25· ·reason of we need to make sure there's an
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·1· ·Environmental Justice area revenue source that's
·2· ·available at least in the near future to take
·3· ·advantage of some of the funds that are offered with
·4· ·regard to those types of programs, bring them in
·5· ·and, again, they reduce the total value of the
·6· ·program overall.
·7· · · · · And the other part is it's just right to do.
·8· ·What we're defining as Environmental Justice area
·9· ·MSD is not defining it.· We had to go through the
10· ·process during ARPA of determining what
11· ·Environmental Justice is.
12· · · · · From a regulatory perspective, even though
13· ·our stormwater is not regulatory, there's guidance
14· ·by the Federal government, the state gets to
15· ·determine what they want to look at -- look like and
16· ·then that will feed into possible grant
17· ·opportunities from the state.· It will feed into
18· ·probably even potential decisions we make on our
19· ·wastewater program as we proceed with it.· So that's
20· ·the reason the Environmental Justice portion is in
21· ·there.· It's 10 percent of the whole.
22· · · · · And just the way MSD was formed -- and I'm
23· ·doing this just by looking at a map -- if you saw
24· ·the OMCI districts, a lot of the areas outside the
25· ·city boundaries in the county, which were not
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·1· ·originally part of OMCI areas, are the lower income
·2· ·areas, the Environmental Justice areas.· For
·3· ·whatever reason it was set up that way.· I don't
·4· ·know if it was -- I'm sure it wasn't intentional.
·5· ·But there are just places that are underserved, not
·6· ·necessarily underserved by MSD but underserved and
·7· ·we think it's important for us to make sure that we
·8· ·provide some amount in there.
·9· · · · · Real quick, Mark, not to take your next
10· ·question but how did we then come up with the
11· ·breakdown?· If you don't mind me extending my
12· ·question here, so we had found through the OMCIs
13· ·that a good formula was for us to keep 50 percent of
14· ·the revenues collected for District-wide prioritized
15· ·projects.· We did that through the OMCIs.· They
16· ·proved to be very, very -- everybody accepted that.
17· ·They thought it was a great program.· We got a lot
18· ·of participation with that.
19· · · · · The balance of the dollars: 30 percent will
20· ·go to grants to local municipalities to address any
21· ·stormwater problem that they think they want to
22· ·address.· It goes from the smallest communities are
23· ·$30,000 made available a year.· Our determination is
24· ·if you're going to do, which a lot have done, a
25· ·stormwater study to find all your problems or a
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·1· ·small project to replace a culvert under a road,
·2· ·that's about the cost of that.
·3· · · · · It is not exactly by population but obviously
·4· ·the higher populated areas will get a larger grant.
·5· ·It goes all the way up to just under one and a half
·6· ·million dollars for the City of St. Louis and
·7· ·Unincorporated St. Louis County.
·8· · · · · And the idea is we kind of approach it using
·9· ·that.· We approach it from two different directions.
10· ·MSD is allowed to prioritize on a District-wide
11· ·basis.· This allows the local municipalities, either
12· ·alone or together with adjacent municipalities, to
13· ·decide on what they think is important as opposed to
14· ·what MSD thinks is important.
15· · · · · So 30 percent, again, will be programs --
16· ·grant programs available to local municipalities.
17· ·There's another 10 percent that uses that same
18· ·method of prioritization that I mentioned.· But
19· ·after we go through everything else we'll just apply
20· ·those to the prioritized projects and what are
21· ·currently identified as Environmental Justice areas.
22· ·Ten percent of the revenues go to that.
23· · · · · The other 10 percent is no matter what we do,
24· ·especially as engineers, to try and make sure we
25· ·covered everything something will be missing.· And
Page 109
·1· ·one thing, especially the input I got back from the
·2· ·municipal leagues, the executive council and some of
·3· ·the city manager groups I met with, we're going to
·4· ·take 10 percent of the dollars and make it available
·5· ·for an annual discussion on a policy basis.· Hey, is
·6· ·there something we're missing that really needs to
·7· ·be funded?
·8· · · · · I'm not saying this needs to be there but,
·9· ·for instance, if we get something like happened this
10· ·past summer, one consideration should be, hey, let's
11· ·address getting people bought out of floodplains.
12· ·That may be a solution.· So we put that piece in
13· ·there.· We think that it kind of provides -- the
14· ·50/30/10/10 provides a whole gamut of kind of
15· ·covering everybody's needs.
16· · · · · And kind of going on what I said earlier, I
17· ·think that it becomes really, really important
18· ·because the question is going to come up:· Should
19· ·you go faster?· I think showing everybody what can
20· ·be done I think is pretty important.
21· · · · · Oh, and I mentioned municipalities getting
22· ·together.· One of the groups we've been working with
23· ·a lot in trying to get public input and see what it
24· ·is is the 24:1 group.· If anybody is familiar with
25· ·them, they're North County -- I guess there's 22
Page 110
·1· ·now.· There used to be 24 municipalities that are
·2· ·within the Normandy School District.· We've been
·3· ·presenting this to them.· They would probably fall
·4· ·in that underserved-type area.
·5· · · · · And they're the ones that really latched onto
·6· ·the idea of they were thinking about the way they
·7· ·are all united under one group, 24:1, kind of --
·8· ·kind of driven by -- I can't remember the group --
·9· ·I'm trying to think but whatever.· Their decision --
10· ·as I was having a discussion with them they were
11· ·worried about how much went to each group.· Beyond
12· ·Housing helps runs this.· They were over there
13· ·calculating what are we collecting all together and
14· ·let's start solving stormwater problems that we as a
15· ·group in this area think is the most important
16· ·problem, which is the way they're addressing issues.
17· · · · · So I'm not saying that's the driver behind it
18· ·but as we brought the issue up it became obvious to
19· ·us that providing that kind of grant opportunity and
20· ·even this other 10 percent to go anywhere else
21· ·really can be flexible enough to allow people to do
22· ·what they want.
23· · · · · If they want to just do a little piece of a
24· ·project and know what their problems are, they can.
25· ·If they want to take their grant and add some of
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·1· ·their own money and do a bigger project, God bless
·2· ·them.· It worked out pretty well.· And I'm sure I
·3· ·went way beyond your question, Mark.
·4· · · · · · · ·COMMISSIONER PERKINS:· That's all.
·5· ·Thank you.· I have one more if I could?
·6· · · · · · · ·CHAIRMAN TOENJES:· Proceed.
·7· · · · · Q.· · (COMMISSIONER PERKINS) Mr. Hoelscher,
·8· ·you also talked just before the end of the
·9· ·questioning there regarding, you know, fairness to
10· ·the various subclasses, et cetera.· And so did you
11· ·consider if you've got very large users let's say,
12· ·either on the residential side or on the
13· ·non-residential side, about consideration of a cap
14· ·of what that fee might be or that tax might be so
15· ·that no one user is overly or, you know,
16· ·disproportionally beyond what their property might
17· ·generate?
18· · · · · A.· ·So I would think the discussion went as
19· ·far as that's not used in any of our other -- any of
20· ·our other services.· Whether it's a 2-cent tax or
21· ·the 10-cent tax there isn't a cap there.· There was
22· ·just a brief discussion, as I recall, and it went
23· ·nowhere.· So we really didn't even put any
24· ·consideration on putting a cap on any property that
25· ·I recall.
Page 112
·1· · · · · · · ·COMMISSIONER PERKINS:· Thank you.
·2· · · · · · · ·CHAIRMAN TOENJES:· Thank you,
·3· ·Mr. Perkins.
·4· · · · · Other questions for Mr. Hoelscher?· Mr.
·5· ·Palans?
·6· · · · · · · ·COMMISSIONER PALANS:· Thank you.
·7· · · · · · · · · · · ·EXAMINATION
·8· · · · · QUESTIONS BY COMMISSIONER PALANS:
·9· · · · · Q.· ·Mr. Hoelscher, just to walk through the
10· ·Proposal as a whole, as I understand it and from Ms.
11· ·Myers' opening statement, she indicated that the
12· ·2-cent property tax currently enforced will not be
13· ·changed, correct?
14· · · · · A.· ·Correct.
15· · · · · Q.· ·And that generates about $6 million a
16· ·year as I understand?
17· · · · · A.· ·And for our current environmental --
18· ·environmental -- the environmental part of our
19· ·stormwater --
20· · · · · Q.· ·I'm not asking you about that.· Just
21· ·keep it to the 2 cents generates $6 million a year?
22· · · · · A.· ·Correct.
23· · · · · Q.· ·And then the O&M is a 10-cent property
24· ·tax and that's not going to be changed by this
25· ·Proposal?
Page 113
·1· · · · · A.· ·Right, that's proven to be about the
·2· ·right size.
·3· · · · · Q.· ·And that's about $31 million a year?
·4· · · · · A.· ·Correct.
·5· · · · · Q.· ·So those two, the 2-cent and the 10-cent
·6· ·property tax, that generates currently $37 million a
·7· ·year and it will continue to generate that
·8· ·$37 million a year?
·9· · · · · A.· ·Correct.
10· · · · · Q.· ·Go back to your explanation, what does
11· ·that do?· What does that $37 million do?
12· · · · · A.· ·So for the 6 million -- this is on the
13· ·2-cent tax -- those of you who were involved with
14· ·the -- and Susan did mention environmental
15· ·regulations.· They're our MS4 program.
16· · · · · So we are required through most of the
17· ·District, except for the combined sewer area, to put
18· ·a program in place that either proactively or as
19· ·areas develop we put in facilities and -- we don't
20· ·put them in, we manage and regulate, kind of as a
21· ·building permit requiring new development to put in
22· ·facilities to capture stormwater to the extent that
23· ·they can prevent the amount of pollutants that come
24· ·off of stormwater runoff.· That's where you see the
25· ·rain gardens or some of the smaller detention areas.
Page 114
·1· · · · · And then rolled into that is also the old
·2· ·volume issue, right, once you build something and
·3· ·you can generate more runoff you need to pull it
·4· ·back so you don't generate any more.
·5· · · · · So the cost to run that program District-wide
·6· ·and then also we are within the District for the --
·7· ·I may have this wrong -- 59 I think co-permittees
·8· ·for the MS4 permit.· We're also the managing
·9· ·authority to make sure that all gets done.· That
10· ·$6 million lines up to being just about the expense
11· ·it takes to manage that environmentally-required
12· ·program.
13· · · · · Q.· ·So the $6 million is dedicated to
14· ·managing the runoff of pollutants.· Is that a fair
15· ·--
16· · · · · A.· ·Storm runoff and stormwater pollutants,
17· ·yes.
18· · · · · Q.· ·Okay.· Now, what is the $31 million from
19· ·the 10-cent property tax used for?
20· · · · · A.· ·Okay.· So that is for us to actually
21· ·operate and maintain the stormwater collection
22· ·system.
23· · · · · A little history lesson for those of you who
24· ·were here, that was presented in front of the Rate
25· ·Commission in 2016.· Prior to 2016 MSD collected
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·1· ·money to operate and maintain the storm sewer system
·2· ·only within the OMCI areas and the City of St.
·3· ·Louis, which meant just inside 270.
·4· · · · · We were given responsibility in 1989 to
·5· ·operate and maintain all the storm sewers west of
·6· ·270 but no funds to do it, so they kind of sat.
·7· · · · · The driver in 2016, we had about five years
·8· ·before that of that system falling part, swimming
·9· ·pools going down holes, holes showing up in people's
10· ·yards.· We had nothing we could do other than put
11· ·tape around them and say, hey, be careful, we'll
12· ·throw some dirt in there.
13· · · · · So what the main part that that's being spent
14· ·on, we're still on the front of this, awful lot of
15· ·corrugated metal pipe that's part of the public
16· ·system and it's gone.· It's rusted away.· We're
17· ·replacing pipe.· We're really replacing the damage
18· ·caused by some of the outfalls.
19· · · · · There's a lot of internal rehabbing.· You
20· ·know we line -- you guys know we line wastewater
21· ·sewers.· We've been doing that with some storm
22· ·sewers in order to make sure we just basically end
23· ·up with a new pipe inside of that pipe.· So we're
24· ·going through and trying to bring those storm sewers
25· ·up to snuff.
Page 116
·1· · · · · The other part and more important if you
·2· ·think about this, not only could we not maintain the
·3· ·storm sewers, we couldn't clean the inlets on a
·4· ·regular basis.· Everything west of 270 we now can.
·5· ·That's also a major part of what that goes into.
·6· · · · · So that's where those dollars are being spent
·7· ·right now.· And the values -- I think you guys know
·8· ·we don't charge 10 cents anymore.· The State tells
·9· ·us we have to charge less, so we're at 9 and 7 cents
10· ·or whatever it is.· But those are fully budgeted
11· ·every year.
12· · · · · Q.· ·Okay.· So just pause for just a minute
13· ·on where we are.· On the 2 cents and the 10 cents,
14· ·on the 2 cents you're managing the pollutants, the
15· ·runoff of pollutants, on the 10 cents you're
16· ·managing the runoff from the sewer system?
17· · · · · A.· ·Well, the operation and maintenance of
18· ·the system as they exist.· The discharge comes from
19· ·other places.
20· · · · · Q.· ·So that $37 million doesn't even touch
21· ·on remediation of stormwater flooding and erosion
22· ·that we're experiencing in the District, that's the
23· ·purpose of this Rate Proposal before us today,
24· ·correct?
25· · · · · A.· ·That's correct.
Page 117
·1· · · · · Q.· ·Okay.· And this new Proposal, the rate
·2· ·you're proposing, it's going to generate from the ad
·3· ·valorem tax on residents 19.3 million, correct?
·4· · · · · A.· ·Correct.
·5· · · · · Q.· ·And it's going to generate from the
·6· ·impervious rate imposed on non-residential
·7· ·14.8 million, correct?
·8· · · · · A.· ·That's an approximate number.· That's
·9· ·very close, yes.
10· · · · · Q.· ·So now you're generating with this Rate
11· ·Proposal 34 -- $34.1 million for remediation of
12· ·flooding and erosion within the District?
13· · · · · A.· ·Correct.
14· · · · · Q.· ·And the District is a 520-square-mile
15· ·District, correct?
16· · · · · A.· ·Correct.
17· · · · · Q.· ·And we've got 1.3 million people in this
18· ·District?
19· · · · · A.· ·Yeah.· Yes.
20· · · · · Q.· ·So of this $34 million you're proposing
21· ·to allocate the use of that -- let me just back up
22· ·for just a minute.
23· · · · · As I understand it today, as I understood it
24· ·from our last Stormwater Rate Proposal, the moneys
25· ·that would be generated from residential and
Page 118
·1· ·non-residential ad valorem and impervious rates
·2· ·would be allocated based upon a cost-benefit
·3· ·analysis, correct?
·4· · · · · A.· ·Fifty percent of the dollars would be
·5· ·District-wide and 10 percent of the dollars --
·6· · · · · Q.· ·I'm talking about the last proposal --
·7· · · · · A.· ·Oh.
·8· · · · · Q.· ·-- not today.
·9· · · · · A.· ·The last proposal was, yes, all the
10· ·funds would be --
11· · · · · Q.· ·It's all based upon a cost benefit?
12· · · · · A.· ·Correct.
13· · · · · Q.· ·And the idea was to benefit the most
14· ·people with the fewest dollars, that's how projects
15· ·wither prioritized?
16· · · · · A.· ·Right.· So I say it the right way, the
17· ·-- whenever there's a problem we add up the point
18· ·value of the benefits, whether you're losing a
19· ·swimming pool, a house, a garden, back fence, and
20· ·then divide it by the cost of the project and end up
21· ·with a cost-benefit -- a benefit-cost ratio and the
22· ·ones that scored the best we were working --
23· · · · · Q.· ·You would prioritize it.· And so that
24· ·was the system that was presented based upon that
25· ·cost-benefit score card analysis during our last
Page 119
·1· ·Rate Proposal?
·2· · · · · A.· ·Right.· And just a little bit about that
·3· ·system, that was based on public input, I don't
·4· ·recall when the last time we met, as a fair way to
·5· ·spend dollars once we started significantly spending
·6· ·stormwater dollars at least in the OMCI districts.
·7· · · · · Q.· ·I appreciate that.
·8· · · · · What the change is today is in lieu of
·9· ·allocating all of the funds from the ad valorem tax
10· ·on residents and the impervious rate on
11· ·nonresidents, in lieu of allocating that based upon
12· ·cost benefit, you're going to allocate 50 percent
13· ·based upon that cost-benefit analysis, that score
14· ·card?
15· · · · · A.· ·District-wide, yes, that's one
16· ·component.
17· · · · · Q.· ·And 30 percent is going to be in the
18· ·form of grants to municipalities?
19· · · · · A.· ·Correct.
20· · · · · Q.· ·And that 30 percent is roughly --
21· ·30 percent of 34 million is roughly 10 million
22· ·bucks?
23· · · · · A.· ·Correct.
24· · · · · Q.· ·And that 10 million bucks is going to be
25· ·allocated based upon population --
Page 120
·1· · · · · A.· ·Yes.
·2· · · · · Q.· ·-- in municipalities?
·3· · · · · A.· ·Correct.
·4· · · · · Q.· ·And is that a fair allocation given that
·5· ·some population areas may not have the appropriate
·6· ·number or need of projects that are prioritized
·7· ·within those municipalities?
·8· · · · · A.· ·I think the program is District-wide.
·9· · · · · Q.· ·Okay.
10· · · · · A.· ·This is a District-wide program.· So if
11· ·you take a look you'll find there are still problems
12· ·everywhere.
13· · · · · Now, you're saying the 30 percent, if I think
14· ·that's appropriate, right, the 30 percent?· Yeah, I
15· ·do think that's appropriate by population to make
16· ·that available to the individual municipalities for
17· ·what they feel is the highest priority stormwater
18· ·issue in their particular municipality.
19· · · · · Q.· ·But the 30 percent that you're granting
20· ·to the municipalities may be disproportionate to the
21· ·cost benefit that would otherwise be prioritized
22· ·with this score card?
23· · · · · A.· ·Correct because we're not extending
24· ·MSD's District-wide cost-benefit solution on the
25· ·municipalities.· We're allowing them to determine
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·1· ·their own priorities.
·2· · · · · Q.· ·And you believe that providing that
·3· ·discretion to the municipalities based upon
·4· ·population and not based upon the fairness of the
·5· ·score card, cost benefit, is appropriate and in the
·6· ·best interest of the District?
·7· · · · · A.· ·Yes.· And that's the input we've gotten
·8· ·as we've discussed this with those who don't benefit
·9· ·from it now.· The input we've gotten from those
10· ·municipalities located within the small OMCI taxing
11· ·districts who are currently taking advantage of
12· ·this, they find it invaluable to be able to address
13· ·the issues that they think are more important in
14· ·their area and quite honestly that might fly
15· ·underneath the radar of MSD.· So I think it's --
16· ·yes, I think it's the appropriate thing to do.
17· · · · · Q.· ·Let me just ask:· Why didn't you
18· ·allocate 60 percent of the revenues to the
19· ·Stormwater Capital Projects based on priorities and
20· ·20 percent in the form of grants to municipalities?
21· · · · · A.· ·The 50/50 program we've used with the
22· ·OMCIs, although in smaller areas, they are in
23· ·taxable areas within folks who have generally the
24· ·same issues, that proved that 50/50 mix turned out
25· ·to be very appropriate.· We collect the funds.· We
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·1· ·make the revenues come back.
·2· · · · · So 50 percent, that's where the 50 percent
·3· ·number came from for doing District-wide --
·4· ·District-wide prioritized projects.
·5· · · · · Q.· ·You could easily have identified
·6· ·75 percent to prioritize projects and 25 percent to
·7· ·municipal projects, couldn't you have?
·8· · · · · A.· ·You could have, yes.· Not me, but you
·9· ·could have, yes.
10· · · · · Q.· ·And in terms of the 10 percent of the
11· ·revenues for the Environmental --
12· · · · · A.· ·Environmental Justice.
13· · · · · Q.· ·-- Justice program, that's also an
14· ·arbitrary number that you think is appropriate to
15· ·gain favor with the current social needs, is that --
16· · · · · A.· ·No, I think it's the right thing to do.
17· ·In no way am I trying to find favor with folks. I
18· ·think it is something we owe our residents to take
19· ·care of those issues and make those resources
20· ·available to them.
21· · · · · Most of those Environmental Justice areas by
22· ·definition definitely do not have the ability to
23· ·solve these problems on their own as many other
24· ·municipalities do.· And I think providing that is
25· ·just simply the right thing to do.
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·1· · · · · It's 10 percent of the amount, I agree. I
·2· ·think just by circumstance, I think 10 percent of
·3· ·the projects we have identified happen to be in
·4· ·Environmental Justice areas.· That's not necessarily
·5· ·where this number came from but I think 10 percent
·6· ·is the right number for now as a policy -- as a
·7· ·policy position.
·8· · · · · Q.· ·So you've split the revenue stream
·9· ·into 50 -- three buckets: 50 percent, 30 percent and
10· ·10 percent?
11· · · · · A.· ·You forgot the fourth bucket.· There's
12· ·another 10 percent.
13· · · · · Q.· ·Fifty, 30 -- yeah, where's the other 10?
14· · · · · A.· ·The other 10, I explain later and we're
15· ·in discussions with -- I forgot who's the Municipal
16· ·League -- oh, Mark, you're the rep right now, right?
17· · · · · So we've been meeting with the Municipal
18· ·League.· We're looking to get a District-wide group
19· ·together to help address stormwater kind of on a
20· ·policy basis:· What are we missing with what you
21· ·just described as our formula?
22· · · · · And we think taking 10 percent of that
23· ·moneys, having a discussion -- the Muni League is
24· ·our entity of choice right now because it touches
25· ·all the municipalities as long as we include the
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·1· ·City of St. Louis.· Is there something else we
·2· ·should do with this?
·3· · · · · I had mentioned a big flood, if something
·4· ·became evident, if we need to do buyouts.· It could
·5· ·very well be put the money in the local grant
·6· ·program.· That may be the recommendation.· It may be
·7· ·this problem has existed in this area for so long we
·8· ·need to do it there.
·9· · · · · Whatever comes out of that group that would
10· ·make a recommendation to our Board as to what to
11· ·spend that 10 percent on every year to cover things
12· ·that simply aren't -- I think we've done a good job
13· ·of laying out a program that kind of hits this
14· ·problem from every angle a little bit and I think
15· ·there's going to be a gap.· And I think that gives
16· ·us the ability to have 10 percent from a policy
17· ·perspective to allow the area to determine, hey,
18· ·here's something extra we need to do.
19· · · · · Q.· ·And as I understand the Proposal, the
20· ·current OMCI elections, if this Proposal would pass,
21· ·would be set at zero?
22· · · · · A.· ·Immediately we would set them at zero,
23· ·correct.· Now, ultimately we'll do like we did last
24· ·time.· We may get folks asking we want this turned
25· ·back on.· This is similar for those of you who know
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·1· ·when we -- in 2016 there was leftover moneys and we
·2· ·were able to spend a larger program for a couple of
·3· ·years.
·4· · · · · We set -- the Board set the tax rate at zero
·5· ·for a couple of years until that ran out and then we
·6· ·went back and said, okay, municipalities, those of
·7· ·you -- and we had 12 different OMCI districts -- who
·8· ·would like to have this turned back on for a reason?
·9· · · · · And where we got overwhelming support we
10· ·moved forward.· If we didn't, we stayed back.
11· ·Obviously now we're being able to charge what is the
12· ·maximum rate that's being allowed by the State of
13· ·Missouri.
14· · · · · · · ·CHAIRMAN TOENJES:· Mr. Hoelscher, you
15· ·have been questioned for the last hour.· We are now
16· ·going to take a break until one o'clock and let you
17· ·get your final two hours in after one o'clock.· So
18· ·we will break for lunch now.· Mr. Palans, you may
19· ·resume when we come back at one o'clock.
20· · · · · · · ·COMMISSIONER PALANS:· Thank you.
21· · · · · · · ·MR. HOELSCHER:· Thank you.
22· · · · · · · · · · · (Break taken.)
23· · · · · · · ·CHAIRMAN TOENJES:· It is one o'clock, so
24· ·we will resume our meeting and we will resume our
25· ·discussion with Mr. Hoelscher.
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·1· · · · · And Mr. Palans, I ask you to continue with
·2· ·your questions.
·3· · · · · Q.· · (COMMISSIONER PALANS) Thank you.
·4· · · · · Mr. Hoelscher, several weeks ago you
·5· ·distributed to us the Stormwater Service Proposal
·6· ·dated February 21, 2023.· On the last page of that
·7· ·there is an orange box and it says, "Area-wide
·8· ·attention to the issue and implementation."· And
·9· ·then another orange box that says, "Don't forget the
10· ·$700 million."
11· · · · · What's the $700 million?
12· · · · · A.· ·700 million was prior to the storms this
13· ·past summer.· So at the time you're seeing a copy of
14· ·something we were using to go out and talk for six,
15· ·seven months before you saw it but I wanted you guys
16· ·to see the same thing we were presenting to the
17· ·public to get feedback.
18· · · · · And it was -- well, I wanted everybody to
19· ·understand the size.· And just by dumb luck, really
20· ·kind of confirming what we were putting together on
21· ·the Rate Proposal, we just wanted to reconfirm with
22· ·everybody.· By dumb luck it happened we went out
23· ·right after that storm.· So I wanted people to think
24· ·that's what this is about.
25· · · · · Q.· ·So is the $700 million, just so I
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·1· ·understand it, is it last summer's storm?
·2· · · · · A.· ·Before last summer's storm.
·3· · · · · Q.· ·Before last summer.· So after last
·4· ·summer's storm we're talking about a number greater
·5· ·than 700 million potentially?
·6· · · · · A.· ·If -- and most of the issues there are
·7· ·flooding and this has to do with MSD, we think it's
·8· ·a good idea to move people out of floodplains but
·9· ·it's not up to us.· We have to cooperation of the
10· ·municipalities.
11· · · · · So you're right.· There's no number in there.
12· ·You'll see what it looks like.· I don't know what
13· ·that number could possibly be.· We were in the
14· ·process of people saying, hey, MSD, why aren't you
15· ·doing something?· And so I put that in there to make
16· ·sure everybody understood and I left it in when I
17· ·did the presentation to you guys.
18· · · · · Q.· ·How does that number, that
19· ·700-million-dollar number correspond to Section 8,
20· ·which is an appendice, which is a detailed
21· ·Stormwater CIRP?
22· · · · · A.· ·So I think you can ask Rich but I think
23· ·the answer is that's -- that is the stormwater prior
24· ·to this summer's storm.· We have been developing
25· ·this program for a while.· Rich may have added
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·1· ·something in there but it wouldn't be significant.
·2· ·The number is about the same.
·3· · · · · Q.· ·Because, you know, when I look at that
·4· ·appendice, I don't see a total for that number.
·5· · · · · A.· ·So I think getting into the details of
·6· ·what's in -- I would ask you wait until you see
·7· ·Rich.
·8· · · · · Q.· ·Okay.
·9· · · · · A.· ·I'm giving you just generalities right
10· ·now.
11· · · · · Q.· ·So let's just focus on -- let's assume
12· ·we're talking about a 700-million-dollar total
13· ·District-wide remediation, stormwater, erosion,
14· ·all-in type of number.· As I understand that number,
15· ·at our last rate hearings that number was
16· ·$562 million.· Do you recall that?
17· · · · · A.· ·Yes.
18· · · · · Q.· ·So it went up like 30 percent?
19· · · · · A.· ·So I would ask and -- if you want to go
20· ·into that, go in it with Rich.
21· · · · · Q.· ·Okay.
22· · · · · A.· ·Problems don't become problems when a
23· ·new property owner shows up.· Redevelopment makes
24· ·problems go away.· Redevelopment makes problems
25· ·develop.· We now -- especially now that we're
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·1· ·spending money we're hearing people who never
·2· ·thought to tell us they had a problem before.
·3· · · · · There's a lot of dynamics.· That number has
·4· ·bounced between 500,000 and a million ever since
·5· ·2008.· And I think if you -- Rich would really be
·6· ·the one to give you a feel for what that is.
·7· · · · · Q.· ·And under this Rate Proposal we're
·8· ·allocating $34 million of revenue to address a
·9· ·700-million-dollar-plus remediation District-wide.
10· ·Is that a fair statement?
11· · · · · A.· ·Correct.
12· · · · · Q.· ·Focusing on the OMCI, as I understand
13· ·how the OMCI works, the communities that have that
14· ·OMCI tax pay it to the District and the municipality
15· ·that pays it is entitled to receive 50 percent of
16· ·that tax back to use for remediation of projects
17· ·within the municipality?
18· · · · · A.· ·Right.· And that's something we put in
19· ·place right after we set them back up after 2016,
20· ·again to try to address some of the issues that I
21· ·think came out of the Rate Commission.
22· · · · · Q.· ·Tell me how this is going to work if
23· ·this Proposal passes and OMCI is terminated, how
24· ·will those districts then be able to receive that
25· ·50 percent contribution to remediate projects
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·1· ·within their municipality?
·2· · · · · A.· ·So that's what the 30 percent number is.
·3· ·The 30 percent is what goes to that.· Thirty percent
·4· ·of everything collected goes to every municipality.
·5· · · · · Q.· ·Every municipality?
·6· · · · · A.· ·Every municipality gets a share.· If
·7· ·they use it and have a plan, then it gets -- it gets
·8· ·-- it will go as grants to the individual
·9· ·municipalities.· If the municipalities don't have --
10· ·again, we won't require it be spent every year.· You
11· ·can save three years to get a project done if you
12· ·want.· If somebody just expresses no interest in
13· ·using it, we're going to put it back into the
14· ·District-wide pot.
15· · · · · Q.· ·Okay.· So the Proposal says that
16· ·30 percent of the revenues would go to the
17· ·municipalities to be determined by population in the
18· ·form of grants.
19· · · · · A.· ·Correct.
20· · · · · Q.· ·If I have a municipality that has 6,000
21· ·population with a hundred million dollars worth of
22· ·stormwater remediation projects, how am I going to
23· ·be able to obtain those funds that I was previously
24· ·receiving from my 50 percent?· Aren't I going to be
25· ·under-compensated for my --
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·1· · · · · A.· ·Well, you'll still be receiving -- the
·2· ·30 percent pot will provide the local match that
·3· ·went away when the OMCIs went in place.
·4· · · · · Q.· ·And I don't mean to argue with you but
·5· ·the 30 percent match is based upon population.
·6· · · · · A.· ·Correct.
·7· · · · · Q.· ·And if I have a municipality with a
·8· ·population of 6,000 compared with a municipality
·9· ·that has a population of 50,000 -- I'm going to give
10· ·a specific example.· A 6,000-municipal, a
11· ·6,000-population municipality that has identified
12· ·over a hundred million dollars worth of remediation
13· ·costs and a 50,000-population municipality that has
14· ·identified $50 million worth of remediation costs,
15· ·how is that fair?
16· · · · · A.· ·How --
17· · · · · Q.· ·Because you're basing it off population?
18· · · · · A.· ·Right.· We're giving -- the individual
19· ·municipalities determine if there's something within
20· ·their areas.· I'm not sure the situation you
21· ·described exists, so therefore I don't think we
22· ·thought about it.
23· · · · · But the idea is to give -- again, hitting it
24· ·from all directions -- and we don't have a hundred
25· ·million dollars.· That's not what we're raising
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·1· ·anyway.· The idea is to hit it from all sides,
·2· ·provide funding and -- to go after what's
·3· ·District-wide and then provide funding to the local
·4· ·municipalities as matches for whatever they feel is
·5· ·important.
·6· · · · · I would put to you maybe that's what the
·7· ·$3 million piece is.· If there's a small community
·8· ·that has a hundred million dollars of stormwater
·9· ·projects -- I got to imagine that amount that we're
10· ·talking about -- we're talking about what are we
11· ·going to do at an area-wide basis.· Is there a
12· ·community that's underwater six months out of the
13· ·year or something?· That may be where that 3 million
14· ·would go based on a District-wide advisory group
15· ·that say here's where to spend some of those extra
16· ·funds.
17· · · · · Q.· ·And I'll give you the specific numbers
18· ·because -- and I just want you to think about how
19· ·this is going to apply because in my municipality we
20· ·have a roughly 6,000 population.· We've identified
21· ·with a stormwater study in excess of a hundred
22· ·million dollars worth of remediation costs.· We're
23· ·currently imposing an OMCI tax, 50 percent of which
24· ·we receive back to allocate towards our budget, and
25· ·I sense with this Proposal we would receive less
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·1· ·back because it's based on population?
·2· · · · · A.· ·Correct.
·3· · · · · Q.· ·And so we don't know -- our population
·4· ·is low but our needs are high.· And you may have a
·5· ·municipality with a high population without
·6· ·identifying that extent of remediation projects.
·7· ·That's what I'm --
·8· · · · · A.· ·Right.
·9· · · · · Q.· ·And I'm -- you may laugh at me but I'm
10· ·just trying to be fair.
11· · · · · A.· ·No, I'm not laughing.
12· · · · · Q.· ·I'm just trying to be fair with the
13· ·allocation.
14· · · · · A.· ·I think where we're at right now, the
15· ·starting point is to give everybody a piece of
16· ·money.· And I think going through and making sure
17· ·there's a minimum amount -- there are communities
18· ·who have a lot of stormwater problems and don't even
19· ·know what they are because they haven't had the
20· ·ability to sit and determine what are my stormwater
21· ·problems?· I think this is the starting point for
22· ·the amount of money we have put aside.
23· · · · · You know, we did the OMCIs.· They are a
24· ·little bit different.· They are similar communities
25· ·all within a much smaller area and we did it the way
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·1· ·we did it because of the character of the OMCIs.
·2· ·Now we're talking District-wide.· And I think for a
·3· ·lot of the reasons I explained before, I think doing
·4· ·it by population now is the right way to get started
·5· ·and make those distributions.· I think Ladue
·6· ·probably would go down.· I have no doubt about that.
·7· ·Some who get nothing right now would potentially get
·8· ·something.
·9· · · · · So you're right, there would -- I wouldn't
10· ·disagree with it but I guess you could make an
11· ·argument that it should go by what they put into the
12· ·pot or -- I am not really sure.· I think we found
13· ·that to be appropriate for all OMCIs but I don't
14· ·think that's the right way to move forward.· I don't
15· ·think it's the right way to move forward.· I think
16· ·we need to do it based on population.
17· · · · · Q.· ·And when I look to a finding that we are
18· ·required to make based upon considering the
19· ·financial impact on all classes in determining fair
20· ·and reasonable burden, I think you're creating a
21· ·disproportionate burden with regard to some
22· ·municipalities by just be putting a 30 percent
23· ·allocation based on population.
24· · · · · A.· ·And I think considering all burdens I
25· ·think we're being fair.· I think we're going to
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·1· ·disagree with that.
·2· · · · · · · ·COMMISSIONER PALANS:· Thank you,
·3· ·Mr. Chairman.· I have no further questions.
·4· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
·5· ·Palans.
·6· · · · · Any other questions for Mr. Hoelscher?
·7· ·Mr. Goss?
·8· · · · · · · · · · · ·EXAMINATION
·9· · · · · QUESTIONS BY COMMISSIONER GOSS:
10· · · · · Q.· ·Did you consider leaving the OMCI tax in
11· ·place fully funded as opposed to bringing it down to
12· ·zero?
13· · · · · A.· ·I think with us having a change and now
14· ·having a District-wide revenue source as opposed
15· ·to -- and, remember, this is my Board's
16· ·consideration.· I don't want my Board saying I'm
17· ·going to leave all those taxes in place without
18· ·input from the public after we successfully imposed
19· ·a new charge for a District-wide service.· And the
20· ·Board agreed with me previously.· I think when I
21· ·bring this up, they'll do that here as well.
22· · · · · The place to start is to make it zero.· The
23· ·sequence we see happening is we'll still collect up
24· ·to April 2024, we'll still collect OMCI taxes at the
25· ·end of calendar 2024, and then sometime before 2025
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·1· ·we're going to have to go back to the communities.
·2· ·If the communities as a whole, individually, want to
·3· ·keep us collecting taxes and providing the OMCIs,
·4· ·we'll consider doing that.
·5· · · · · But I think the starting point is it's going
·6· ·to be set at zero and we need to hear from the
·7· ·elected officials in those cities that they really
·8· ·want to be the ones to support keeping the OMCI
·9· ·taxes.
10· · · · · Q.· ·Okay.· And so in followup to that
11· ·because that was one of my questions, how is the
12· ·decision made to turn -- as you used the phrase
13· ·"turn the OMCI tax back on"?· If it's the
14· ·municipalities that are making that decision, are
15· ·you calling a meeting of the municipalities?· Are
16· ·they having a vote because then how's that vote
17· ·determined?· How's that going to work?
18· · · · · A.· ·So what we did -- we would probably
19· ·duplicate what we did in the OMCI districts.· Within
20· ·that we got every municipality, including
21· ·Unincorporated St. Louis County, we got them
22· ·together and we said here's what we're looking at:
23· ·we can either leave it off, we can turn it back on
24· ·and do it the way we've done it just on a
25· ·cost-benefit analysis or we can turn it back on and
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·1· ·provide half to the municipalities and half to a
·2· ·benefit-cost analysis.· So we went through that.
·3· ·There were 12 of them.
·4· · · · · There isn't a formula -- it's not a vote and
·5· ·there is no formula but we required an opinion from
·6· ·everyone in the municipalities who wanted to
·7· ·participate, yes or no did you want any of those to
·8· ·happen.· So there's 12 of the OMCIs.· Six originally
·9· ·said we don't want to be -- we don't want anything.
10· ·We got very little support, maybe even up to 30 or
11· ·40 percent but that wasn't sufficient.· My Board was
12· ·not comfortable with that.· It's up to them what to
13· ·charge for taxes.
14· · · · · The six others said no, pretty overwhelming
15· ·support, we want it turned on.· And one of those six
16· ·said our communities are -- don't have enough
17· ·revenue, resources, moxie, don't give us money in
18· ·grants, please leave it in your benefit-cost
19· ·analysis and do the projects that way.· And then
20· ·later on a seventh one was added when one of the
21· ·major entities changed their mind.
22· · · · · So I imagine us -- it worked really, really
23· ·well. I haven't asked that question directly but I
24· ·have indicated to those who participated in the past
25· ·that I've met with that that would be the future
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·1· ·process and they didn't have an issue with that.
·2· · · · · But we need to -- a vote is not required but
·3· ·I need to give the Board a set -- or whoever is in
·4· ·this seat needs to give the Board a sense of what
·5· ·the elected officials in those areas think and will
·6· ·support.· My Board is not going to say leave the tax
·7· ·on if two-thirds of the communities come in and say
·8· ·what are you doing?
·9· · · · · And I think the place to start is by setting
10· ·it at zero.· There is time, if this process works
11· ·through, that it may never go down to zero.· Our
12· ·plan is to set it at zero unless there's support
13· ·from individual OMCIs that want us to do it
14· ·differently.· Same way we did after 2016.
15· · · · · Q.· ·So in the case of -- let's use Lloyd's
16· ·community, Ladue.· How many other municipalities are
17· ·in Ladue's OMCI?· Do you have any idea?
18· · · · · A.· ·I do but I don't have that information
19· ·with me.
20· · · · · Q.· ·But there are several?
21· · · · · A.· ·In many of them there are several, yes.
22· · · · · Q.· ·Okay.· And so in the process that you
23· ·were describing those municipalities in that OMCI
24· ·would give MSD feedback as to whether they wanted
25· ·that OMCI tax to continue in their OMCI district and
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·1· ·then MSD would make a determination based on some
·2· ·criteria as to whether they would --
·3· · · · · A.· ·Well, the criteria was do you say yes or
·4· ·no, what percent of the population do you represent.
·5· ·That was the criteria we went through.
·6· · · · · The -- every city did it differently.· Some
·7· ·said, "I'm the mayor, I just say yes."· Others
·8· ·decided they wanted for a lot of right reasons to
·9· ·have an actual resolution at the municipal level.
10· ·They all did it a little bit different.· We just
11· ·wanted to make sure that we could record that they
12· ·were supportive of us turning those taxes -- setting
13· ·the taxes back above zero.
14· · · · · Q.· ·Okay.· And this would not be a new tax
15· ·and no vote of the people is required because the
16· ·tax is already in place, it's simply setting the
17· ·amount of tax --
18· · · · · A.· ·Right.
19· · · · · Q.· ·-- and that's me asking a question by
20· ·saying a statement.· I'm sorry.
21· · · · · A.· ·No, that's -- no, because let me expand
22· ·on that.· I think as much as you're doing today
23· ·you're going to set a tax rate and MSD's -- the
24· ·Charter then tasks the Board once that rate is set
25· ·to determine what portion of that is appropriate for
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·1· ·a given year.· So that's the process they go
·2· ·through.· I had a point here, Brad, because I was
·3· ·going to file in what you asked --
·4· · · · · Q.· ·Well, I'm asking is it a new tax and I
·5· ·don't think --
·6· · · · · A.· ·Right, it is not.· The ability to have
·7· ·that tax is there.· There's some restrictions but
·8· ·the Board is tasked with -- it's called a Finding of
·9· ·Fact Committee -- how much of that tax is
10· ·appropriate for this particular year.· And since
11· ·I've been here there have been years we haven't
12· ·charged the actual amount because we weren't going
13· ·to spend what we had in four years, so we would
14· ·bring it down or something like that.
15· · · · · So we'll make sure -- we would make sure that
16· ·got done.· So if there was -- he mentioned you,
17· ·Lloyd.· If the subdistrict that Lloyd's community
18· ·and the other ones are in, if 85 percent of them
19· ·again said leave it on, I guarantee you they would
20· ·never see a stop of the tax because they supported
21· ·it.
22· · · · · Just so you get a sense of what we're
23· ·thinking, I think -- like we gave two options
24· ·before.· The options would probably be -- we would
25· ·probably propose it being -- well, this is one
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·1· ·option.· We could propose if we turn it back on it's
·2· ·all grants and if we turned it back on we would only
·3· ·-- or we turn it back on at half the price.· We'll
·4· ·have to figure out what it is we want to ask and
·5· ·kind of what program would like right.· You know,
·6· ·you want to be careful though because if you've got
·7· ·17 communities, you got to get them all on the
·8· ·consensus of one certain type of program.· So it can
·9· ·be kind of anything we want, anything that the
10· ·communities think would work as long as they all
11· ·have a consensus of how it would work in an OMCI.
12· · · · · Q.· ·Okay.· And so I think Lloyd was going
13· ·here also with one of his questions.· Let's say a
14· ·municipality has a project that's in process in a
15· ·year when the OMCIs would potentially be turned off
16· ·and, you know, they need funding, there's going to
17· ·be another two or three years of that project and if
18· ·they simply -- and if they don't get the OMCI money,
19· ·they can't do the project or they're going to have
20· ·to stop the project.· Has there been some thought as
21· ·to how that would be handled?
22· · · · · A.· ·So I want to leave that in the
23· ·case-by-case category, Brad, if you don't mind.· But
24· ·I think it depends on where we land.· We've talked
25· ·about there's all kinds of options that will occur
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·1· ·assuming we get a positive vote.· Do we stop
·2· ·District process -- projects in the OMCIs and make
·3· ·all remaining balances just go to grants?· That's
·4· ·one possibility.· Do we -- whatever we happen to do
·5· ·is going to be based on the input we get from the
·6· ·individual municipalities within those areas.
·7· · · · · Now, I would definitely say anything we
·8· ·collect on those OMCI districts will stay in those
·9· ·OMCI districts.· So I guess not only what would we
10· ·do in the future but do you want us to do something
11· ·different with the balances, the fund balances that
12· ·are in some of those OMCIs?
13· · · · · One of the questions we could possibly ask is
14· ·does the community want us to stop doing MSD-driven
15· ·projects and just distribute the balance on an
16· ·annual basis to individual municipalities?· That's
17· ·something we could consider.· It's going to look
18· ·like whatever -- it's going to be based a lot on
19· ·what the customers say they want within those
20· ·individual taxing subdistricts.
21· · · · · Q.· ·And when I looked at the numbers that
22· ·the OMCI was generating and the amount of revenue
23· ·that the new stormwater rate is going to generate,
24· ·it looked to me like those living in the OMCI
25· ·districts were going to get tax relief.· They're
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·1· ·going to -- that right now they're paying more money
·2· ·associated with the OMCI tax then they would pay
·3· ·with the stormwater tax.
·4· · · · · A.· ·So I was smart enough to look that up
·5· ·before you asked the question.· So on average of the
·6· ·seven we have turned on, five of them on average
·7· ·will pay an extra one and a half cents or 40 cents
·8· ·per month I think for the typical property.
·9· · · · · They are all below 7.5 cents right now.· And
10· ·there's two small ones that have even a lower amount
11· ·because of the Hancock adjustments that get done
12· ·every year.· But everybody would see -- in the
13· ·existing OMCIs there would be a slight increase in
14· ·the cost if they exchanged one for the other.· On
15· ·average it's something like one and a half cents on
16· ·their property tax is what the increase would look
17· ·like.
18· · · · · Q.· ·And my concern was that -- because I
19· ·didn't have the benefit of those numbers -- is that
20· ·you would end up giving probably the wealthiest part
21· ·of our community a tax break while we imposed a new
22· ·tax on people who --
23· · · · · A.· ·We're going to impose 7 and a half cents
24· ·on everybody.
25· · · · · Q.· ·Right. I understand.
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·1· · · · · A.· ·The tax break comes because we take a
·2· ·service away.· That would be the tax break.· Or if,
·3· ·like I said, those municipalities decide no, keep
·4· ·the service, then we'll take a tax hit.· It's going
·5· ·to be up to the groups, the municipalities in the
·6· ·OMCIs.
·7· · · · · Q.· ·Okay.· The taxes proposed -- or tax and
·8· ·rate that's proposed, when we're talking about an ad
·9· ·valorem tax, I don't -- I'm having trouble with
10· ·fairness in this regard, I can have a property that
11· ·is, you know, very valuable and it's taxed at a
12· ·very -- it pays a large amount of tax but it's not
13· ·generating very much stormwater and a similarly
14· ·situated property in terms of, you know, size is
15· ·generating a lot of stormwater but it is isn't -- it
16· ·doesn't pay much tax and since we're not tieing it
17· ·to the amount of stormwater being generated by the
18· ·particular property, how is that fair?
19· · · · · A.· ·I think it is fair on the classes of
20· ·ratepayers.· Is any system we put in place going to
21· ·be fair for each individual instance?· It won't.
22· · · · · I think one of the things we -- I'll just
23· ·relay to you from when we came out of the 2008 Rate
24· ·Proposal, if somebody has an impervious area a
25· ·hundred feet wide and then 200 feet of grass before
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·1· ·it gets to the pavement, that's less bad than
·2· ·somebody that has a hundred feet of impervious next
·3· ·to the pavement and 200 feet of grass.
·4· · · · · Everybody's property is different.· How is it
·5· ·terrained?· What's the slope look like?· There's all
·6· ·kinds of things you could factor into it.· I would
·7· ·just -- and I've learned that from being here.
·8· · · · · We're trying to find an equitable way to
·9· ·distribute the costs.· In no way is any rate
10· ·actually adding up what actually runs off your
11· ·property.· You're finding something that's fair and
12· ·equitable.· Is it going to be exact in every case?
13· ·No, it's not.· But I don't think any rate is that
14· ·way.
15· · · · · So I think it's fair and equitable as a
16· ·method of a rate in order to collect the appropriate
17· ·revenues and distribute the revenue requirements
18· ·amongst the various ratepayers.
19· · · · · Q.· ·And the work that -- the money that's
20· ·distributed to municipalities under -- as you're
21· ·proposing, I'm assuming the municipalities then
22· ·contract that work out.· Is that either to third
23· ·party -- they use their own forces?
24· · · · · A.· ·Right.· I don't know if -- you would
25· ·have to ask Rich.· My gut feeling is most of the
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·1· ·time the amount of money we're giving is such they
·2· ·aren't using their own forces.· Although I guess
·3· ·they could be buying materials.· I don't really
·4· ·know.· Rich, when he gets up, if you want to ask
·5· ·kind of what that looks like on the OMCIs, I think
·6· ·Rich would be a better one to talk to about that.
·7· · · · · Q.· ·Okay.
·8· · · · · A.· ·But it can be anything it wants.· And I
·9· ·think -- the other part is it could be anything
10· ·stormwater that they think is important.· Like I
11· ·said, it could be -- a lot of them on the front end
12· ·did stormwater plans.· There's obviously nothing
13· ·going into the ground.· Others have decided to clean
14· ·creeks in line with the requirements by the Corps of
15· ·Engineers to not over clean them.
16· · · · · So they've all taken something a little bit
17· ·different.· Now, before they get the grants we just
18· ·don't give them the money.· They propose to us "Here
19· ·is what we propose to do with this cost" and our
20· ·Board has to actually appropriate the moneys for the
21· ·specific cost for the specific project.· So we're
22· ·kind of keeping a balance sheet for all the
23· ·municipalities and that's what we'll do in the
24· ·future.
25· · · · · Q.· ·And when you are talking about the OMCI
Page 147
·1· ·districts, when you set them up, there were four
·2· ·OMCI districts that the municipalities didn't have
·3· ·an interest in addressing --
·4· · · · · A.· ·Five of them, right.
·5· · · · · Q.· ·Five.· Has that changed in your
·6· ·perception today from them?
·7· · · · · A.· ·So I haven't heard from them. I
·8· ·mentioned the 24:1 group.· If I'm not mistaken I
·9· ·think a little over half of them are in OMCIs, a
10· ·little under half are not.· And we've talked with
11· ·them enough times.· The issue has never come up. I
12· ·think it's simply you ask again.
13· · · · · And since we're going to go through the
14· ·process of asking again and this will be -- you
15· ·know, when the OMCIs come up, we'll ask them again,
16· ·you know, regardless of what comes out of the Rate
17· ·Proposal.
18· · · · · I'm going out on a limb, this is not out
19· ·there, I assume that if this Rate Proposal fails
20· ·probably one of the things we'll need to do is go
21· ·talk to those five OMCIs who said no originally and
22· ·see if they want to change their mind.
23· · · · · Q.· ·And if it passes, all of the OMCIs would
24· ·be eligible for their ratable share of this money;
25· ·is that right?
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·1· · · · · A.· ·Right.· Every municipality.
·2· · · · · Q.· ·Every municipality?
·3· · · · · A.· ·Every municipality, yes.
·4· · · · · Q.· ·And so if -- and is that money going to
·5· ·be automatically; sent to the municipality or how is
·6· ·that going to work because if you have a
·7· ·municipality that says, look, we don't think we have
·8· ·a stormwater problem but they do but they just don't
·9· ·think they do, sending them money doesn't make sense
10· ·--
11· · · · · A.· ·So we don't do that.· They have to
12· ·actually -- the grants are done by projects being
13· ·submitted to us.
14· · · · · Ladue, let's take them, they have a project
15· ·that's this much and they're asking for their grant
16· ·to help pay for part it.· That actually has to come
17· ·to us, our Board has to see what the project is, see
18· ·the money, approve it and then the money gets
19· ·appropriated.· We don't write them a blank check.
20· ·It's available if the municipalities ask for it.
21· · · · · Q.· ·So the money that's being distributed or
22· ·allocated based on a population basis to
23· ·municipalities, is that the same, they still have to
24· ·submit a grant proposal for that?
25· · · · · A.· ·Yes.
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·1· · · · · Q.· ·So -- so a larger municipality just has
·2· ·a bigger pool of money under this Proposal --
·3· · · · · A.· ·Correct.
·4· · · · · Q.· ·-- to seek assistance?
·5· · · · · A.· ·Correct.
·6· · · · · · · ·COMMISSIONER GOSS:· Thank you.· That's
·7· ·all I have.
·8· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Goss.
·9· · · · · Mr. Palans, you have some followup?
10· · · · · · · ·COMMISSIONER PALANS:· Very -- very brief
11· ·followup.
12· · · · · · · · · · · ·EXAMINATION
13· · · · · QUESTIONS BY COMMISSIONER PALANS:
14· · · · · Q.· ·Mr. Hoelscher, in your direct
15· ·examination testimony on page 3, Line 18:
16· · · · · Question:· What did the District determine
17· ·from this public engagement?
18· · · · · And the answer is:· We determined that MSD's
19· ·customers are willing to pay $2 a month or $25 a
20· ·year for a Stormwater Capital Improvement Program.
21· · · · · And I think in response to Mr. Malone's
22· ·question you identified the process that you went
23· ·through to determine that.· There was some company
24· ·that you used to do a survey, am I correct?
25· · · · · A.· ·Yeah, we did a -- we added -- we added
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·1· ·that question into our regular surveying program to
·2· ·get the answer that you see there.
·3· · · · · Q.· ·And who did that survey?
·4· · · · · A.· ·Let us get you that.· I don't know if
·5· ·their name is on the document we submitted as an
·6· ·exhibit or not.
·7· · · · · Q.· ·Okay.
·8· · · · · A.· ·It's Exhibit 70R.
·9· · · · · Q.· ·Okay.
10· · · · · A.· ·But we'll get you the name of the entity
11· ·that did it.
12· · · · · Q.· ·And when was that survey conducted?
13· · · · · A.· ·And it was either third -- third or
14· ·fourth quarter of 2021 or 2022, one or the other. I
15· ·think 2021.
16· · · · · Q.· ·So that would have been done prior to
17· ·the rains that this region experienced last summer?
18· · · · · A.· ·Correct.
19· · · · · Q.· ·And as I recall before, the
20· ·advertisement that went to the public was "for the
21· ·cost of a Starbucks a month we can pay for this
22· ·stormwater program."· Is that --
23· · · · · A.· ·I'll take your word for it.· That sounds
24· ·right.
25· · · · · Q.· ·So we're back to a Starbucks a month,
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·1· ·the cost of Starbucks a month to fund this.
·2· · · · · Given the fact that that survey was done
·3· ·before this rain that the region experienced, don't
·4· ·you think we're maybe up to a venti instead of a
·5· ·tall?
·6· · · · · A.· ·So while there's inflated prices on
·7· ·coffee, prior to 2018 we had three years of massive
·8· ·floods: two years on the Meramec and one year on the
·9· ·Mississippi River, partially on the river Des Peres.
10· ·Three years of that and then they voted no.
11· ·Immediately after that -- and then matter of fact,
12· ·just out of dumb luck, another flood right after
13· ·they voted.
14· · · · · So I would put to you that was probably a
15· ·more opportune time than these floods we had the
16· ·past summer.· I don't know that that's going to
17· ·change their mind.· I think our past experiences --
18· ·and we're making a little bit of a guess here -- I
19· ·think finding the place that we get something in
20· ·place to start doing stuff with the most is
21· ·important.· I don't -- I wouldn't want to press that
22· ·envelope at all.
23· · · · · I think the results here are still showing --
24· ·again, three years of flooding, they vote no at that
25· ·rate, another year of flooding, two years off,
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·1· ·they're still at five -- they're still at the same
·2· ·number, $2 a month.· And we're saying that now, now
·3· ·would probably be a terrible time to take a poll if
·4· ·you weren't voting for another 12 months.
·5· · · · · So just my experience of how this works, I'm
·6· ·giving you -- this is rhetorical but I've always had
·7· ·in my mind the community around here remembers
·8· ·floods for six months, a little bit longer if you
·9· ·were actually impacted and then it just kind of goes
10· ·away.· And so I think that's really the right
11· ·number.· I think we've taken all of that into
12· ·account in trying to come up with where we go.
13· · · · · · · ·COMMISSIONER PALANS:· Thank you.
14· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
15· ·Palans.
16· · · · · Other questions?· Mr. Perkins?
17· · · · · · · · · · · ·EXAMINATION
18· · · · · QUESTIONS BY COMMISSIONER PERKINS:
19· · · · · Q.· ·Mr. Hoelscher, I wanted to followup on a
20· ·discussion we had a little bit earlier regarding the
21· ·distribution of the 30 percent funding to
22· ·municipalities.· I understand that's going to be
23· ·based on population.
24· · · · · A.· ·Correct.
25· · · · · Q.· ·You know, given the fact that you have
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·1· ·some municipalities with very high ratios of
·2· ·residential compared to non-residential properties,
·3· ·you have other properties that have a very low ratio
·4· ·of residential impervious area to non-residential,
·5· ·so did -- did you or your staff give any
·6· ·consideration to perhaps coming up with a
·7· ·distribution formula that might blend the
·8· ·residential population with the -- perhaps the
·9· ·impervious area of the non-residential population so
10· ·that that distribution might as a result be a bit
11· ·more equitable for those communities, whoever that
12· ·might be, whether it's a Hazelwood or a Fenton or
13· ·whoever that might have a higher degree and
14· ·therefore would be able to do a little bit more with
15· ·that funding?
16· · · · · A.· ·Yeah, and I don't know how much
17· ·different that actually is.· As far as I know
18· ·impervious area might match pretty much with
19· ·population.· I'm not really sure in general how that
20· ·goes.
21· · · · · We talked about some other different
22· ·possibilities briefly but we need to have something
23· ·that's understandable, something we can execute. I
24· ·agree there's probably an awful lot of ways to do
25· ·this.· I agree that after five to ten years of this
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·1· ·the fruit is hanging so low that I think we get
·2· ·started with something that people understand,
·3· ·everybody can experience and I think this is a very
·4· ·acceptable way to do it.· Could you do it other
·5· ·ways?· You could, but you'd have just as many people
·6· ·arguing that's not the right way to do it either.
·7· · · · · So I think by doing it by population I think
·8· ·that's a good way to do it.· It allows us -- it made
·9· ·it -- a real focus at the time was you can't take
10· ·somebody with -- I can't remember what our lowest
11· ·population here is, under a thousand I think -- you
12· ·can't just make it per body for something like that,
13· ·so we set a minimum.· That was a large discussion we
14· ·had.
15· · · · · But there would be a lot of other ways to do
16· ·it.· But I think something that's very
17· ·understandable makes sense, easy to adopt, I think
18· ·that's the goal right now.· Can we by policy change
19· ·that?· Sure we could as we got going.· It wouldn't
20· ·necessarily take us coming to the Rate Commission to
21· ·do that.
22· · · · · Q.· ·Oh, that's my -- that would be my
23· ·follow-up question.· If there was determined to be a
24· ·little bit more equitable way, that the Rate
25· ·Commission could do that on its own without having
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·1· ·to return to a vote of the people?
·2· · · · · A.· ·Well, my point is I don't -- it wouldn't
·3· ·take the Rate Commission.· I think we're providing
·4· ·you with our plan for expenditures and this is what
·5· ·we'll commit to the people who are voting on it.
·6· ·But if the circumstances change, we'll do something
·7· ·different.· But it wouldn't -- it would come from
·8· ·the folks who are watching the program, what it is
·9· ·they want to do, what they want to see.
10· · · · · Q.· ·I misspoke.· That's what I meant.· MSD,
11· ·not the Rate Commission.
12· · · · · A.· ·Yeah, no, we could -- I mean, we're
13· ·going to do this for at least four years.· And I
14· ·would put to you if we decide hopefully, my wish is
15· ·if we do this and everybody says this is great, come
16· ·back with another 5 cents or something like that.
17· ·We'll have the discussion about, hey, what is really
18· ·the initial policy moving forward, how to spend it,
19· ·very well could adjust things then.
20· · · · · · · ·COMMISSIONER PERKINS:· Thank you.
21· · · · · · · ·COMMISSIONER JEARLS:· Mr. Chairman?
22· · · · · · · ·CHAIRMAN TOENJES:· Yes.
23· · · · · · · ·COMMISSIONER JEARLS:· Can I ask a few
24· ·questions?
25· · · · · · · ·CHAIRMAN TOENJES:· Proceed.
Page 156
·1· · · · · · · · · · · ·EXAMINATION
·2· · · · · QUESTIONS BY COMMISSIONER JEARLS:
·3· · · · · Q.· ·Dovetailing on that last set of
·4· ·questions, I'm not sure population is a really good
·5· ·way to do it.· The City of Florissant is in a
·6· ·valley.· We've got plenty of creeks.· We've got
·7· ·plenty of projects.· So we don't have a lot of
·8· ·industrial flat areas.· So that's -- that will be a
·9· ·tough one to try and balance out.
10· · · · · But back on the program expenditure goals,
11· ·the 50 percent that MSD will spend is a highly
12· ·prioritized set of projects.· I mean in favor of the
13· ·whole community and then you got a
14· ·highly-prioritized project, you're going to be in
15· ·that community?
16· · · · · A.· ·Yes.
17· · · · · Q.· ·Okay.· And then the 30 percent, the part
18· ·that bothers me is that it says it's going to be
19· ·prioritized for any stormwater project.· In other
20· ·words, whatever the mayor wants to do that you play
21· ·cards with, is that the one you're going to --
22· · · · · A.· ·That mayor isn't mayor anymore since you
23· ·brought in the inside stuff, Lou.
24· · · · · Q.· ·So do you have a set of priorities for
25· ·the 30 percent?
Page 157
·1· · · · · A.· ·No, I think we intentionally -- really
·2· ·thinking about this as we talked is we get pushback
·3· ·on "We don't like your priority system."· This is
·4· ·the reverse of that.· This is making the funds
·5· ·available and let the city say what's your priority?
·6· · · · · Now, it's got to be stormwater something.· It
·7· ·can't be -- or we had the discussion about MS4
·8· ·requirements earlier.· It can't be because you have
·9· ·to maintain the rain gardens that are required
10· ·because of your street --
11· · · · · Q.· ·You don't want it to be political
12· ·either.
13· · · · · A.· ·Huh?
14· · · · · Q.· ·You don't want it to be political
15· ·either.
16· · · · · A.· ·Well --
17· · · · · Q.· ·You want it to be -- I mean, you know,
18· ·you want it to be a worthwhile --
19· · · · · A.· ·I think any grant program is going to be
20· ·political.· I think making it available to the
21· ·municipalities under whatever system, process, place
22· ·they put that, yeah, I think that's the right thing
23· ·for us to do as long as -- again, they got to submit
24· ·the project -- as long as it's a stormwater-related
25· ·issue.
Page 158
·1· · · · · Q.· ·So you're going to have at least a brief
·2· ·set of checklists of --
·3· · · · · A.· ·Well, yeah.· So what would happen is the
·4· ·individual municipalities would have to submit to us
·5· ·here's a project, here we're proving to you it's a
·6· ·stormwater project.· They usually submit to us
·7· ·here's the total cost of the project, here's how
·8· ·much we're doing.· I think Rich has even got some
·9· ·"Hold the money.· In two years we're going to add a
10· ·little and build a bigger project."
11· · · · · So it's got to be a stormwater project.· It's
12· ·got to be reviewed by our board and the money has
13· ·got to be appropriated by our board.· We're not just
14· ·going to hand the money out.· So it will require
15· ·some work to get done and it has to be spent on
16· ·stormwater issues as well.
17· · · · · Q.· ·The 30 percent, do you anticipate any of
18· ·that money not being spent?
19· · · · · A.· ·I think there's some municipalities --
20· ·there are a couple who would claim they have no
21· ·stormwater issue or really kind of sort of don't
22· ·want to take up administration time working with it.
23· ·There will be some who don't use it for that reason.
24· · · · · There will be others who are just in a
25· ·financial/social place where they can't even assess
Page 159
·1· ·what kind of resources they need to do something
·2· ·with this.· I unfortunately suspect they also will
·3· ·not use it.
·4· · · · · Q.· ·So what happens to that money?
·5· · · · · A.· ·So that money then goes back into the
·6· ·50 percent District-wide pot.
·7· · · · · Q.· ·So that's your pot?
·8· · · · · A.· ·And unless the municipality is in an EJ
·9· ·area then it goes into the EJ pot, the prioritized
10· ·EJ pot.
11· · · · · Q.· ·Yeah, that's my other question.· Could
12· ·it go into one of the other 10 percent pots?
13· · · · · A.· ·Yeah.· So the money, if they're in the
14· ·EJ pot, it would go into that 10 percent.· The other
15· ·10 percent, which is where do we spend
16· ·District-wide, that's kind of the reverse, right,
17· ·that's finding the special problems that the area
18· ·decides we need to solve these.
19· · · · · Q.· ·Okay.· Has any thought been given to
20· ·credits?· Say you have a municipality or a large
21· ·landowner that wants to put in a detention/retention
22· ·pond --
23· · · · · A.· ·Yeah.
24· · · · · Q.· ·-- on their own nickel?
25· · · · · A.· ·So on a case-by-case basis I'm going to
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·1· ·leave Rich to answer this in detail because we've
·2· ·had a discussion.· No matter what rules we set down
·3· ·there are things that are going to be different.
·4· · · · · What I would like everybody to remember is if
·5· ·something goes in because of an MS4 for a 2-year
·6· ·storm or you put in a 10-year basin or you have a
·7· ·15-year detention basin, when we get a 35-, 50-,
·8· ·75-year storm, those aren't there anymore.· They get
·9· ·filled, they're blinded and off we go.
10· · · · · So, remember, we're talking about something
11· ·that, you know, it's great to put Green
12· ·Infrastructure in to take care of small storms, hold
13· ·the water back, capture pollutants --
14· · · · · Q.· ·Also to support the effort, you know --
15· · · · · A.· ·Yes.
16· · · · · Q.· ·-- MSD-wide, you know, for other
17· ·people --
18· · · · · A.· ·Right, for other purposes.· But when
19· ·you're talking about the big storms which are
20· ·causing erosion and causing the flooding, any of
21· ·those type of facilities, it's as though they're not
22· ·even there.· The thing about it, my staff was trying
23· ·to explain to some other folks, you put a 20-year
24· ·basin in, the early part of the storm the basin is
25· ·full and then when the hundred, 150-year storm comes
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·1· ·through it's as though it's not even there.
·2· · · · · And so that, unlike the other stormwater
·3· ·issues that we've had, that's what this one is
·4· ·covering, is those type of events.
·5· · · · · Q.· ·I'm on the planning and zoning board, so
·6· ·we've got some projects that come before us that are
·7· ·like old projects, 4 acres of impervious surfaces
·8· ·and no detention at all.· Do you address those
·9· ·issues at all?
10· · · · · A.· ·So our rules are only set up as a
11· ·regulator to address those on a regulatory side is
12· ·if those sites get redeveloped, you may then fall
13· ·under our building-permit-type stuff if you
14· ·redevelop them.
15· · · · · As they sit right now, Rich can get you more
16· ·details on this, but if a solution to an area-wide
17· ·issue is to get rid of something like that, make it
18· ·a basin, that's something Rich would consider as a
19· ·part of the prioritized projects.
20· · · · · Q.· ·Okay.· So he can answer that?
21· · · · · A.· ·Yeah, I think -- he'll give you a more
22· ·-- he can give you some recent examples too.· He'd
23· ·be better than me.
24· · · · · · · ·COMMISSIONER JEARLS:· Okay.· Thank you.
25· · · · · · · ·CHAIRMAN TOENJES:· Mr. Goss?
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·1· · · · · · · · · · · ·EXAMINATION
·2· · · · · QUESTIONS BY COMMISSIONER GOSS:
·3· · · · · Q.· ·With Project Clear I've seen a lot of
·4· ·signs up and around the community that you've put up
·5· ·for various projects you've been performing.· Two
·6· ·questions.
·7· · · · · One, has that given MSD -- have you seen
·8· ·positive feedback from those signs?· Are people
·9· ·becoming aware of those projects?· And, if so, will
10· ·that be a requirement if you're getting this money,
11· ·this stormwater money, to have some kind of signage
12· ·like that so that people understand this is what
13· ·your stormwater money paid for?
14· · · · · A.· ·So I'll answer half and leave the other
15· ·half to Rich Unverferth.
16· · · · · So the first half is if we're doing a
17· ·District-wide project now, even in the OMCIs, if
18· ·it's stormwater only, those signs go up.· And the
19· ·Stormwater Capital Program in the OMCIs is tagged
20· ·Project Clear.
21· · · · · As far as I think you were going to what
22· ·about grant-type money, I would ask you save that
23· ·for Rich Unverferth.· I'm not sure what his thoughts
24· ·were.· We didn't get that detailed into what the
25· ·proposal was but I think he would be the best one to
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·1· ·give you those thoughts.
·2· · · · · · · ·COMMISSIONER GOSS:· Thank you.
·3· · · · · · · ·CHAIRMAN TOENJES:· Any other questions
·4· ·for Mr. Hoelscher?
·5· · · · · I have one.
·6· · · · · · · · · · · ·EXAMINATION
·7· · · · · QUESTIONS BY CHAIRMAN TOENJES:
·8· · · · · Q.· ·To go back to the comparison of the
·9· ·existing OMCI and a new model, has there been or can
10· ·there be a muni-by-muni analysis taking into account
11· ·what's currently being collected and then taking
12· ·that and layering it into the new -- if this passes
13· ·and the population and the 30 percent and -- is
14· ·that -- is there a muni-by-muni comparison?
15· · · · · · · ·MR. HOELSCHER:· So, Rich, did you
16· ·submit -- did you submit as an exhibit the actual --
17· ·a city-by-city proposal for the new rate?· Is it in
18· ·an exhibit or the Proposal?
19· · · · · If you don't mind --
20· · · · · · · ·CHAIRMAN TOENJES:· Can that be compared
21· ·to the -- to what's current, a side by side to
22· ·indicate the delta?
23· · · · · · · ·MR. UNVERFERTH:· (Inaudible response.)
24· · · · · · · ·CHAIRMAN TOENJES:· But to get to --
25· · · · · · · ·MR. UNVERFERTH:· (Inaudible response.)
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·1· · · · · · · ·CHAIRMAN TOENJES:· But quite frankly, to
·2· ·get to Mr. Perkins' comments and Mr. Palans'
·3· ·comments, I really think it would be beneficial to
·4· ·run those, whether it's our rate consultants or your
·5· ·team or whatever, to try to run those comparisons as
·6· ·it may indicate if there are some flaws in this
·7· ·model or some modifications that could occur and
·8· ·point out wild variances if they exist or not.
·9· · · · · · · ·MR. HOELSCHER:· I'll commit that we'll
10· ·do that.· I am going to always say though remember,
11· ·they're two completely different programs.· To
12· ·make an equivalency --
13· · · · · · · ·CHAIRMAN TOENJES:· I understand.
14· · · · · · · ·MR. HOELSCHER:· But to see the changes
15· ·we'll take the existing one, keeping in mind people
16· ·are in different taxing districts with different tax
17· ·rates.· Mark is lucky enough to live in a city that
18· ·is half in an OMCI and half not in an OMCI, so he's
19· ·going to look like something different.
20· · · · · But I think we can do that with every
21· ·municipality.· We'll take the chart we submitted and
22· ·as long as you can understand we're going to give
23· ·you probably a real close estimate as to what
24· ·they're getting to help Rich out --
25· · · · · · · ·CHAIRMAN TOENJES:· If that's in general
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·1· ·that can show if there are wild variances based on
·2· ·changes in the impervious -- you know, to try to
·3· ·take all those factors --
·4· · · · · · · ·MR. HOELSCHER:· Rich, I'm going to
·5· ·commit you to having that done.· That wasn't a
·6· ·question.
·7· · · · · · · ·CHAIRMAN TOENJES:· Why don't I let you
·8· ·guys --
·9· · · · · · · ·MR. HOELSCHER:· Are we just talking
10· ·taxes?· I'm going to make sure I understand.
11· · · · · · · ·CHAIRMAN TOENJES:· I'm talking what I'm
12· ·currently paying in a municipality, what I'm
13· ·currently paying under the existing system.
14· · · · · · · ·MR. HOELSCHER:· What you're currently
15· ·getting for a grant?
16· · · · · · · ·CHAIRMAN TOENJES:· Right.
17· · · · · · · ·MR. HOELSCHER:· Okay.
18· · · · · · · ·CHAIRMAN TOENJES:· Well, let me back up.
19· · · · · Yeah, what my current revenue is as a muni
20· ·based on the current system and what my revenue
21· ·would be under the new system?
22· · · · · · · ·MR. HOELSCHER:· So, Rich, this would be
23· ·the grants under the new system that you've already
24· ·have the chart for versus what's the grant value.
25· ·This doesn't mean impervious -- okay.· So that's
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·1· ·what he's looking for is a side-by-side comparison
·2· ·of those and we can get that.· We can do that.
·3· · · · · · · ·CHAIRMAN TOENJES:· Thank you.
·4· · · · · · · ·MR. HOELSCHER:· I'll leave it to Rich.
·5· ·He'll either have it or else when he testifies he
·6· ·can let you know.
·7· · · · · · · ·CHAIRMAN TOENJES:· Including all in with
·8· ·the impervious area and the ad valorem tax and what
·9· ·that revenue would be like based on population --
10· ·I'm sorry -- what the grant is on population --
11· ·forget what I just said.
12· · · · · · · ·MR. HOELSCHER:· Okay.
13· · · · · · · ·CHAIRMAN TOENJES:· What the grant is
14· ·based on population versus what the grant is now
15· ·would be.
16· · · · · · · ·MR. HOELSCHER:· Right.· Just the grant
17· ·values --
18· · · · · · · ·CHAIRMAN TOENJES:· Correct.
19· · · · · · · ·MR. HOELSCHER:· -- we can do that.· Yes,
20· ·we can do that.
21· · · · · · · · · · · ·EXAMINATION
22· · · · · QUESTIONS BY COMMISSIONER PERKINS:
23· · · · · Q.· ·And just to follow up on that -- does
24· ·MSD have -- and since you're looking at the
25· ·impervious fee based on -- for the commercial, do
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·1· ·you have a breakdown of the non-residential
·2· ·impervious areas by community?
·3· · · · · A.· ·So, no, we don't have it available right
·4· ·now.· To give you a sense of it, I think -- pardon
·5· ·me, Rich -- right, I think, Mark, I would ask you
·6· ·look at there was a request made in one of the
·7· ·discovery requests for the top 10 or 15
·8· ·non-residential properties under the current
·9· ·program.· So have you seen that chart?
10· · · · · Q.· ·I have not.
11· · · · · A.· ·Okay.
12· · · · · Q.· ·What exhibit is that?
13· · · · · A.· ·It's the one where -- here it is -- give
14· ·me just a minute, Mark.· I'm going to find where
15· ·that's at.· I'm looking for the chart that said
16· ·here's what the top 10 or 15 impervious areas paid
17· ·in 2018 and I put that list in and then indicated
18· ·you could raise them all by 15 percent.
19· · · · · · · ·MR. UNVERFERTH:· Page 11 of the second
20· ·discovery.
21· · · · · · · ·MR. HOELSCHER:· Eleven of the second.
22· ·It was the last one I was looking at.· Oh, there is
23· ·it is.
24· · · · · So on page 11 of the second discovery
25· ·request -- thank you -- it's Exhibit 70A but it's
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·1· ·attached to the second request on page 11 -- it
·2· ·gives the examples of potential changes for the
·3· ·Capital Rate and then what happens for the 25
·4· ·largest customers by impervious area.
·5· · · · · Mark, two assumptions: these numbers, the
·6· ·impervious area is the same now as it was back in
·7· ·2018 and I think we say the total cost of those
·8· ·entities would go up 15 percent because we're
·9· ·looking for 15 percent additional revenue.· That's
10· ·all in the answer.
11· · · · · So what you're asking I think was asked
12· ·before and it's a massive project and changes the
13· ·day after we're done.· So I would ask you look at
14· ·that first and see if that answers your question and
15· ·if you need something more let us know.
16· · · · · · · ·COMMISSIONER PERKINS:· Thank you.
17· · · · · · · ·CHAIRMAN TOENJES:· Any other questions
18· ·for Mr. Hoelscher?· Anyone online have questions for
19· ·Mr. Hoelscher?
20· · · · · Mr. Malone, do you have any further
21· ·questions?
22· · · · · · · ·MR. MALONE:· No, sir.
23· · · · · · · ·CHAIRMAN TOENJES:· Ms. Myers, do you
24· ·have any further questions for Mr. Hoelscher?
25· · · · · Thank you.
Page 169
·1· · · · · · · ·MR. HOELSCHER:· Thank you.
·2· · · · · · · ·CHAIRMAN TOENJES:· Ms. Myers, do you
·3· ·care to call your next witness?
·4· · · · · · · ·MS. MYERS:· Yes, Rich Unverferth,
·5· ·director of engineering is our next witness and I'm
·6· ·also going to have Brian Stone an attorney from my
·7· ·staff with him at the table.
·8· · · · · · · ·(Whereupon, RICH UNVERFERTH was sworn
·9· ·in.)
10· · · · · · · ·CHAIRMAN TOENJES:· Mr. Malone, do you
11· ·have any questions for the witness?
12· · · · · · · ·MR. MALONE:· Yes, sir.
13· · · · · · · ·CHAIRMAN TOENJES:· Please proceed.
14· · · · · · · · · · · · * * * * *
15· · · · · · · · · · RICH UNVERFERTH,
16· ·having been duly sworn testifies as follows:
17· · · · · · · · · · · ·EXAMINATION
18· · · · · QUESTIONS BY MR. MALONE:
19· · · · · Q.· ·Good afternoon, Mr. Unverferth.
20· · · · · A.· ·Good afternoon.
21· · · · · Q.· ·Do you have your testimony that you
22· ·submitted in this matter with you today?
23· · · · · A.· ·I do.
24· · · · · Q.· ·And would you please tell the Commission
25· ·your position with MSD?
Page 170
·1· · · · · A.· ·I am the director of engineering, been
·2· ·the director just under 10 years, been with the
·3· ·District approximately 36 years.
·4· · · · · Q.· ·And how many Rate Change Proceedings
·5· ·have you been involved with?
·6· · · · · A.· ·More -- as a director this will be my
·7· ·third and then prior to that, in a support role,
·8· ·since we started doing Rate Commissions since 2004.
·9· · · · · Q.· ·Okay.· And I understand from
10· ·communications I've received from Ms. Myers that
11· ·you're best suited to answer questions about the
12· ·second of the five criteria, which is whether or not
13· ·the Rate Change Proposal enhances the District's
14· ·ability to provide adequate sewer and drainage
15· ·systems?
16· · · · · A.· ·That is correct.
17· · · · · Q.· ·Okay.· Would you like to explain to the
18· ·Commission briefly why you believe the Rate Change
19· ·Proposal would enhance the District's ability to
20· ·provide adequate sewer and drainage systems,
21· ·facilities and related services as it relates to
22· ·stormwater?
23· · · · · A.· ·Okay.· Which has been reiterated
24· ·numerous times today, the District does have funds
25· ·in place to do stormwater regulatory services with
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·1· ·what we call -- the District refers to as a 2-cent
·2· ·tax.
·3· · · · · In 2016, we received voter approval for
·4· ·operation and maintenance to maintain the system,
·5· ·the 4500 miles of sewers we have out there.· But
·6· ·what we were lacking is the ability to take care of
·7· ·erosion and stormwater flooding throughout the
·8· ·District, something that we've had since we've
·9· ·existed, something we have the powers to take care
10· ·of once we have the funding.
11· · · · · If this is passed by the voters, we would
12· ·have the opportunity to address those flooding and
13· ·erosion issues that we have throughout the District.
14· ·Right now, I think it's been mentioned before,
15· ·probably close to $700 million worth of need out
16· ·there.· We have approximately 550 individual
17· ·projects that are identified and obviously, you
18· ·know, anytime you get a rain event there's more
19· ·coming and then obviously we address them as we can.
20· · · · · Q.· ·And it's my understanding that the
21· ·Stormwater Capital Rate, if it is implemented, it's
22· ·not going to be used to pay for improvements to the
23· ·public storm sewer system; is that correct?
24· · · · · A.· ·That is correct.· You may have an
25· ·instance where flooding is being caused potentially
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·1· ·by a system that already exists and may require you
·2· ·to upgrade that, make it a little larger.· But for
·3· ·the most part the O&M tax will take care of any
·4· ·repairs or maintenance we do to the existing
·5· ·stormwater system.
·6· · · · · Q.· ·So I take it then that MSD is not
·7· ·anticipating increased O&M costs if this Stormwater
·8· ·Capital Rate is implemented, correct?
·9· · · · · A.· ·That is correct.
10· · · · · Q.· ·And since the bulk of these projects are
11· ·going to be performed on -- primarily on private
12· ·property do you expect I guess, for lack of a better
13· ·phrase, downstream benefits, that there will be less
14· ·stress on the public storm sewer system because less
15· ·stormwater is being pushed into the public system?
16· · · · · A.· ·That's dependent on the type of project
17· ·that we perform.· In a lot of cases our erosion
18· ·control is simply preventing further erosion.· It
19· ·doesn't really reduce it.· It may have some benefit
20· ·of reduction of flow but you're really not reducing
21· ·the flow.· But based on how the design goes you
22· ·could be essentially detaining some flow and taking
23· ·some pressure off the downstream area.
24· · · · · Q.· ·Okay.· And Mr. Hoelscher touched on this
25· ·in his testimony but am I correct that improvements
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·1· ·or additions to the public storm sewer system are
·2· ·going to be primarily performed by developers who
·3· ·then transfer the improvements to MSD for
·4· ·maintenance?
·5· · · · · A.· ·Yeah, the majority or almost all new
·6· ·sewers are built by developers and if they're public
·7· ·sewers then they become the asset of the District.
·8· · · · · Q.· ·I see.· All right.· In referring to your
·9· ·testimony I'm going to look at Question 10, which is
10· ·on page 3.· I'm looking at Line No. 11.· There's a
11· ·statement that the Stormwater CIRP includes
12· ·8.5 million annually for repairs and rehabilitation
13· ·of the existing stormwater system over this period,
14· ·funded with the O&M tax.
15· · · · · Does this include any required expansion?
16· · · · · A.· ·What question was that again?
17· · · · · Q.· ·I'm looking at Question 10.· It's on
18· ·page 3 of your testimony.· I am interested in the
19· ·paragraph from Line Nos. 11 through 13.
20· · · · · A.· ·Question 10?
21· · · · · Q.· ·Yes.· Looking at Lines 11 through 13.
22· · · · · A.· ·Oh, okay.· Yeah.· The 22 million?
23· · · · · Q.· ·No, actually I'm interested in the
24· ·8.5 million for repairs and the rehabilitation of
25· ·the stormwater system.· And my question --
Page 174
·1· · · · · A.· ·Yeah.· I'm sorry.· Go ahead.
·2· · · · · Q.· ·I was going to say if that includes any
·3· ·required expansion of the existing system as
·4· ·development occurs?
·5· · · · · A.· ·No, it does not.· Typically that's just
·6· ·a repair we have in the Capital Program.· Brian
·7· ·mentioned -- he alluded to a while ago that would be
·8· ·replacement of systems that are in disrepair or
·9· ·lining of sewer systems or the repair or replacement
10· ·of inlets such as our outfalls of pipe as well into
11· ·creeks and things like that.
12· · · · · Q.· ·Okay.· And moving down to Line 14
13· ·there's a statement that the Stormwater CIRP
14· ·includes 5.5 million in funding from the OMCI and
15· ·regulatory funds.
16· · · · · Could you tell the Commission what kind of --
17· ·what kind of projects would be funded from the
18· ·regulatory fund?
19· · · · · A.· ·I -- off the top of my head it's
20· ·generally related to our regulatory requirements and
21· ·our Green Infrastructure or we're participating on
22· ·some type of Green Infrastructure program where
23· ·we're going to get credit with our MS4 program or
24· ·public engagement, things like that.· I could give
25· ·you the exact projects.· I just don't -- can't think
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·1· ·of those right off the top of my head.
·2· · · · · With regard to the OMCI, I think Mr.
·3· ·Hoelscher just described the type of projects we're
·4· ·seeing with the grant program and those funds going
·5· ·to the municipalities.· I think I'm going to provide
·6· ·the exact amount for each municipality to compare to
·7· ·what we're proposing.
·8· · · · · But what we're seeing with those, like Mr.
·9· ·Hoelscher said, everything from projects where
10· ·municipalities are doing stormwater studies, a lot
11· ·of municipalities that don't have them are doing
12· ·those, they're coupling that with some of their
13· ·street work and actually putting in areas where they
14· ·don't have storm sewers and they're putting in
15· ·inlets or replacing inlets.
16· · · · · And then I think it was asked earlier do
17· ·they -- do some municipalities do work themselves?
18· ·There are some municipalities that are getting
19· ·pretty small amounts of money from the OMCIs and
20· ·they may utilize their own forces to put in some
21· ·storm sewers.
22· · · · · I live in Shrewsbury and they actually have a
23· ·small amount of money and they have a big erosion
24· ·off one of their parking lots and they're putting in
25· ·a storm sewer system to address that issue.· So we
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·1· ·see a little bit of everything with regard to those.
·2· · · · · But I'll have to get back to you on the
·3· ·specific projects on the -- for the regulatory fund.
·4· · · · · Q.· ·Referring to Question 13 in your
·5· ·testimony, which is on page 5, you indicate that
·6· ·some of the unexpended funds from the District's
·7· ·stormwater O&M tax can be used for Capital Projects.
·8· · · · · How are you determining what unexpended funds
·9· ·are available?
10· · · · · A.· ·Oh.· What we're doing is -- in other
11· ·words there's a -- the amount of money that is being
12· ·spent for our true O&M by our operations division
13· ·and there are some remaining funds that initially in
14· ·2016 there was a commitment made to perform like 72
15· ·projects throughout the District from the OMCI funds
16· ·that we committed to.· So there's some of those
17· ·projects that are still being finalized that are
18· ·primarily complete.
19· · · · · In addition, we're utilizing some of those
20· ·O&M funds in addition to OMCI funds as our matching
21· ·dollars in order to perform the projects that we're
22· ·getting, the $22 million from the State of Missouri
23· ·for ARPA funds.· There was a required -- there was a
24· ·required match for those funds, for utilizing some
25· ·funds there.· But the intent is that all Capital
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·1· ·Improvement would come from the new fund.
·2· · · · · Q.· ·And how confident are you that the
·3· ·District has identified and quantified the costs of
·4· ·capital needs for stormwater management?
·5· · · · · A.· ·I'm fairly confident we have what we
·6· ·have right now.· There's been studies performed
·7· ·throughout the years and I think I provided our
·8· ·latest study that was done in 2011 I believe.
·9· ·There has been studies done in the 80s and again in
10· ·the 90s.· And then 2011 took that and basically did
11· ·a thorough review.
12· · · · · But as I indicated earlier, municipalities
13· ·that didn't perform their own studies, they'll
14· ·provide their projects to us and we incorporate
15· ·those.· So that project list does go up.· Obviously
16· ·municipalities take care of themselves.
17· · · · · We go to do an analysis of a project when it
18· ·comes up for review and determine that it was
19· ·addressed by some other means whether it be a
20· ·municipality or a homeowner took care of the issue
21· ·themselves.· So there's a great deal of fluctuation
22· ·with that overall.
23· · · · · But as far as the total need, I would venture
24· ·to say, you know, we're in that 500 to
25· ·700-million-dollar range.
Page 178
·1· · · · · Q.· ·Okay.· And I understand from talking to
·2· ·Brian Hoelscher earlier this morning that the amount
·3· ·of the ad valorem tax and the amount of the
·4· ·impervious area charge were I guess driven by what
·5· ·was felt the ratepayers and the taxpayers would be
·6· ·willing to pay and then the District looked at what
·7· ·it could spend with that money versus determining
·8· ·how much is in needed in a given year and then
·9· ·determining how much to charge or assess taxpayers
10· ·and ratepayers.· Is that a fair statement?
11· · · · · A.· ·Yes, it is.
12· · · · · Q.· ·If more money were theoretically
13· ·available that is through higher rates, higher
14· ·taxes, is there a point at which the District would
15· ·be able to handle more?
16· · · · · I guess would they be able to handle more
17· ·projects or would the District's resources be
18· ·strained even if additional revenue is available for
19· ·projects?
20· · · · · A.· ·If it increased much more -- right now
21· ·we're in a transition where we're able to utilize
22· ·our wastewater programs as less projects and we're
23· ·able to transfer -- we'll have some additional costs
24· ·but we're at a position now where we could handle
25· ·the $34 million -- well, we're going to have
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·1· ·50 percent of that.· So essentially right now with
·2· ·the OMCIs it's about 6 million or so.· So we will
·3· ·have to ramp up but we've proven with our wastewater
·4· ·program with the utilization of outside resources,
·5· ·consultants, we've been able to manage that type of
·6· ·program.
·7· · · · · Q.· ·Do you have a rough sense of where the
·8· ·point is at which if additional revenue was
·9· ·available you'd start to encounter strains on
10· ·resources to get projects for which there's funding
11· ·available actually completed?
12· · · · · A.· ·I haven't really done that analysis.
13· · · · · Q.· ·Okay.· In Question 22 in your prepared
14· ·testimony on page 9 you indicate that --
15· · · · · A.· ·Can you give us a second?
16· · · · · Q.· ·Oh, sure.· I'm sorry.
17· · · · · · · ·Are you there?
18· · · · · A.· ·Yes.
19· · · · · Q.· ·In your testimony you state that the
20· ·estimate is there's -- there would need to be 28
21· ·internal full-time employees to deliver the new
22· ·Stormwater Capital Program including existing staff
23· ·and proposed hires.· Do you know how many proposed
24· ·hires you anticipate?
25· · · · · A.· ·Right now we're anticipating rotating --
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·1· ·basically rotating those employees that are
·2· ·wastewater area into the stormwater area.
·3· · · · · In the inspection side we would probably have
·4· ·a little difficulty right now hiring inspectors, so
·5· ·we'd probably be utilizing outside resources for the
·6· ·inspection.· On the stormwater side you're dealing
·7· ·with a lot of smaller projects, so you need more
·8· ·inspection resources rather than the larger
·9· ·wastewater projects that we do now.
10· · · · · Q.· ·Okay.· And is there funding in the CIRP
11· ·proposed for contracting assistance in these
12· ·programs?
13· · · · · A.· ·Yes, there is.
14· · · · · Q.· ·And is that funding available -- is that
15· ·in addition to funding for new hires or would that
16· ·be in lieu of new hires?
17· · · · · A.· ·It would be in lieu of new hires.
18· · · · · Q.· ·Okay.· We talked a little bit earlier
19· ·today about the four buckets I guess for stormwater
20· ·capital expenditures and you mention it on page 5 of
21· ·your testimony, Question 15.· With regard to the
22· ·50 percent bucket for District-wide projects --
23· · · · · A.· ·Can you give us a sec?
24· · · · · Q.· ·Certainly.· Sorry.
25· · · · · A.· ·Go ahead.
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·1· · · · · Q.· ·How much of that 50 percent is
·2· ·unprogrammed or as a reserve for newly-identified
·3· ·high-priority projects that come up as the program
·4· ·is being implemented?
·5· · · · · A.· ·Right now, in other words, we kind of
·6· ·keep a rolling four-year program in place and if
·7· ·another higher priority project comes in we will
·8· ·insert it but generally you won't see a whole lot of
·9· ·new change.· So, in other words, the program we've
10· ·provided will pretty much be the program that we
11· ·plan to provide.
12· · · · · Q.· ·Can you give the Commission an example
13· ·of what type of project might come up that would
14· ·take precedence over already identified projects?
15· · · · · A.· ·Probably easiest would be an
16· ·erosion-type project where you have a storm event,
17· ·like we had last summer, that all of a sudden it has
18· ·taken out a large tree and eats its way back towards
19· ·somebody's garage or just somebody's home that might
20· ·require us to expedite a project in that area out of
21· ·the Capital Program, albeit, you know, through some
22· ·type of biostabilization or some combination of hard
23· ·armor and biostabilization.· Those typically are
24· ·ones.
25· · · · · On the flooding side, when you get a large
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·1· ·rain event like that, there's other projects that
·2· ·are already identified on the flooding side that,
·3· ·you know, that happen and are more periodic.
·4· · · · · So a one-time flooding isn't necessarily
·5· ·going to trump somebody that gets flooded on a
·6· ·regular basis.· So those are your higher priority
·7· ·stormwater flooding problems.
·8· · · · · But the erosion, potentially a roadway goes
·9· ·out.· I mean we've had situations where, you know, a
10· ·municipality's roadway is gone and we have to move
11· ·in and assist with it.
12· · · · · Q.· ·Can you explain how with regard to the
13· ·50 percent bucket does the availability of ARPA
14· ·funds and other similar funds recently available
15· ·funds to the District, does that affect the
16· ·prioritization of projects within that bucket?
17· · · · · A.· ·No, we will -- that will just leave
18· ·additional money for future projects.
19· · · · · Q.· ·And with regard to the municipal grant
20· ·program, have there been -- has there been
21· ·discussions about the detailed grant eligibility and
22· ·what the process will be to select among the
23· ·applicants for grants?
24· · · · · A.· ·We actually have a process in place
25· ·thanks to the OMCI program.· It will be -- it will
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·1· ·run very similar.· What we do now is we appropriate
·2· ·the dollars, one time appropriation showing the
·3· ·allocation for each municipality and we do that once
·4· ·we reach out to a municipality.
·5· · · · · I think it was mentioned earlier if your
·6· ·municipality doesn't necessarily want -- or doesn't
·7· ·plan to use their money then obviously we're not
·8· ·going to tie that up in an appropriation for use.
·9· ·And then the municipality will indicate to us and
10· ·that money will be available.· And at that
11· ·appropriation they can request those dollars right
12· ·then.· And, again, it's a reimbursement program.· In
13· ·other words, once they've completed the work then
14· ·they get the dollars.
15· · · · · Q.· ·And the District isn't involved in
16· ·deciding whether those projects are conducted on
17· ·public or private property, correct?
18· · · · · A.· ·No.· Again, the program is just to --
19· ·for that municipality to prove to us -- and I can
20· ·provide you the guidance that we provide to the
21· ·municipality, I can provide that --
22· · · · · Q.· ·Okay.
23· · · · · A.· ·-- that it basically resolves a
24· ·stormwater flooding or erosion issue.
25· · · · · Q.· ·Okay.· And I understand -- am I correct
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·1· ·that the municipalities are being grouped into seven
·2· ·different categories based on population; is that
·3· ·correct?
·4· · · · · A.· ·That is correct.
·5· · · · · Q.· ·Okay.· Would the District entertain
·6· ·joint requests by two or more municipalities?
·7· · · · · A.· ·Yes, that's a plan.· We haven't had that
·8· ·in the OMCI areas but, you know, a lot of times
·9· ·projects do cross over municipal boundaries.· So if
10· ·there was a joint effort we would entertain that.
11· · · · · Q.· ·And would the -- would the District
12· ·account for in the groupings of municipalities if
13· ·you had two that are each within one of the seven
14· ·categories but combined are bumped into a different
15· ·category, does that affect their eligibility for
16· ·grants or --
17· · · · · A.· ·I'm not sure I understand the question.
18· · · · · Q.· ·So if a municipality individually
19· ·applying for a grant is -- if there were a group --
20· ·say one group of seven is ineligible for those funds
21· ·but combined with another municipality in that group
22· ·there's a larger population, does that affect the
23· ·amount of funds that would be available?
24· · · · · A.· ·No, it would not.· It would still be the
25· ·funds set aside originally.
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·1· · · · · Q.· ·Okay.· All right. I think I just want to
·2· ·look through the questions I had for previous
·3· ·witnesses that they referred to you, so bear with
·4· ·me.
·5· · · · · All right.· When I asked Ms. Myers about this
·6· ·criteria earlier, she suggested that you would be
·7· ·the appropriate person.· Is it the District's
·8· ·position that the Stormwater Rate Change Proposal is
·9· ·necessary to pay the cost of operation and
10· ·maintenance for stormwater?
11· · · · · A.· ·No, it would not be.
12· · · · · Q.· ·Because it' not designed to, correct?
13· · · · · A.· ·Right.
14· · · · · Q.· ·And I believe you testified to this
15· ·earlier, it's the District's position that the
16· ·proposed rate change would enhance the District's
17· ·ability to provide adequate sewer and drainage
18· ·systems, facilities and related services?
19· · · · · A.· ·Yes, it would.
20· · · · · Q.· ·Okay.· One of the topics I discussed
21· ·with Ms. Myers is what the, for lack of a better
22· ·word, the service provided to non-residential
23· ·ratepayers is with regard to the impervious surface
24· ·charge being paid.· Is it the District's position
25· ·that properties producing stormwater runoff, does
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·1· ·that equate to being served by the sewer facilities
·2· ·of the District?
·3· · · · · A.· ·Could you repeat the question?
·4· · · · · Q.· ·Does the production of stormwater runoff
·5· ·from a property, does that equate to being served by
·6· ·the sewer facilities of the District?
·7· · · · · A.· ·Yeah, the rate that -- the funding that
·8· ·we're proposing for the program would treat the
·9· ·folks with impervious rate the same as they would
10· ·the residential rate.· In other words, they'd be
11· ·served the same way.· If they had a problem that was
12· ·a high priority, we would address that problem just
13· ·as we would anyone, you know, no distinguishing.
14· · · · · Q.· ·And that would still be the case if the
15· ·property -- because of measures the owner has taken
16· ·or just because of the natural features of the
17· ·property if the runoff was captured on site or
18· ·absorbed elsewhere on the property, it's your
19· ·position they're still being served by the sewer
20· ·facilities of the District, right?
21· · · · · A.· ·Correct.· Again, it's generating revenue
22· ·to address District-wide issues.· It wouldn't
23· ·necessarily distinguish that.· It would have to be
24· ·on their property.
25· · · · · Q.· ·Okay.· And if a non-residential property
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·1· ·has zero impervious surface, would it still be
·2· ·assessed a rate or a charge?
·3· · · · · A.· ·No, it would not.
·4· · · · · Q.· ·And this was a question I posed to Mr.
·5· ·Hoelscher nearlier:· Does the District track on an
·6· ·annual or monthly basis the number of calls it
·7· ·receives for stormwater and erosion?
·8· · · · · A.· ·We do.· We have a system.· The call
·9· ·comes in to customer service and it's tracked in our
10· ·Maximo system.· And then each call is then either by
11· ·a crew or by one of our stormwater engineers in our
12· ·yard will go out and investigate and determine if
13· ·there's any action needed.· And if there's a project
14· ·warranted, then they create a project that would
15· ·then go into our database and prioritized if there
16· ·was a project deemed necessary.
17· · · · · · · ·MR. MALONE:· I see.· I think that's all
18· ·the questions I have.
19· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
20· ·Malone.
21· · · · · Questions from any other Rate Commissioners
22· ·for Mr. Unverferth?· Mr. Jearls?
23· · · · · · · · · · · ·EXAMINATION
24· · · · · QUESTIONS BY COMMISSIONER JEARLS:
25· · · · · Q.· ·Yes.· Did I hear that question answered
Page 188
·1· ·properly that if you have zero impervious rate you
·2· ·wouldn't be charged?
·3· · · · · A.· ·Yeah, and a vacant lot would not -- if
·4· ·it's a non-residential, it would not be charged.
·5· · · · · · · ·COMMISSIONER JEARLS:· Okay.
·6· · · · · · · ·CHAIRMAN TOENJES:· Mr. Palans?
·7· · · · · · · · · · · ·EXAMINATION
·8· · · · · QUESTIONS BY COMMISSIONER PALANS:
·9· · · · · Q.· ·Mr. Unverferth, I just want to
10· ·understand to be clear, the buckets of the revenues
11· ·that are received, we're talking about roughly
12· ·$34 million a year if should this pass per year for
13· ·four years, so we're talking about a potential
14· ·140-million-dollar package to address for
15· ·remediation, right?
16· · · · · A.· ·Correct.
17· · · · · Q.· ·And 50 percent of the revenues go on a
18· ·prioritized basis using the cost-benefit analysis
19· ·that has been created?
20· · · · · A.· ·That's correct.
21· · · · · Q.· ·And just so I'm clear, those projects
22· ·are identified on page -- Section 8 in the
23· ·appendices starting with 8 dash 17?
24· · · · · A.· ·Okay.· Yes.
25· · · · · Q.· ·And are those ranked in accordance with
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·1· ·the priority in the cost-benefit analysis?
·2· · · · · A.· ·I do not know that for certain.· It
·3· ·looks to me like they're alphabetical.
·4· · · · · Q.· ·Do you have a separate listing of the
·5· ·priority-based Capital Projects that you can share
·6· ·with us?
·7· · · · · A.· ·I think we gave that as one of the -- it
·8· ·was requested that to give the entire CIRP in the
·9· ·Excel format I think we provided --
10· · · · · Q.· ·It came in on one of the discovery
11· ·requests?
12· · · · · A.· ·Yes.· And if it did not -- I would have
13· ·thought we would have provided the priority but if
14· ·it didn't, we can do the same thing with the
15· ·priority.· But I'm most certain it did.· I did not
16· ·see the spreadsheet.
17· · · · · Q.· ·Okay.
18· · · · · A.· ·But I think it was with the last -- the
19· ·last one or the second discovery request.
20· · · · · · · ·CHAIRMAN TOENJES:· And that was ranked
21· ·by cost benefit, Rich?
22· · · · · A.· ·I do -- I do not have that sitting in
23· ·front of me because it was probably a large file.
24· · · · · · · ·CHAIRMAN TOENJES:· Well, I think --
25· · · · · A.· ·We provided the Excel.· But I don't know
Page 190
·1· ·if we provided the exact same spreadsheet but if
·2· ·not, we can provide that, this exact CIRP by
·3· ·priority benefit.
·4· · · · · · · ·CHAIRMAN TOENJES:· Thanks.
·5· · · · · · · ·COMMISSIONER PALANS:· I'd like to see
·6· ·that.
·7· · · · · · · ·MR. UNVERFERTH:· Okay.
·8· · · · · Q.· · (COMMISSIONER PALANS) And, also, if I
·9· ·were to run a total of all the CIRP projects that
10· ·are identified in that appendices, Section 8,
11· ·Appendices 8.2.2, you're saying that I would reach a
12· ·total of close to $700 million?
13· · · · · A.· ·I think this is just the four -- the
14· ·four-year program.· This is just --
15· · · · · Q.· ·Just the four-year program?· Okay.
16· · · · · A.· ·But I think the -- what we provided, I'm
17· ·not certain.· I can't remember.· Again, I haven't
18· ·found it.· I think we provided the Excel of the
19· ·entire CIRP.
20· · · · · Q.· ·So the first bucket, the 50 percent of
21· ·the revenues on the cost -- that are prioritized
22· ·based upon cost benefit those are projects that the
23· ·District would perform, correct?
24· · · · · A.· ·Yeah, what you have is in this listing
25· ·is you have a combination of projects that will be
Page 191
·1· ·out of the new rate and we have funding that we're
·2· ·still spending out of the current OMCIs as well.· So
·3· ·it's a combination.· You'd have to sort to find --
·4· ·if it's listed as a 5140, that would be from the new
·5· ·rate.
·6· · · · · But, yes, the highest priority projects,
·7· ·until we spend out the OMCIs, is included in that
·8· ·five-year program.
·9· · · · · Q.· ·And these are costs that the District
10· ·would incur for design, engineering and
11· ·construction --
12· · · · · A.· ·Exactly.
13· · · · · Q.· ·-- on these Capital Projects --
14· · · · · A.· ·Yes.
15· · · · · Q.· ·-- correct?
16· · · · · A.· ·Yes.
17· · · · · Q.· ·And that second bucket that is
18· ·30 percent of the revenues to the municipalities,
19· ·those are dispersed on a reimbursement program,
20· ·correct?
21· · · · · A.· ·That is correct.
22· · · · · Q.· ·So the municipality has to spend the
23· ·money first before it's entitled to receive any of
24· ·the funds, correct?
25· · · · · A.· ·Yes, but we have worked out,
Page 192
·1· ·particularly with a municipality that has a large
·2· ·project, that they could submit interim -- as the
·3· ·construction is going they could submit an interim
·4· ·pay request, you know, to blend in with theirs.
·5· ·We've done that.
·6· · · · · Q.· ·So they don't have to wait until
·7· ·completion, correct?
·8· · · · · A.· ·Correct.
·9· · · · · Q.· ·So they can certify that it's 20 percent
10· ·done and drawdown 20 percent of the reimbursement?
11· ·That's the idea?
12· · · · · A.· ·Or let's just take for example they
13· ·could -- we could reimburse -- if they plan to use
14· ·the money for construction, they could seek
15· ·reimbursement for the design of the same project.
16· ·In other words, get more of the money up front even.
17· · · · · Q.· ·So the 30 percent is a reimbursement
18· ·program.· What about the 10 percent based upon the
19· ·Environmental Justice areas, is that a
20· ·reimbursement?
21· · · · · A.· ·No, those are -- those are projects in
22· ·our program that we have identified the highest
23· ·priority projects in the Environmental Justice area
24· ·that we've identified in the back.· In other words,
25· ·that's -- we take the 10 high- -- or the 10 percent
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·1· ·of the highest projects in that area and program
·2· ·those --
·3· · · · · Q.· ·And you'll fund those?
·4· · · · · A.· ·And we'll fund those and perform those.
·5· · · · · Q.· ·And what about the last 10 percent that
·6· ·is to be distributed on projects identified by MSD
·7· ·with the assistance of an area-wide advisory
·8· ·committee, is that reimbursement or is that first
·9· ·dollar --
10· · · · · A.· ·Yeah, it could come probably in either
11· ·form depending, you know, on what the real request
12· ·is.· Again, how that's going to work is kind of
13· ·still a little bit up in the air.
14· · · · · You know, if you use the example Mr.
15· ·Hoelscher gave about regional flooding and use last
16· ·summer's example where there's an opportunity, let's
17· ·just say for a $3.4 million available, last summer
18· ·when you had municipalities that were seeking
19· ·potentially 90 percent matching State or Federal
20· ·grants for buyouts, obviously you want to make the
21· ·most use out of that $3.4 million.
22· · · · · So if it took that commitment up front, in
23· ·other words, that money we would program each year
24· ·and it would be available during that fiscal year
25· ·and if there was a need to make a commitment, say
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·1· ·for a matching fund to a municipality or to this
·2· ·group as a whole, I mean we would have that ability
·3· ·to do that.· Obviously we'd have to take it to the
·4· ·Board and they would have to understand what we were
·5· ·-- how we were dispersing those funds.
·6· · · · · Q.· ·I want to stay with the 30 percent of
·7· ·the revenues distributed to the municipalities.
·8· ·Again, that's a reimbursement program?
·9· · · · · A.· ·Correct.
10· · · · · Q.· ·What if a municipality does not have a
11· ·stormwater tax to have the revenue available to do
12· ·such a project and it doesn't have general operating
13· ·revenues sufficient to do a project, what happens
14· ·then?
15· · · · · A.· ·Well, generally those -- we'll approach
16· ·the municipality before we make our annual
17· ·appropriation for the reimbursement program.· And we
18· ·have that now in the OMCIs.· You'll have
19· ·municipalities say we do not have a need this year
20· ·or future years and then that fund remains in the
21· ·OMCI or in the stormwater fund it would become part
22· ·of our 50 percent and -- or if it's in an EJ area
23· ·then it would go into the 10 percent area.
24· · · · · Q.· ·Okay.· I don't think this is identified
25· ·anywhere in the materials such that if you have that
Page 195
·1· ·situation where a municipality either does not have
·2· ·the resources because it does not have a stormwater
·3· ·tax that it can draw upon for remediation and does
·4· ·not otherwise have the revenues, it needs to revert
·5· ·somewhere.· Are you committed to put that money back
·6· ·into the 50 percent bucket or -- based upon cost
·7· ·benefit on an annualized basis?
·8· · · · · A.· ·That's the plan.· And I agree it's
·9· ·probably not stated specifically where those funds
10· ·would return to but that is our plan.
11· · · · · Q.· ·Well, I think it has to be clearly
12· ·identified that those funds are replenished that
13· ·year so that there is no carry-over benefit that
14· ·that municipality can then use that to accumulate in
15· ·a reserve fund to do a project down the road when it
16· ·doesn't have the resources.
17· · · · · A.· ·Yeah.· Well, we do allow that.· I mean
18· ·if your municipality -- I'll just take for example
19· ·if they're getting $10,000 or whatever their grant
20· ·is going to be and they have something they want to
21· ·do that's going to cost 30,000, we will set that
22· ·funding aside until they reach that 30,000.· I'm not
23· ·sure if that's -- I'm answering your question or
24· ·not.
25· · · · · Q.· ·Well, what I -- what I don't want to --
Page 196
·1· ·I want to see funds spent on a cost-benefit basis
·2· ·District-wide to ensure that we're having
·3· ·remediation for stormwater and erosion in the
·4· ·District.· I want to see those funds applied. I
·5· ·don't want to see those funds held.
·6· · · · · A.· ·Oh, I totally agree with you.· I mean,
·7· ·we want to spend all the funding available as quick
·8· ·as we can spend that funding.
·9· · · · · But if your municipality wants to participate
10· ·in the grant program and they want to get reimbursed
11· ·we will allow some discretion to that municipality
12· ·that -- you know, if it's going to take them three
13· ·years to build up that fund to build up that
14· ·project.
15· · · · · Q.· ·One of the benefits I see here in doing
16· ·a program, as you've identified, is perhaps offering
17· ·some incentive to municipalities to create a
18· ·stormwater tax based upon a percentage of sales tax
19· ·or however they wish to do it in order to have the
20· ·funds available to utilize that 30 percent
21· ·reimbursement program.· Do you see that value?
22· · · · · A.· ·Well, I mean I would envision -- again,
23· ·it's not a program that has been available out there
24· ·to these municipalities, so there's going to have to
25· ·be some thought and probably education on our
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·1· ·part on what they -- you know, how they could
·2· ·actually use the funds.
·3· · · · · I mean, we've had -- my staff and myself were
·4· ·a big part of going out to the OMCIs and discussing
·5· ·with those municipalities, you know, about the grant
·6· ·program, what they could use it for and things like
·7· ·that.· And initially you had some that say, "Oh, I
·8· ·don't know that we'll use it," and now all of a
·9· ·sudden they're saying, "Oh, I can use it for that, I
10· ·can use it for this," and they're taking advantage
11· ·of it.
12· · · · · So I do think there will be an education
13· ·program but I do think there will be some that will
14· ·just choose not to, which then we would program
15· ·those funds into our program.
16· · · · · Q.· ·In terms of the projects that comprise
17· ·that $700 million of capital needs within the
18· ·District, as I understand it that consists presently
19· ·of about 550 projects; is that correct?
20· · · · · A.· ·Correct.· Yeah, approximately.
21· · · · · Q.· ·And my notes from our Rate Proposal
22· ·hearings this past cycle indicated at that time we
23· ·had 483 remediation projects and the total
24· ·remediation cost was $562 million.· Does that match
25· ·your recollection?
Page 198
·1· · · · · A.· ·It probably -- it sounds correct, yes.
·2· · · · · Q.· ·So we've gone up roughly 70 projects in
·3· ·numbers since our last Rate Proposal consideration
·4· ·and we've gone up about $130 million in needs since
·5· ·our last remediation project?
·6· · · · · A.· ·Now, keep in mind what we did, in order
·7· ·to develop our current rate is, you know, we did
·8· ·inflate -- in other words, I mean that was four,
·9· ·almost five years ago now -- based on what we see
10· ·for that type of project.· You know, all 550 of
11· ·those projects were inflated -- excuse me -- and
12· ·depending on the type of project they were inflated
13· ·a certain amount.
14· · · · · So what you're seeing is the additional
15· ·projects in addition to the inflation that has been
16· ·added to those projects.
17· · · · · Q.· ·And has your methodology changed over
18· ·the years in identifying projects?· And by
19· ·methodology I understand you identify a project
20· ·because a call comes in, correct?
21· · · · · A.· ·Correct.
22· · · · · Q.· ·And then you investigate that call,
23· ·correct?
24· · · · · A.· ·Correct.
25· · · · · Q.· ·And then the words that were used in our
Page 199
·1· ·prior hearing were that an estimate is made to
·2· ·remediate.· Do you remember that?
·3· · · · · A.· ·Correct.· Yeah, we perform what we
·4· ·initially call a "conceptual estimate" on what the
·5· ·solution -- we determine to be the solution.
·6· · · · · Q.· ·So there's an estimate, it's conceptual
·7· ·in nature, there's very little engineering analysis,
·8· ·correct?
·9· · · · · A.· ·I mean, obviously there is some
10· ·engineering analysis.· We look at projects that we
11· ·have done, similar-type projects that we have done
12· ·that were used to develop our conceptual cost
13· ·estimate, yes.
14· · · · · Q.· ·And there's minimal amount of detailed
15· ·information associated with these 550 projects,
16· ·correct?
17· · · · · A.· ·I mean, it's probably varying but I
18· ·could say -- I don't know if the word "minimal" is
19· ·correct.· I'd say it's the amount of information
20· ·available depending upon usually there's a site
21· ·visit involved, the length or the scope is set based
22· ·on how far or how big the issue is.· So, I don't
23· ·know, the word "minimal" I'm not so sure I agree
24· ·with.
25· · · · · Q.· ·And we're talking about a program that's
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·1· ·going to take 30 years or more --
·2· · · · · A.· ·Correct.
·3· · · · · Q.· ·-- in order to reach completion,
·4· ·correct?
·5· · · · · A.· ·Correct.
·6· · · · · Q.· ·And so these numbers that are identified
·7· ·today, they don't identify inflationary costs
·8· ·necessary to deal with those 550 projects over a
·9· ·30-year period, do they?
10· · · · · A.· ·No, they do not.· In other words,
11· ·they're all -- the initial cost benefit is based on
12· ·that original conceptual that's done.
13· · · · · Q.· ·And I believe your testimony before was
14· ·that the engineering group spent, quote, maybe a few
15· ·minutes looking at each project, is that correct,
16· ·the prior cycle?
17· · · · · A.· ·They -- well, I don't know if I was
18· ·referring to when we did the initial study in 2011
19· ·or -- I don't know.· Did I really say minutes? I
20· ·don't know that we do anything in minutes.
21· · · · · But it's probably -- it's not the effort you
22· ·would go through to do a preliminary design or a
23· ·final design, let's put it that way.
24· · · · · Q.· ·And you've done no -- you've engaged no
25· ·outside engineering firm to do a study District-wide
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·1· ·of the remediation projects that are necessary to
·2· ·solve the erosion and flooding problems within the
·3· ·District?
·4· · · · · A.· ·Not since 2011.· That was the last study
·5· ·and I think I provided the last study that we did.
·6· · · · · And that did -- they did actually look at
·7· ·every individual project through a site visit and
·8· ·refined the list because I think I spoke earlier,
·9· ·sometimes problems go away, they're addressed by
10· ·somebody else but their goal was to look at the
11· ·database of projects we have.
12· · · · · Q.· ·So from 2011 to the current time, we're
13· ·talking 12 years --
14· · · · · A.· ·Correct.
15· · · · · Q.· ·-- the last 12 years.· Are these the
16· ·same projects that were here 12 years ago?
17· · · · · A.· ·The majority of them are, yeah, plus any
18· ·new ones that we may have identified that have come
19· ·through calls and whatnot.
20· · · · · Q.· ·Do you think it would be beneficial for
21· ·the District to conduct a -- engage outside
22· ·engineers to do a new study District-wide to bring
23· ·that study current?
24· · · · · A.· ·Honestly we wouldn't initiate that
25· ·without some additional funding.· I mean the times
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·1· ·that we've done it -- I mean it's not a small
·2· ·endeavor.
·3· · · · · But with the current -- in other words, our
·4· ·plan right now is hit the ground running to take
·5· ·care of the issues that we know are there and that
·6· ·are high priorities.· If I -- if we felt like we
·7· ·were getting projects that, you know, weren't
·8· ·necessarily legitimate obviously we would start
·9· ·looking at our database to determine whether those
10· ·are valid projects.
11· · · · · Q.· ·The 700-million-dollar remediation need
12· ·District-wide, do you believe that's a very low
13· ·number, reasonable accurate number or wild guess
14· ·number?
15· · · · · A.· ·I would say -- I wouldn't call it a wild
16· ·guess.· I'd say it's reasonable for what we know
17· ·today.· When there was a study done in the 80s, it
18· ·was over a billion.· It was a billion-two.· But they
19· ·were looking at projects a different way than we
20· ·look at today.
21· · · · · They were looking at large swaths of buyouts.
22· ·Basically they identified the buyouts of all the
23· ·floodplains.· They identified major channel work.
24· ·In other words, concrete-lining every channel.
25· ·That's what they looked at.
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·1· · · · · And when we went back and looked at it again,
·2· ·we said, well, that's really not feasible.· So then
·3· ·we identified the projects that were actually
·4· ·feasible and that got us what we had in 2011.
·5· · · · · Q.· ·Mr. Unverferth, the need -- the cost to
·6· ·remediate the projects that have been identified in
·7· ·the District --
·8· · · · · A.· ·Mm-hmm.
·9· · · · · Q.· ·-- it's clear that the District does not
10· ·have the sources currently available to address that
11· ·need, correct?
12· · · · · A.· ·That is correct.
13· · · · · Q.· ·It's limited.· We're asking in this Rate
14· ·Proposal for $34 million.· We've conservatively
15· ·identified $700 million.· We identified that there
16· ·may be materially more needs within the
17· ·$700 million, correct, to remediate --
18· · · · · A.· ·Yes, potentially.· Yes.
19· · · · · Q.· ·And what is the District doing to
20· ·encourage other sources of funds to be used to
21· ·remediate our erosion and flooding in this District?
22· · · · · A.· ·To my knowledge -- I mean, we're not out
23· ·to project it to other municipalities or anybody
24· ·within our District.
25· · · · · Other ways, obviously we take advantage of
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·1· ·any -- you know, obviously the ARPA funds that came,
·2· ·we took advantage of those funds that came through a
·3· ·Federal level.· The State has the ability to issue
·4· ·stormwater bonds.· They've chosen not to do that.
·5· ·We've always participated in that program in years
·6· ·past.· We encouraged our municipalities to go for
·7· ·the ARPA funds separately.· In fact, in some of the
·8· ·legislation that we've seen in the Missouri Congress
·9· ·right now there's projects -- stormwater projects
10· ·within the District that are going to be funded
11· ·separately from MSD, assuming the budget goes
12· ·through the Missouri House, you know, some
13· ·significant dollars.
14· · · · · But, you know, each municipality I guess has
15· ·to make their own decision on where they fund their
16· ·resources and a municipality has a lot more strings
17· ·being pulled different directions than MSD does.
18· · · · · Q.· ·Mr. Unverferth, the only third-party
19· ·funds outside of the grant that you mentioned are
20· ·customers incentivized to implement green practices,
21· ·which they can -- might be entitled to a
22· ·reimbursement up to 3,000 bucks for a constructed
23· ·Green Infrastructure.· And for non-residential
24· ·customers constructed Green Infrastructures or Best
25· ·Management Practices, they have a right to exclude a
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·1· ·hundred percent of those costs that they incur from
·2· ·their bill.· That's it.· I'm looking at his
·3· ·testimony, page 8.
·4· · · · · A.· ·Oh, as far as an incentive program?
·5· · · · · Q.· ·Yeah.
·6· · · · · A.· ·Again, yes, for a non-residential,
·7· ·obviously anything that they do to remove pervious
·8· ·area, again, we -- you know, reduces the amount that
·9· ·they pay.
10· · · · · On a residential -- in other words, we don't
11· ·have the ability to provide a tax credit.· In other
12· ·words, we don't administer the tax.· We set the tax
13· ·rate.· But we wouldn't have that ability to give
14· ·somebody a tax credit on the residential side.· But
15· ·we do have the grant program that's available.
16· ·That's utilized to the extent that we appropriate
17· ·the dollars and all the dollars are used every year
18· ·in that program.
19· · · · · A lot of the issues that we find out there
20· ·and we go see, that Mr. Berthold's crews go out and
21· ·look at and the stormwater engineers look at are --
22· ·a lot of them are just smaller in nature that
23· ·sometimes smaller projects like rain gardens or
24· ·bioswales, things like that, we'll address that
25· ·issue.· But it's never going to rise to the level of
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·1· ·our priority system.· In other words, we've got
·2· ·bigger fish to fry but this does allow an
·3· ·opportunity to address some of those issues.
·4· · · · · Q.· ·So it's kind of like hitting an elephant
·5· ·with a whiffle ball bat, isn't it?
·6· · · · · A.· ·Yeah.· And, you know, I will say this,
·7· ·and again, there's a lot of individual -- you know,
·8· ·I mean if you look at a lot of the municipalities
·9· ·today with the tear-down and rebuild and the
10· ·situation going on there, which the District does
11· ·not see those individual projects, you know, a lot
12· ·of stormwater problems get created as quick as they
13· ·can -- faster than we can make them go away.
14· · · · · Q.· ·And Mr. Unverferth, I don't mean to
15· ·sound like a broken record, I probably do, but we
16· ·went through this as part of our last cycle and I
17· ·think you have an opportunity to incentivize
18· ·third-party funding in a fair and reasonable manner
19· ·based upon a cost-benefit analysis in order to raise
20· ·funds to address what we presently identified as 550
21· ·projects that are going to take presently far more
22· ·than 30 years to complete.· And is the District
23· ·doing anything to incentivize third-party
24· ·contributions to supplement the funds that you
25· ·intend to raise by this 34-million-dollar Rate
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·1· ·Proposal?
·2· · · · · A.· ·We are not proposing anything other than
·3· ·the grant program that we have in the Proposal.
·4· · · · · · · ·COMMISSIONER PALANS:· Thank you.· I have
·5· ·no further questions.
·6· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
·7· ·Palans.
·8· · · · · Do any other Rate Commissioners have any
·9· ·questions for Mr. Unverferth?· Mr. Jearls and
10· ·Mr. Goss?
11· · · · · · · ·COMMISSIONER JEARLS:· Chairman, thank
12· ·you.
13· · · · · · · · · · · ·EXAMINATION
14· · · · · QUESTIONS BY COMMISSIONER JEARLS:
15· · · · · Q.· ·My question is concerning I&I, which I
16· ·thank Mr. Hoelscher for trying to bring me up to
17· ·speed a little bit on that a few weeks ago.· I'm
18· ·still fuzzy.
19· · · · · If I'm reading right, District-wide I&I is
20· ·approximately 62 percent of the total wastewater
21· ·flow and your wastewater has a budget of about
22· ·459 million a year.· So your I&I cost the -- MSD
23· ·about 284 million a year?· And stormwater, you know
24· ·is a part of the problem for I&I, is it not?
25· · · · · A.· ·Oh, I -- okay.· I know where you're
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·1· ·going.
·2· · · · · Q.· ·So my question is, you know, what
·3· ·efforts are you making to reduce I&I, which is a big
·4· ·problem for, you know, 56 percent, 62 percent --
·5· ·56 percent of the total MSD budget, what are you
·6· ·doing -- what plans do you have to reduce the I&I?
·7· · · · · A.· ·I guess I don't know -- what numbers are
·8· ·you speaking of?
·9· · · · · Q.· ·Well, the numbers in the Executive
10· ·Summary, ES dash 3, Wastewater Revenues.· Wastewater
11· ·revenue accounts for 458, 459 million, if I'm
12· ·reading that right.
13· · · · · A.· ·Yes.
14· · · · · Q.· ·On then page 4 dash 32, District-wide
15· ·I&I is approximately 62 percent of the total
16· ·wastewater flow, which adds up to about $284 million
17· ·worth of that problem.· Part of that is due to
18· ·stormwater infiltration.· So I was wondering what
19· ·efforts on the stormwater side is being made to
20· ·reduce the I&I?
21· · · · · A.· ·Yeah, obviously removal of I&I is a
22· ·sanitary issue.· In other words, we're trying to
23· ·remove direct connections to our system through
24· ·downspouts, things like that.· That's been the
25· ·primary purpose of our wastewater program for the
Page 209
·1· ·last 10 years is doing the I&I, removing the
·2· ·downspouts from the system, lining our sewers, our
·3· ·leaking sewers, rehabilitation of manholes.· That
·4· ·has been our primary objective on -- and, again,
·5· ·that's on the wastewater side.· I'm not sure I
·6· ·understand where you're going on the stormwater.
·7· · · · · Q.· ·Well, is stormwater part of I&I?
·8· · · · · A.· ·Obviously stormwater flooding could be a
·9· ·huge impact on the wastewater system.
10· · · · · Q.· ·And so it affects both sides of the
11· ·coin?
12· · · · · A.· ·Right.· Yeah, stormwater -- I mean, a
13· ·perfect example is homes flooding in a floodplain
14· ·just inundates our wastewater system whether we like
15· ·it or not.· But --
16· · · · · Q.· ·Well, not the wastewater, what are you
17· ·doing on the stormwater side?
18· · · · · A.· ·Obviously we're -- right now on the
19· ·stormwater side, beyond the program that we
20· ·presented, there's nothing.
21· · · · · Q.· ·That don't sound good.· You got a
22· ·284-million-dollar problem and you're not doing
23· ·anything is what you just said.
24· · · · · · · ·UNIDENTIFIED SPEAKER:· (Inaudible.)
25· · · · · Q.· · (COMMISSIONER JEARLS) And to the
Page 210
·1· ·wastewater -- and to the wastewater, yes.
·2· · · · · Am I reading that wrong?
·3· · · · · A.· ·Again, I understand what you're saying
·4· ·but, again, that's part of the Wastewater Proposal.
·5· ·We have -- we are trying to address I&I into the
·6· ·wastewater system.· They do -- stormwater issues do
·7· ·impact the wastewater system.· We're aware of that.
·8· ·But we're not -- right now we don't currently spend
·9· ·wastewater funding to address stormwater issues
10· ·unless it's a direct connection from a stormwater
11· ·sewer into the wastewater program.· That might be
12· ·the only time we would address it.
13· · · · · Right, being funded through the wastewater
14· ·program.
15· · · · · · · ·COMMISSIONER JEARLS:· Okay.· That's all
16· ·I have.
17· · · · · · · ·CHAIRMAN TOENJES:· Mr. Goss?
18· · · · · · · · · · · ·EXAMINATION
19· · · · · QUESTIONS BY COMMISSIONER GOSS:
20· · · · · Q.· ·Mr. Unverferth, thank you for taking the
21· ·time.
22· · · · · There have been a lot of questions to you in
23· ·the last hour about the need to address stormwater
24· ·problems in the region and to educate the public and
25· ·to spend time in addressing these problems.· And you
Page 211
·1· ·were asked a lot of questions about why aren't you
·2· ·doing something about it.· Maybe this is to your
·3· ·counsel, but I don't think you have the legal
·4· ·authority to do anything about it until we pass the
·5· ·stormwater rate.· Is that a fair statement, other
·6· ·than to the extent of what you just said about your
·7· ·sanitary sewer lines having problems and needing
·8· ·repair?
·9· · · · · A.· ·That and our -- the availability of the
10· ·OMCI areas.
11· · · · · Q.· ·Right, which is why we have a critical
12· ·need to get the rate passed?
13· · · · · A.· ·That's right.
14· · · · · Q.· ·The other part of this discussion has
15· ·been a review of your testimony from the prior
16· ·stormwater hearing, which I'm impressed with the
17· ·excellent recall of my colleague and --
18· · · · · · · ·COMMISSIONER JEARLS:· What did we have
19· ·for lunch today?
20· · · · · Q.· · (COMMISSIONER GOSS) You know, not
21· ·enough obviously.
22· · · · · So what I recall from that testimony was the
23· ·identification of priority projects was in part to
24· ·illustrate that there really was a need for this
25· ·stormwater program.· Is that a fair statement?
Page 212
·1· · · · · A.· ·Yes, it is.
·2· · · · · Q.· ·Which is ground that we've already
·3· ·covered.· And if I understood, I think it was Mr.
·4· ·Hoelscher's testimony, partly why you haven't gone
·5· ·back to redo that work is because it's a lot of
·6· ·work?
·7· · · · · A.· ·Correct.
·8· · · · · Q.· ·And the other thing that I want to make
·9· ·sure I understand is the paradigm -- from what I
10· ·remember and I may be wrong -- is that previously we
11· ·were proposing a stormwater rate where the
12· ·allocation of funds was based upon merits and a
13· ·ranking system; is that correct?
14· · · · · A.· ·Correct, a hundred percent of the funds
15· ·going to where we're now sending 50 percent of the
16· ·funds.
17· · · · · Q.· ·Right.· And so that's not what we're
18· ·doing with this program --
19· · · · · A.· ·Correct.
20· · · · · Q.· ·-- we've changed the paradigm of how
21· ·we're paying.· And so if I understood your testimony
22· ·today, that's why you're not going back through and
23· ·spending all that time and effort to identify those
24· ·projects and update this list.· Is that a fair
25· ·statement?
Page 213
·1· · · · · A.· ·Yes, that's a fair statement.
·2· · · · · · · ·COMMISSIONER GOSS:· Thank you.
·3· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr. Goss.
·4· · · · · Further questions for Mr. Unverferth?· Anyone
·5· ·online?· Mr. Malone, do you have any further
·6· ·questions?
·7· · · · · (Inaudible speaking from unidentified
·8· ·person.)
·9· · · · · · · ·MR. UNVERFERTH:· Do you recall if it had
10· ·priority numbers on the stormwater?· It does not?
11· ·We can provide that.
12· · · · · · · ·CHAIRMAN TOENJES:· Any further questions
13· ·for Mr. Unverferth?
14· · · · · · · ·COMMISSIONER ZIEGLER:· Chairman Toenjes,
15· ·this is Paul Ziegler.· I'm going to have to drop off
16· ·the call here in about five minutes, so I thought I
17· ·would take the opportunity to let you know that now.
18· · · · · · · ·CHAIRMAN TOENJES:· Thank you, Mr.
19· ·Ziegler.
20· · · · · We are going to take a break right now until
21· ·three o'clock.· So thank you for joining us today.
22· ·Thank you, Mr. Unverferth.· I just -- from my
23· ·construction background, I guess in line with Mr.
24· ·Palans' comments about your estimates, I certainly
25· ·understand the difference between a conceptual
Page 214
·1· ·estimate, a detailed estimate and a construction
·2· ·estimate and if you could figure out what those
·3· ·projects are going to cost 30 years from now I'm
·4· ·take you to Vegas with me.· Thanks very much.· We'll
·5· ·break until three o'clock.
·6· · · · · · · · · · · (Break taken.)
·7· · · · · · · ·CHAIRMAN TOENJES:· We will reconvene at
·8· ·three o'clock.· It is now three o'clock.
·9· · · · · Mr. Mahfood, you look in place and ready to
10· ·go.
11· · · · · · · ·COMMISSIONER MAHFOOD:· There I am.
12· · · · · · · ·CHAIRMAN TOENJES:· Thank you, sir.
13· · · · · Let us resume with a couple of announcements.
14· ·First of all, concerning our schedule today, we will
15· ·proceed with the testimony from Mr. Gee at which
16· ·point we will adjourn for the day.· We will complete
17· ·our stormwater work today and move onto wastewater
18· ·tomorrow morning.
19· · · · · I have another appointment I need to leave
20· ·for, so I'm going to turn the chair over to
21· ·Mr. Muren to continue with the remainder of today.
22· · · · · And tomorrow we are scheduled to end at
23· ·two o'clock.· And based on how things go tomorrow I
24· ·understand this room is available until three or a
25· ·little bit thereafter, so if it appears that we may
Page 215
·1· ·get finished tomorrow, we will push on.· If not, we
·2· ·will go ahead and adjourn at our normal time and
·3· ·then finish on Friday morning.
·4· · · · · So with that I am going to excuse myself and
·5· ·turn the chair over to Mr. Muren for the remainder
·6· ·of the day.
·7· · · · · · · ·VICE-CHAIRMAN MUREN:· Thank you, Mr.
·8· ·Chair.
·9· · · · · Mr. Gee, were you sworn in already?
10· · · · · · · ·MR. GEE:· Not yet.
11· · · · · · · ·(Whereupon, MARION GEE was sworn in.)
12· · · · · · · ·VICE-CHAIRMAN MUREN:· Mr. Malone, do you
13· ·have questions of Mr. Gee on behalf of the Rate
14· ·Commission?
15· · · · · · · ·MR. MALONE:· I do.
16· · · · · · · · · · · · * * * * *
17· · · · · · · · · · · ·MARION GEE,
18· ·having been duly sworn testifies as follows:
19· · · · · · · · · · · ·EXAMINATION
20· · · · · QUESTIONS BY MR. MALONE:
21· · · · · Q.· ·Good afternoon, Mr. Gee.
22· · · · · A.· ·Good afternoon.
23· · · · · Q.· ·Do you have the testimony you submitted
24· ·with you today?
25· · · · · A.· ·Yes, I do.
Page 216
·1· · · · · Q.· ·Will you please tell the Commission what
·2· ·your position is with MSD?
·3· · · · · A.· ·I am the director of finance.
·4· · · · · Q.· ·And how long have you held that
·5· ·position?
·6· · · · · A.· ·Approximately eight years.
·7· · · · · Q.· ·And how many Rate Change Proceedings
·8· ·have you been involved with in that position?
·9· · · · · A.· ·This would be my third one.
10· · · · · Q.· ·All right.· With regard to the
11· ·Stormwater Rate Change Proposal -- and my questions
12· ·are going to be limited to stormwater as has been
13· ·the case with all the witnesses today.
14· · · · · With regard to the Stormwater Rate Change
15· ·Proposal did the District consider any -- using any
16· ·debt financing to fund the Stormwater CIRP?
17· · · · · A.· ·No.
18· · · · · Q.· ·Can you explain why or why not -- why
19· ·not I guess?
20· · · · · A.· ·Well, given the size of the program, an
21· ·issuance of debt really would not be feasible.
22· · · · · Q.· ·Okay.· And most of the projects in the
23· ·Stormwater CIRP I understand are on private
24· ·property; is that correct?
25· · · · · A.· ·I would have to look at the listing. I
Page 217
·1· ·would assume that would be the case as Rich
·2· ·indicated earlier -- or Brian did.· I think most of
·3· ·our projects are on private property.
·4· · · · · Q.· ·And would the District's ability to use
·5· ·tax-exempt bond funding on private property be
·6· ·restricted or limited in some way?
·7· · · · · A.· ·Potentially.· I don't want to say it
·8· ·definitively would.· There are certain situations in
·9· ·which you can't use you tax-exempt debt for private
10· ·activity and related purposes but I'll leave it at
11· ·that.
12· · · · · Q.· ·In the 2018 Stormwater Rate Change
13· ·Proceeding part of the rationale for the argument
14· ·that bond financing ought to be used was that future
15· ·generations would get a benefit from these projects
16· ·unless they should contribute to the financing.
17· ·Wouldn't that rationale still be applicable here?
18· · · · · A.· ·Potentially if you believe that.
19· · · · · Q.· ·Okay.· And does the District intend for
20· ·the Stormwater Capital Rate to be -- both the ad
21· ·valorem tax for residential and the impervious
22· ·surface charge for non-residential, is it intended
23· ·that that be in place in perpetuity?
24· · · · · A.· ·I am not aware of us having any
25· ·discussions with respect to ending it.
Page 218
·1· · · · · Q.· ·Okay.· And would the Stormwater Capital
·2· ·Rate funds be used to cover emergencies or
·3· ·anticipated delinquencies?
·4· · · · · A.· ·I'm not sure what you mean by
·5· ·"delinquencies."
·6· · · · · Q.· ·Well, that's one of the three factors
·7· ·that the Rate Commission is to consider under the
·8· ·District's Charter Plan.· And I believe in 2018 we
·9· ·concluded that that the proposed impervious surface
10· ·charge wasn't designed to cover emergencies and
11· ·anticipated delinquencies.
12· · · · · My question for you is, is that potentially
13· ·still the case today?
14· · · · · A.· ·Yes, it's not intended for that purpose.
15· · · · · Q.· ·Is there planned to be a minimum fund
16· ·balance in the Stormwater Capital Rate Fund?
17· · · · · A.· ·The only requirement with respect to
18· ·this fund would be that it's positive for the
19· ·Charter.
20· · · · · Q.· ·Okay.· All right.· And with regard to
21· ·the testimony you submitted in this hearing I'm
22· ·looking at Question 13, which is on page 4 of your
23· ·testimony, specifically Line No. 8.
24· · · · · There is a statement that the District
25· ·expects a bad debt percentage of 4 percent for the
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·1· ·impervious area charge and no bad debt for the ad
·2· ·valorem tax receipts.· Can you explain how these
·3· ·determinations were made?
·4· · · · · A.· ·Yes.· The 4 percent is basically what we
·5· ·see in terms of delinquencies with our wastewater
·6· ·billings.· The no bad debt percent, with respect to
·7· ·the tax, for the most part both the city and the
·8· ·county have a high collection rate on tax receipts.
·9· ·It's above 98 percent.· So you pretty much -- it's
10· ·not a hundred percent but for the most part it's
11· ·sufficient in terms of our ability to plan and count
12· ·on a steady revenue stream.
13· · · · · Q.· ·I see.
14· · · · · Do you have -- do you know what the tax
15· ·collection rate is for the 2-cent ad valorem tax and
16· ·the 10 percent?
17· · · · · A.· ·It would be the same.
18· · · · · Q.· ·Okay.
19· · · · · A.· ·The 98 percent that I'm quoting is based
20· ·on overall collection rates for both the city and
21· ·the county.
22· · · · · Q.· ·Does the District have a target
23· ·end-of-year balance for the construction fund?
24· · · · · A.· ·Again, our -- the way we handle our
25· ·construction funds is -- in our Charter the only
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·1· ·requirement is that the fund has to have a positive
·2· ·fund balance.· And so we adjust our ending fund
·3· ·balance projections throughout the year.· So we look
·4· ·at it to make sure that we have enough fund balance
·5· ·receipts coming in to cover projects and
·6· ·expenditures.· So that really is our only
·7· ·requirement is that we make sure the fund balance is
·8· ·positive.
·9· · · · · Q.· ·So how would unplanned or unexpected
10· ·cost increase or expenses be accounted for?
11· · · · · A.· ·In most cases when we appropriate funds
12· ·it's only if some kind of liquidation process that
13· ·we go through at the end so you're not -- even
14· ·though you appropriate funds in a particular year
15· ·you're not going to spend all of that in that year.
16· · · · · There's always the ability if we needed to do
17· ·some kind of fund transfer, we could do that as
18· ·well.· So that's how we would account for that.· Or
19· ·in some instances if there's no fund balance
20· ·available, we would take a look at the projects that
21· ·have been appropriated and we may decide that we
22· ·need to delay projects in order to ensure that the
23· ·fund balance requirements are met.
24· · · · · Q.· ·Do you have a copy of the Rate Change
25· ·Proposal document with you?· It's marked --
Page 221
·1· · · · · A.· ·I do.
·2· · · · · Q.· ·-- as MSD Exhibit 1.
·3· · · · · Could I direct your attention to page 8-77.
·4· ·It's in Appendix 8.13.· This is the Stormwater
·5· ·Financial Plan and I'm interested, under the
·6· ·Operating Expenses, on Line No. 14.
·7· · · · · Can you tell us what type of expenses would
·8· ·be included in this category for operating expenses
·9· ·for the Stormwater Capital Fund?
10· · · · · A.· ·In looking at this, I'm assuming that
11· ·what this would be would probably be any
12· ·internal-related labor that's going to be used on or
13· ·charged to the fund.
14· · · · · Q.· ·All right.· And directing your attention
15· ·to page 5-6, which is Section 5.3, it states that
16· ·the proposed non-residential impervious rate -- I'm
17· ·paraphrasing -- was determined based on the
18· ·estimated units of non-residential areas.· It also
19· ·states that the impervious area will be measured and
20· ·customers will be charged based on units of 1,000
21· ·square feet.
22· · · · · Can you please explain the process used to
23· ·estimate the impervious area used for the rate
24· ·calculation?
25· · · · · A.· ·Are you referring specifically to the
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·1· ·impervious area for a non-residential?
·2· · · · · Q.· ·Correct, yes.
·3· · · · · A.· ·Okay.· So just to kind of reiterate, I
·4· ·think Brian kind of touched on this earlier, but
·5· ·what we did is we calculated available funding based
·6· ·on what customers had indicated was their
·7· ·willingness to pay.· So we calculated an overall
·8· ·revenue amount, which came to about 40 -- or I'm
·9· ·sorry, let me find the exact amount here -- so it
10· ·was about $34.1 million.· Of that amount
11· ·19.3 million of it related to expected collections
12· ·from the tax from residential customers.· The
13· ·remaining 14.8 pertained to collections from
14· ·non-residential customers.
15· · · · · With respect to how we determine the
16· ·impervious surface area, our GIS department has
17· ·data.· Basically we do flyovers and we collect data
18· ·that we then review which provides us with total
19· ·impervious surface area within the system.· That's
20· ·going to be divvied up between property types, which
21· ·we did.· And I think we actually provided an exhibit
22· ·as a response to one of the -- I think it may have
23· ·been your second request.
24· · · · · But there was a chart that we provided which
25· ·identified the ratio breakdown of residential
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·1· ·impervious area to non-residential impervious area.
·2· ·And it was 57 percent residential to 43 percent
·3· ·impervious.
·4· · · · · So when you calculate the dollar amount
·5· ·that's generated from -- expected to be generated
·6· ·from impervious -- or non-residential customers,
·7· ·again, that was $14.8 millions, you divide that by
·8· ·the impervious surface area and then we converted
·9· ·that to a per thousand square foot basis and the
10· ·rate is a dollar-five per thousand square feet of
11· ·impervious surface area.
12· · · · · Q.· ·All right.· And I posed this question
13· ·earlier to Ms. Myers and she -- well, she initially
14· ·referred me to Tim Snoke but he didn't submit
15· ·testimony on stormwater, so off the record she had
16· ·asked that I refer this question to you.
17· · · · · A.· ·Sure.
18· · · · · Q.· ·Is it the District's position that the
19· ·Stormwater Rate Change Proposal is necessary to pay
20· ·interest and principal falling due on bonds issued
21· ·to finance assets of the District?
22· · · · · A.· ·No.· As I indicated earlier, we don't
23· ·have any intentions of issuing bonds that relate to
24· ·this Proposal.
25· · · · · Q.· ·Okay.· And is it the District's position
Page 224
·1· ·that the Rate Change Proposal for stormwater is
·2· ·consistent with and not in violation of any covenant
·3· ·or provision relating to any outstanding bonds or
·4· ·indebtedness of the District?
·5· · · · · A.· ·Again, this has no impact on -- we're
·6· ·not issuing bonds.· So any bond convenance would
·7· ·not relate to this Stormwater Capital Program.
·8· · · · · Q.· ·Okay.· And, again, I posed this question
·9· ·to Ms. Myers and she directed me to you.
10· · · · · Has the District taken steps to ensure that
11· ·the cost of constructing and maintaining District
12· ·facilities and related services are being incurred
13· ·in a reasonable and efficient manner?
14· · · · · A.· ·Yes.· We do have -- there are audits
15· ·that are conducted of our construction programs.· In
16· ·response to the second discovery request from the
17· ·Rate Commission we provided examples of those
18· ·audits.· They are Exhibits 70C through 70L.
19· · · · · Q.· ·Okay.· And just since I don't have those
20· ·if front of me, are those internal audits or
21· ·external audits?
22· · · · · A.· ·They are internal audits.
23· · · · · Q.· ·All right.· And with regard to the
24· ·Missouri Statute 204.700, this is the statute that
25· ·provides that properties within MSD's area -- no
Page 225
·1· ·residential property in MSD's territory shall be
·2· ·assessed a fee or tax for stormwater services if the
·3· ·District doesn't provide sanitary sewer services or
·4· ·the runoff doesn't flow or conveyed into a sewer
·5· ·maintained by the District.
·6· · · · · My question for you is does the District know
·7· ·how many properties that would apply to if that
·8· ·statute is valid?
·9· · · · · A.· ·I think we have those numbers.· I don't
10· ·know it off the top of my head.· I'd have to look it
11· ·up.
12· · · · · Q.· ·All right.· And then I posed this
13· ·question to Mr. Hoelscher earlier:· How will
14· ·non-residential customers be billed for
15· ·impervious-area-based stormwater charges?
16· · · · · A.· ·The bill would be generated along with
17· ·their wastewater bill.· So if they're a wastewater
18· ·customer, they would see a line item on their
19· ·wastewater bill.· If they're not a wastewater
20· ·customer, we would still use that billing system to
21· ·generate an impervious-only bill.
22· · · · · Q.· ·Okay.· And do we know how many
23· ·properties we anticipate receiving an
24· ·impervious-only bill?
25· · · · · A.· ·I do not, not at the moment.
Page 226
·1· · · · · · · ·MR. MALONE:· And I think that's all the
·2· ·questions I have.
·3· · · · · · · ·VICE-CHAIRMAN MUREN:· Does any member of
·4· ·the Rate Commission have questions for Mr. Gee?
·5· · · · · · · ·COMMISSIONER GOSS:· I have one question,
·6· ·Mr. Chairman.
·7· · · · · · · ·VICE-CHAIRMAN MUREN:· Mr. Goss?
·8· · · · · · · · · · · ·EXAMINATION
·9· · · · · QUESTIONS BY COMMISSIONER GOSS:
10· · · · · Q.· ·I've heard the statement about the
11· ·District not providing services for properties,
12· ·you're not going to tax them.· Can you tell me what
13· ·kind of property is that that you're excluding?
14· · · · · I can't -- it's stormwater.· Everything --
15· ·stormwater runs into storm sewers and you address
16· ·it, so it seems generally everyone gets -- is being
17· ·provided services for stormwater.· So you're
18· ·excluding certain properties and I'm just trying to
19· ·understand what kind of property that would be?
20· · · · · A.· ·Well, that's not really -- I think his
21· ·question was is according to the statute it
22· ·indicates that if certain customers don't receive
23· ·wastewater -- wastewater services then they can't be
24· ·billed by MSD.
25· · · · · Actually, with our 10-cent stormwater rate,
Page 227
·1· ·we bill all customers for that rate because it's a
·2· ·voted upon rate.· So that's not entirely correct.
·3· · · · · Q.· ·Okay.· And that's what I thought.· So I
·4· ·thought those -- there isn't anybody that would be
·5· ·excluded on the basis of that statute if I
·6· ·understood that --
·7· · · · · A.· ·Well, we -- let me clarify.· We do have
·8· ·some customers that are covered by levee district
·9· ·agreements.· And in that case the levee district
10· ·actually provides that maintenance -- that
11· ·stormwater maintenance service.· So those
12· ·individuals would not be billed that 10-cent rate
13· ·and it's possible that they would not be billed this
14· ·particular rate as well.
15· · · · · Q.· ·And when will you make that
16· ·determination, if they wouldn't be billed this rate?
17· · · · · A.· ·Well, I think our intent is to go back
18· ·to those levee districts and ensure that they are
19· ·going to assume the services that would be covered
20· ·under this Proposal and, if so, we would not bill
21· ·them because they're already paying for that service
22· ·through a levee district fee.
23· · · · · Q.· ·I know there's some litigation pending
24· ·against one of the levee districts that's associated
25· ·with a casino.· It's public record, so I'm not
Page 228
·1· ·talking about anything that isn't public record. I
·2· ·guess I'd like our counsel -- I'm going to talk to
·3· ·our counsel.· I want to follow up on how that works
·4· ·with the levee districts and sifting them out from
·5· ·the stormwater rate generally.· I just don't
·6· ·understand it.· So I won't take up more of your
·7· ·time.· Thank you.
·8· · · · · · · ·MR. GEE:· You're welcome.
·9· · · · · · · ·VICE-CHAIRMAN MUREN:· Thank you,
10· ·Commissioner Goss.
11· · · · · Is there another member of the Rate
12· ·Commission that has a question for Mr. Gee?· Anyone
13· ·online?
14· · · · · All right.· And Ms. Myers is not here for any
15· ·further questions.
16· · · · · Mr. Malone, do you have any questions?
17· · · · · · · ·MR. MALONE:· I do not.
18· · · · · · · ·VICE-CHAIRMAN MUREN:· Very good.· Well,
19· ·then, that was quick.· All right.· I am going to
20· ·call a pause for the proceedings.· We will be
21· ·resuming tomorrow at 9:30 a.m.
22· · · · · · · · · · · · - - - - -
23· · ·(Whereupon, the meeting adjourned at 3:19 p.m.)
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Page 229
·1· · · · · · · · ·CERTIFICATE OF REPORTER
·2· · · · · I, Suzanne M. Zes, a Certified Court Reporter
·3· ·(MO) and Registered Professional Reporter, do hereby
·4· ·certify that the witnesses whose testimony appears
·5· ·in the foregoing proceeding were sworn pursuant to
·6· ·Section 492.010 RSMo; that the testimony of said
·7· ·witnesses was taken by me to the best of my ability
·8· ·and thereafter reduced to typewriting under my
·9· ·direction; that I am neither counsel for, related
10· ·to, nor employed by any of the parties to the action
11· ·in which this deposition was taken, and further that
12· ·I am not a relative or employee of any attorney or
13· ·counsel employed by the parties thereto, nor
14· ·financially or otherwise interested in the outcome
15· ·of the action.
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18· · · · · · · · · · ·_______________________________
19· · · · · · · · · · · · Certified Court Reporter
20· · · · · · · · · within and for the State of Missouri
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