HomeMy Public PortalAboutExhibit MSD 73A- MSD's Response to Rate Commission's Fourth Discovery RequestExhibit MSD 73A
BEFORE THE RATE COMMISSION OF THE
METROPOLITAN ST. LOUIS SEWER DISTRICT
MSD’S RESPONSE TO THE FOURTH DISCOVERY REQUEST OF
THE RATE COMMISSION
DATE PREPARED:
ISSUE:2023 STORMWATER & WASTEWATER RATE
CHANGE PROCEEDING
WITNESS:METROPOLITAN ST. LOUIS SEWER DISTRICT
SPONSORING PARTY:RATE COMMISSION
MAY 11, 2023
Exhibit MSD 73A
BEFORE THE RATE COMMISSION
OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
For Consideration of a Stormwater & )
Wastewater Rate Change Proposal )
by the Rate Commission of the )
Metropolitan St. Louis Sewer District )
FOURTH DISCOVERY REQUEST
OF THE RATE COMMISSION
Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer
District (the “Charter Plan”), Restated Operational Rule § 3(7) and Procedural Schedule §§16
and 17 of the Rate Commission of the Metropolitan St. Louis Sewer District (the “Rate
Commission”), The Metropolitan St. Louis Sewer District (the “District”) hereby responds to the
May 1, 2023 Fourth Discovery Request of the Rate Commission for additional information and
answers regarding the Rate Change Proposal dated March 24, 2023 (the “Rate Change
Proposal”).
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Exhibit MSD 73A
BEFORE THE RATE COMMISSION
OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT
For Consideration of a Stormwater & )
Wastewater Rate Change Proposal )
by the Rate Commission of the )
Metropolitan St. Louis Sewer District )
FOURTH DISCOVERY REQUEST
OF THE RATE COMMISSION
Pursuant to §§ 7.280 and 7.290 of the Charter Plan of the Metropolitan St. Louis Sewer
District (the “Charter Plan”), Restated Operational Rule § 3(7) and Procedural Schedule §§16 and
17 of the Rate Commission of the Metropolitan St. Louis Sewer District (the “Rate Commission”),
the Rate Commission requests additional information and answers from the Metropolitan St. Louis
Sewer District (the “District”) regarding the Rate Change Proposal dated March 24, 2023 (the
“Rate Change Proposal”).
The District is requested to amend or supplement the responses to this Discovery Request,
if the District obtains information upon the basis of which (a) the District knows that a response
was incorrect when made, or (b) the District knows that the response, though correct when made,
is no longer correct.
The following Discovery Requests are deemed continuing so as to require the District to
serve timely supplemental answers if the District obtains further information pertinent thereto
between the time the answers are served and the time of the Prehearing Conference.
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Exhibit MSD73A
DISCOVERY REQUEST
1. Please provide all citations to cases referenced in any legal opinion received by the
District that was relied upon in crafting the stormwater and wastewater Rate Change Proposals
under consideration by the Rate Commission.
RESPONSE: All citations to the cases the District considered to be significant in the crafting
and supporting of the Stormwater Rate Change Proposal are included in Exhibits MSD 3B1 and
3B2 These Exhibits are robust legal summaries which have been previously provided to assist
the Rate Commission in understanding the validity of the District charging an ad valorem tax to
residential customers; an impervious area-based charge to non-residential customers, and a
voter-approved impervious area-based stormwater charge to tax exempt, non-profit, and
governmental entities In addition to the citations referenced in Exhibits MSD 3B1 and 3B2, the
District refers the Rate Commission to the following additional case citations which are
miscellaneous cases found in footnotes and string cites within the confidential memos. (There
were no legal opinions received by the District that were relied upon in crafting or supporting the
Wastewater Rate Change Proposal under consideration by the Rate Commission).
• Union Electric Co. v. Mexico Plastic Co., 973 S.W.2d 170 (Mo. App. E.D. 1998)
• Bertv. Dir. of Revenue, 935 S.W.2d 319 (Mo. banc 1996)
• Dean Taylor Cadillac-Olds, Inc v Thompson, 871 S.W.2d 5 (Mo. App. E.D. 1993)
• Brookside Estates v State Tax Comm ’n, 849 S.W.2d 29 (Mo. banc 1993)
• Metal Form Corp. v. Leachman, 599 S.W.2d 922 (Mo. banc 1980)
• 508 Chestnut, Inc v City of St Louis, 389 S.W.2d 823 (Mo. 1965)
• City of Hannibal v County of Marion, 800 S.W.2d 471 (Mo. App. E.D. 1990)
• State ex rel. Dalton v Metro. St. Louis Sewer District, 275 S.W.2d 225 (Mo. banc 1955)
• St. Louis Inv. Properties, Inc v Metropolitan St Louis Sewer Dist., 873 S.W.2d303, 307
(Mo.App.1994)
• McKay Buick, Inc. v Spradling, 529 S.W.2d 394 (Mo. banc 1975) (“McKay I”)
• McKay Buick, Inc v. Love, 569 S.W.2d 740 (Mo. banc 1978) (“McKay II”)
• Robert Williams & Co v State Tax Comm ’n, 498 S.W.2d 527 (Mo. 1973)
• St. Louis County v State Tax Comm ’n, 562 S.W.2d 334 (Mo. banc 1978)
• Snider v. Casino Aztar/Aztar Mo. Gaming Corp., 156 S.W.3d 341, 348 (Mo. banc 2005)
• State ex rel. United States Bank v Gehner, 5 S.W.2d 40 (Mo. 1928)
• McLeod v Columbia County, 599 S.E.2d 152, 154 (Ga. 2004)
• Northern Pl Home Builders Ass ’n v County of DuPage, 649 N.E.2d 384 393 (Ill. 1995)
• Green v. City of Winnetka, 135 N.E.3d 103, 116 (Ill. App. 2019)
• People ex rel. Wangelin v Wiggins Ferry Co., 191 N.E. 296, 299 (Ill. 1934)
• People ex rel. Toman v. Chicago Union Station Co., 48 N.E.2d 524, 529 (Ill. 1943)
• Shaarei Tfiloh Congregation v. Mayor & City Council of Baltimore, 183 A.3d 845, 869
(Md. App. 2018)
• Centerre Bank of Crane v. Dir of Revenue, 744 S.W.2d 754, 756 (Mo. banc 1988)
• Weaver v. Prince George’s County, 379 A.2d 399 (Md. 1977)
• Waters Landing Limited Partnership v. Montgomery County, 650 A.2d 712 (Md. 1992)
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Exhibit MSD 73A
• Norfolk Southern Ry Co v City ofRoanoke, No. 7:16CV00176, 2017 WL 6599008 (W.D.
Va. 2017)
2. Please identify the five Keller factors utilized by Missouri courts to consider
whether a payment is considered a tax or a user fee under the Hancock Amendment to the Missouri
Constitution. See Keller v. Marion County Ambulance District, 820 S.W.2d 301 (Mo. banc 1991).
RESPONSE:
1 When is the fee paid?
2 Who pays the fee?
3 Is the amount of the fee to be paid affected by the level ofgoods or services provided to the
fee payeN
4 Is the government providing a service or good?
5 Has the activity historically and exclusively been provided by the government^
3. Please provide a citation to (and/or a copy of) any opinion of which the District is
aware, issued by a Missouri court or tribunal (or a court/tribunal from another state), that has
authorized a stormwater rate charge for residential ratepayers based on an ad valorem property tax,
and a rate/charge based on impervious area for non-residential ratepayers.
RESPONSE: The District is not aware of a Missouri court or tribunal opinion (or a
court/tribunal opinion from another state) that has authorized a stormwater rate charge for
residential ratepayers based on an ad valorem property tax and a rate/charge based on impervious
areas for non-residential ratepayers
4. Please provide all legal citations contained in any memorandum or opinion relied
upon by the District to support the Rate Change Proposal, including the rationale set forth in Ex.
MSD 3B1 and Ex. MSD 3B2.
RESPONSE: See response to 01 above
5. Please state the name of any consultant who performed or assisted the District in
performing the Stormwater Public Survey, and provide the dates any such surveys were performed.
RESPONSE: The surveying was completed by the Kelly Group under a sub-contract with our
Public Affairs Consultant, Standpoint. The Q3 2021 data came from information obtained between
the 8/23/2021 and 9/9/2021. The 04 2021 data came from information obtained between
11/4/2021 and 11/23/2021 Please see Exhibit MSD 70Rfor the survey data for our customers
from 2021 Q3 and 04 of calendar year 2021 showing that the acceptable median monthly charge
for stormwater services is $2/month
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Exhibit MSD 73A
6. Please provide a list of all projects planned or presently being funded by the $0.02 ad
valorem tax levied by the District for regulatory purposes.
RESPONSE: See Exhibit MSD 73B. The Rate Change Proposal Projects are identified in
Appendix 8.12.1 under Fund 5110.
7. Please provide a copy of any publication or guidance issued to municipalities in the
District’s service area regarding grants available within the OMCI subdistricts.
RESPONSE: Annually, MSD sends a cover letter with a “Municipal Certification of Intent to
Participate ” form to each applicable municipality. Each participating municipality is sent an
“Application for OMCI Stormwater Project Reimbursement Program ” form with Instructions.
See Exhibit MSD 73C.
8. For each OMCI subdistrict, please provide, in Microsoft Excel format, a summary
of historical revenue provided to each municipality over the past 10 years, along with projected
allocation of grant money from the 30% allocation of the proposed stormwater capital charge.
RESPONSE: For 5 OMCI subdistricts, MSD has allocated grant money in Fiscal Year 2021,
2022 and 2023, with plans for 2024 also. The allocation of grant money for a sixth OMCI,
Gravois, began in Fiscal Year 2023. A summary of these historical revenues allocated to each
municipality and the related OMCI is provided in Exhibit MSD 73D. For the project allocation
of grant money from the 30% allocation of the proposed stormwater capital program, the Rate
Change Proposal Appendix 8.12.1 contains a project number 13828 titled “Stormwater
Municipality Reimbursements Program”. This project funding will be used for the municipal
grant funding, and it allocates $10.2 million per year for each year of the Rate Proposal.
Additionally, the details of funding each municipality is described in Appendix 8.18, Proposed
Grant Program.
9. Please provide any available summaries of demographic data for the communities
within each OMCI subdistrict.
RESPONSE: MSD does not have summaries available of demographic data for the communities
within each OMCI subdistrict. Demographic information for a GIS analysis can be obtainedfrom
the US Census web page: https://data. census, gov/advanced Drill down using Topics and
Geography, and extract data in Tables.
10. Please provide a summary of residential versus non-residential number of parcels
and impervious area for each community within each OMCI subdistrict.
RESPONSE: MSD does not have a summary of residential versus non-residential parcel count
with impervious area for each community within each OMCI subdistrict. However, this data is
contained in its GIS system. A geodatabase file can be provided. The file would contain
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Exhibit MSD 73A
(a) Parcel map and attribute data with impervious surface square footage, parcel
square footage, residential status, and many other attributes
(b) OMCI Tax Districts map and attributes
(c) Municipality map and attributes.
11. In Ex. MSD 3C, Direct Testimony of Mr. Unverferth, Question 10, beginning on
line 14, Mr. Unverferth indicates that the stormwater CIRP includes “$5.5 million in funding to
provide stormwater grants to third parties to promote flooding and erosion control, and green
infrastructure, funded via OMCI taxing districts and the District’s stormwater regulatory fund.”
Please provide a breakdown of the funding from each OMCI subdistrict and the regulatory fund.
RESPONSE: See Exhibit MSD 73E
12. Please provide a copy of the Stormwater CIRP, in Microsoft Excel format,
including project priority numbers for the 4-year capital program to be funded by the Rate Change
Proposal. See Ex. MSD 1; p. 8-64 - 8-76.
RESPONSE: See Exhibit MSD 73F.
13. Mr. Unverferth stated in his testimony during the technical conference on April 26,
2023 that the grant program funded from the 30% allocation of the stormwater capital charge
would be allocated to communities as reimbursement for projects completed, versus up-front
funding. Please state whether, when communities apply for funding, do they do so prior to
initiating a project, or does the District require a project to be complete before approving the
project? Please state whether the District anticipates some communities to not participate in the
program due to lack of funding to fund the project initially? Pleas state whether the District has
discussed any options that would allow communities to move forward with erosion and/or flood
control projects if they do not have the financial capability to fund the project up front?
RESPONSE: When communities apply for funding, they do so prior to initiating a project. From
MSD’s experience implementing a stormwater CIRP and grant program, the reimbursement
aspect of the program has not been an issue for municipalities to administer projects When
cashflow has been a concern for a municipality, MSD has expedited the reimbursement, as
requested, and worked with the municipality by processing partial payments as work is performed
and invoiced
14. Please state the number of properties which would be subject to the exemption from
stormwater taxes, fees, or charges by virtue of § 204.700, RSMo.
RESPONSE: As §204.700, RSMo applies to MSD, there will be no properties subject to the
exemption from stormwater taxes, fees, or charges See Article X, Section 6 1 of the Missouri
Constitution
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Exhibit MSD 73A
15. Please the estimate number of non-residential properties which do not receive
wastewater service from the District, but would, under the Rate Change Proposal, receive an
impervious surface bill from the District.
RESPONSE: The District does not have the breakdown between residential and non-residential
customers although, there are approximately 40,000 stormwater accounts that will be billed to
properties that the District does not currently bill for wastewater services This number was
calculated and included in the 2018 Stormwater Rate Change Proposal (see Exhibit MSD 5, page
6-18) As of March 31, 2023, non-residential properties comprised approximately 6% or 23,900
of the 429,700 accounts billed by the District. Assuming that 6% of the 40,000 stormwater only
accounts identified in 2018 will be non-residential, this would result in an additional 2,400 non-
residential accounts being billed for stormwater services
16. During Mr. Unverferth’s testimony at the April 27, 2023 technical conference, he
referenced a technical memorandum summarizing the District’s evaluation of energy recovery
options for the biosolids program. Please state whether this technical memorandum also discuss
options beyond the technology chosen? Please provide a copy of the technical memorandum
mentioned. If the memorandum does not discuss why fluidized bed technology was chosen, please
provide a summary of the reasons the District chose the methodology.
RESPONSE: Technical memoranda with the information requested are provided as Exhibits
MSD 73G, MSD 73H, MSD 731, and MSD 73J
17. Please provide a summary of any projects proposed in the wastewater CIRP
involving the Fluidized Bed Incinerators, and any technical memorandum in the District’s
possession regarding such project(s). See Ex. MSD 1; p. 8-17 - 8-41.
RESPONSE: Technical memoranda with the information requested has been provided for 016,
and FBI projects in the CIRP are provided as Exhibit MSD 73K
18. In Ms. Pugh’s testimony during the April 27, 2023 technical conference, she
discussed liquidity in terms of Days Cash on Hand. What is the current and projected Days Cash
on Hand for this Rate Change Proposal? How is the calculation of Days Cash on Hand different
than the calculation of the 60-day operating reserve calculation in the rate model and financial
plan?
RESPONSE: At the end of FY22 the sum of the District’s short-term unrestricted investments
divided by average daily operating expenses equaled 500 days cash on hand (DCOH). If there
were no change to the District’s level of short-term unrestricted investments going forward,
projected operating expenses would result in DCOH ranges of 421 days at the end ofFY25 to 464
days at the end of FY28 However, the District plans to proactively manage the level of short-term
investments to meet a minimum of500 DCOH throughout the FY25-FY28 rate cycle
The 60-day operating reserve is the minimum amount the District desires to hold in its General
Fund as insurance for the payment of operating expenses but is only part of the funds available
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Exhibit MSD73A
for the DCOH calculation. The DCOH calculation includes cash, cash equivalents, and other
short-term investments from various District Funds that are not restricted from use by external
parties or agreements. For example, bond proceeds, required debt service reserves, and
stormwater OMCI revenue are restricted and not included in the calculation. Transfers of User
Charge revenue from the General Fund to the Construction Fund or to other unrestricted funds of
the District are generally included in the calculation of DCOH (until expended) but not in the
calculation of the 60-day operating reserve.
The 500 DCOH target is within the range of other issuers in the District’s rating category. A 60-
day reserve is not an appropriate target for an all-funds unrestricted reserve from a either a
prudent financial management perspective or to maintain the District’s credit ratings.
19. Please state how the District determines which ratepayers/property owners are
monitored for industrial waste (as referenced in questioning of Mr. Tom Beckley at the technical
conference on April 27, 2023).
RESPONSE: MSD ordinance 15048 (see Exhibit MSD 54) provides the authority for determining
which customers are monitored for industrial pollutants and for regulating those customers ’
dischargers. If industrial waste approval is needed to discharge, then the user is required to
provide a response to MSD’s Commercial/Industrial User Short Questionnaire. Based on that
response, MSD will determine if that industry needs to also complete a more comprehensive
Industrial User Questionnaire. The response to the Industrial User Questionnaire is then used to
determine what, if any, additional action MSD needs to take (e.g., inspections, monitoring,
permitting, etc.) to approve the discharge. This process is described on MSD website,
https://msdproiectclear.org/doing-business/environmental-compliance/industrial-pretreatment/
20. Please provide a summary of consent decree spending, including spending to date
and projected through completion of the consent decree in 2039.
RESPONSE: MSD planned expenditures (appropriations) through the end ofFY24 (the first 13
years of the CD) are $3,054,290,580. The balance through the completion of the consent decree
is $4,084,624,000. These projections are in 2023 dollars.
21. Please state the estimated impact of inflation to date on the size of the consent
decree program? Please provide an analysis of inflationary impact on the remaining costs for FY
2029-FY 2039.
RESPONSE: The impact of inflation to date on the program is reflected in the actual
appropriation made to date. In addition, cost estimates for construction components of the
program for future years were inflated to FY23 estimated value, in preparation for the rate setting
process. As noted in Appendix 8.1.2 of the Rate Proposal, the rate model incorporates a 3.7%
inflation factor to the CIRP numbers for future years, beginning with FY24. The rate setting
process is on a 4 year cycle, and these efforts to adjust for inflation will be repeated each 4 years
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Exhibit MSD 73A
going forward, in preparation for the next rate setting process. It is currently unknown what
recommended inflation level projections will be in the FY2029-FY2039period, making an analysis
of inflationary impact during those years impossible.
22. Please provide the report summarizing technical analysis that William Zieburtz
referenced in his testimony during the April 27, 2023 technical conference.
RESPONSE: Please see Exhibit MSD 73L
23. In Ex. MSD 66, Stantec’s Infiltration and Inflow Cost Allocation report, for Option
3 in Section 3.2.3, Inch-Feet: Collection System with Minimum 8” Line, please explain why 8”
was chosen for the minimum pipe size for the entire system, rather than 8” for the separate system
and 12” for the combined system, as discussed in section 8.2.1. If the analysis were updated to
reflect the distinction between the two systems, what would the expected directional impact on the
allocation of Infiltration and Inflow be?
RESPONSE: Approach #3 as described in Section 3 2 3 assumes an 8” connection for all gravity
lines, which generally reflects the minimum size required to provide capacity to serve customers,
and does not involve an independent size assumption for combined sewer areas If a 12’’
assumption for combined sewer areas were incorporated, the directional impact would
presumably be a shift in the allocation of I/I costs from volume to customer. As this analysis was
not done, we cannot definitively speak to magnitude or direction.
24. In Ex. MSD 66, Stantec’s Infiltration and Inflow Cost Allocation report, please
explain how the percentage allocations of volume and customer-based allocations were determined
to provide a balanced result relative to the target distribution by customer type for the rate code
based methodologies presented in sections 3.2.7 (Table 8), 3.2.8 (Table 10), 3.2.9 (Table 12),
3.2.10 (Table 14). Please state whether the “Resulting I/I Allocations” were established to
minimize the variance in a specific customer type, or whether they were established to result in a
proportionate variance by customer type?
RESPONSE: The “Resulting FI Allocations’’ were established to minimize the variance for a
specific customer type More specifically, the allocations seek to minimize the variance for the
non-residential class between I/I attribution as measured by each alternative approach and the I/I
cost allocation resulting from an implementable (defined as allocations between 0% and 100%)
customer/volumetric split.
25. In Ex. MSD 66, on the Rate Code-based options, please state whether the Multi
Family Residential was considered a residential or non-residential customer type?
RESPONSE: The Rate Code-based options contained in Exhibit MSD 66 considers Multi-Family
Residential to be residential.
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Exhibit MSD 73A
26. Please explain the rationale for projecting annual decreases in both TSS and
BOD/COD extra-strength loadings starting in FY 2024 at 6.2% and escalating, to decreases of
12.3% by FY 2032, continuing through 2039, when the average FY 2022 - FY 2023 data indicates
an increase of 13.54% in TSS and an increase of 3.68% in BOD/COD extra strength loadings.
Please also provide any relevant data, analysis and assumptions used in developing the projected
surcharge units through 2039.
RESPONSE: The projections for extra strength surcharge loadings -were developed based on
billing data through the end of fiscal year 2022 The future projections beyond the District's fiscal
year 2023 budget were based on an analysis of five years of historical data that showed a
downward trend in billed extra strength loadings.
In reviewing current fiscal year data, it was determined that In October 2022 the District’s total
billed extra strength surcharge units increased by approximately 20% Further investigation
revealed that this unusual increase was related to a new process implemented by Anheuser-Busch
related to the washing ofspent grain for use as animal feed. This increase has remained consistent
through April 2023, the most recent available month This week we confirmed with Anheuser-
Busch that they expect this process will continue in the future
Given this recent change in the extra strength surcharge units of service, it would be appropriate
to adjust the projections of these units. It is important to note that while this is a significant change
in the units ofservice for extra strength surcharges, its impact on total units of service is minimal,
but we would expect that this change would reduce other retail rates slightly.
27. In. Ex. MSD 68A, in the District’s response to Question 10 (see page 5), the District
indicates that volume was projected based on an analysis of the trend in total volume in past years.
In the Demand tab of the rate model, please state whether the customer accounts were separately
projected at various rates depending on the customer class? Was an analysis of volume per
customer for the historical data considered, and if so, does the resulting volume per customer by
class in the current rate model reflect the historical volume per customer? If not, what factors were
taken into consideration that would explain a different volume/customer?
RESPONSE: Exhibit MSD 7IB was provided in response to question 4 in the Rate Commission’s
Third Discovery Request The calculation of individual growth rates by class were shown in the
tab labeled “Total Accounts ’’for residential, multi-family, and non-residential customer accounts
Each class of customer accounts was separately projected A similar calculation was performed
for metered and unmetered volumes in the tabs labeled “Metered Volume (Remove FY21) ” and
“Unmetered”.
The demand growth rates for wastewater customer accounts and volume can be found in Ex MSD
60 (rate model) in the tab labeled Demand beginning with row 148 These growth rates were
applied to the FY23 budget and used to prepare the forecast for FY24 thru FY28 (see Ex MSD 60,
Demand tab, starting at row 7).
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Exhibit MSD73A
28. Please explain how the different compliance tiers are defined and how customers
are assigned a compliance tier.
RESPONSE: The different compliance tiers are described in MSD Ordinance 15669 (See Exhibit
MSD 53), Appendix I Non-residential customers are assigned to a tier based on the number of
biennial inspections performed by MSD and the number sample points that are monitored by MSD.
Whether or not an industry is inspected is based on the determination that an inspection is needed
to evaluate compliance with MSD’s Sewer Use Ordinance 15048 (Exhibit MSD 54). The number
of sample points is based on several factors, but is primarily determined by the number of
connections to the sewer system, the different types of industrial processes and discharges at the
facility, and federal regulations that require specific sample point locations.
Respectfully submitted,
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
2350 Market Street
St. Louis, Missouri 63103
Tel: (314) 768-6366
smyers@stlmsd.com
bstone@stlmsd. com
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Exhibit MSD73A
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing was sent by electronic transmission
to Lisa O. Stump and Brian J. Malone, Lashly & Baer, on this 11th day of May, 2023.
Lisa O. Stump
Lashly & Baer, P.C.
714 Locust Street
St. Louis, Missouri 63101
lostump@lashlybaer.com
Brian J. Malone
Lashly & Baer, P.C.
714 Locust Street
St. Louis, Missouri 63101
bmalone@lashlybaer. com
Brian Stone
THE METROPOLITAN ST. LOUIS
SEWER DISTRICT
2350 Market Street
St. Louis, Missouri 63103
Tel: (314)768-6366
smyers@stlmsd.com
bstone@stlmsd.com
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