NOTICE OF REGULAR MEETING

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1 NOTICE OF REGULAR MEETING PLEASE TAKE NOTICE that there will be a regular meeting of the Commission of the Madison Metropolitan Sewerage District at 8:00 a.m., on Thursday, May 11, 2017, at the Maintenance Facility Training Room at 1610 Moorland Road, Madison, Wisconsin The Commission will consider, and may take action, on the matters set forth on the attached Agenda. If any matter on the Agenda is to be considered in closed session of the Commission, please be advised that following the closed session the Commission will reconvene into open session for purposes of taking any action based on the closed session and concluding its agenda. Date: May 9, 2017 D. Michael Mucha, P.E. Chief Engineer and Director Any person who has a qualifying disability as defined by the Americans with Disabilities Act that requires the meeting or materials at the meeting to be in an accessible location or format must contact the Chief Engineer Director at , 1610 Moorland Road, Madison, Wisconsin, at least twenty-four hours prior to the commencement of the meeting so that any necessary arrangements can be made to accommodate each request. 1. Opening A. Call to Order B. Welcome Guests C. Announcements 2. Appearances by the Public 3. Consent Calendar A. Approval of Commission Meeting Minutes from B. Approval of Cash Statement-Operating Fund C. Approval of Cash Statement-Capital Projects Fund D. Approval of Cash Statement-Debt Service Fund E. Review and Approval of Sewer Extension Plans-Post Commission Agenda Report Attachment 1: Sewer Extension Vicinity Map Attachment 2: Sewer Extension Financial Summary 1

2 New Construction Projects o Prairie Place, Village of McFarland Attachment 3: Prairie Place Map & Resolution ( R1) o Lower Badger Mill Creek-Phase 4, City of Fitchburg Attachment 4: Lower Badger Mill Creek-Phase 4 & Resolution ( R2) 4. Employee Compensation-Peters Commission Agenda Report Attachment 1: Option 1 Commission Resolution ( R3) Attachment 2: Option 2 Commission Resolution ( R4) Attachment 3: Option 3 Commission Resolution ( R5) Attachment 4: Exhibit A 2017 Salary Schedule Attachment 5: Exhibit B 2017 Wage Schedule 5. Connection Charges: Ordinance Amendments, Regulations and Rates-Walker Commission Agenda Report Attachment 1: Written Public Comments Received Attachment 2: Minutes from April 27, 2017 Public Hearing Attachment 3: Resolution: Establishing Policy for District Connection Charges ( R1) 6. Study Session: Fund Reserves Policy-Brochtrup Commission Agenda Report Attachment 1: Fund Reserves Policy 7. Review of Lower Badger Mill Creek Phase 4 Project-Stieve Commission Agenda Report Attachment 1: LBMC Phases 8. Chief Engineer and Director s Report A. Chief Engineer and Director s Report-Mucha B. Regulatory Review-Kent C. Review Commission Calendar Future Meeting Schedule as of Future Agenda Topics 10. Other Business by Law 11. Adjournment 2

3 Return to Agenda Meeting of the Commissioners of the Madison Metropolitan Sewerage District Thursday, April 27, :00 a.m. MMSD Maintenance Facility Training Room, 1610 Moorland Road, Madison, WI Present: Commissioner Tom Hovel Commissioner Angela James (attendance via teleconference) Commissioner Ken Clark (excused absence) Commissioner Sara Eskrich Commissioner James Martin Commissioner Ezra Meyer Commissioner Brad Murphy Commissioner Brian Potts (excused absence) Commissioner Tom Wilson (excused absence) Commission Meeting 1. Opening A. Commissioner Hovel called the meeting to order at 8:00 a.m. B. Welcome guests: Matt Brink, Smart Growth; Curt Brink, Curt Vaughn Brink LLC; Bill Cole, Legal Counsel for City of Monona; Andrew Disch, Apartment Association of South Central Wisconsin; Jodi Dobson, Baker Tilly; Chris Ehlers, Ehlers Development Company; Steve Fahlgren, Village of DeForest; Greg Fries, City of Madison; Andrew Homburg, Homburg, Inc.; Chad Lawler, Madison Area Builders Association; Mike Lawton, Boardman & Clark; April Little, City of Monona; Mark Moder, City of Madison; Dave Sarbacker, City of Middleton; Tony Stolper, City of Monona; Terrence Wall, T. Wall Enterprises; Todd Wozniak, Veridian Homes C. Announcements: None. 2. Appearances by the Public 3. Consent Calendar None. A. Approval of Commission Meeting Minutes from B. Review and Approval of Sewer Extension Plans ( R1 through R3). Discussion: The minutes and Review and Approval of Sewer Extension Plans were reviewed and placed on file ( R1 through R3). Action: Commissioner Martin moved, seconded by Commissioner Murphy to approve items A-B of the Consent Calendar. 3

4 Return to Agenda Motion carried unanimously. 4. Convene in Closed Session in accordance with Wis. Stat. s (1)(e) for the purpose of conducting specified public business involving competitive reasons associated with the City of Monona s request for cost sharing for relocation of the District s Southeast Interceptor sewer easement and in accordance with Wis. Stat. s (1)(g) to confer with legal counsel who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation in which it is or is likely to become involved associated with the District s Southeast Interceptor sewer easement in Monona-Mucha Presenter: Michael Mucha, Chief Engineer and Director Description: Closed Session of the Commission. Discussion: Mr. Mucha introduced the topic to the Commission and the Commission agreed to hear comments from City of Monona representatives prior to going into Closed Session. Mr. Cole, legal counsel for the City of Monona, spoke on behalf of the City, summarizing benefits of the pipe relocation. Action: Commissioner Meyer moved, seconded by Commissioner Eskrich to Convene in Closed Session in accordance with Wis. Stat. s (1)(e) for the purpose of conducting specified public business involving competitive reasons associated with the City of Monona s request for cost sharing for relocation of the District s Southeast Interceptor sewer easement and in accordance with Wis. Stat. s (1)(g) to confer with legal counsel who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation in which it is or is likely to become involved associated with the District s Southeast Interceptor sewer easement in Monona. Roll call vote: Commissioner Eskrich-aye Commissioner Meyer-aye Commissioner Hovel-aye Commissioner Murphy-aye Commissioner Martin-aye Commissioner James-aye Motion carried unanimously. 4

5 Return to Agenda 5. Reconvene in Open Session Action: Commissioner Eskrich moved, seconded by Commissioner Meyer to reconvene in Open Session. Roll call vote: Commissioner Eskrich-aye Commissioner Meyer-aye Commissioner Hovel-aye Commissioner Murphy-aye Commissioner Martin-aye Commissioner James-aye Motion carried unanimously. 6. Discussion or Action, if any, relative to the Closed Session (agenda item number 4) Action 1: After a risk analysis, Commissioner Martin moved, seconded by Commissioner Eskrich : The Commission authorizes the District to contribute $250,000 to the relocation of the sewer main on the condition that the District and Monona enter into an acceptable intergovernmental agreement (IGA) which includes the following: Relocation of the main shall be to the location shown on the map included in the 4/27/17 Commission packet; and There will be no reduction in the capacity of the main (the relocated main will be expanded from 60 to 63 inches); and There will be mutually acceptable easement language and a 30 foot easement; and The relocated main will be relocated to public right-of-way; and Relocation will occur before the demolition and reconstruction; and The Commission directs staff and legal counsel to prepare the IGA with the City of Monona Motion carried 5-1 (Eskrich voted nay). Action 2: If a raze order for the bank building is issued prior to relocation of the main, legal counsel and staff are authorized to engage in litigation for a declaratory judgment and injunction, as appropriate. Motion carried 6-0. NOTE: The Chief Engineer and Director s Report (originally item #7 was deferred until after the Public Hearing). 5

6 Return to Agenda 7. Public Hearing on Proposed District Regulations and Ordinance Amendments Regarding Connection Charges (to begin at or after 9:30 a.m.) Discussion: Commission President Mr. Hovel opened the floor to those interested in speaking on the subject with a 5 minute time-limit. The following meeting attendees spoke on the subject: Matt Brink, Smart Growth (Attachment 1: A1) Mr. Brink provided the Commission with a written handout and summarized his main points. He requested that the Commission delay fee increases, consider a smaller ongoing annual fee increase in lieu of the current proposed fee increase, consider involving the development community in discussions, and explain the reasons for the proposed increase in fees. Terrence Wall, T. Wall Enterprises Mr. Wall addressed the Commission stating that the proposed fees are not reasonable, objecting that the development community was not involved, suggesting that the proposed fee increase would slow or stop development projects, noting that immediate fee increases have not been planned for and would be paid from project profits. He requested the Commission to slow down and work with the housing community. Steve Fahlgren, Village of DeForest Mr. Fahlgren addressed the Commission and stated he was not representing his board at the hearing. He questioned the logic and fairness of using an area basis for connection charges. He stated that the fees should be based on usage and proportionate cost. Todd Wozniak, Veridian Homes Mr. Wozniak addressed the Commission and stated concerns he had about the impact the proposed fees would have on new home buyers and affordable housing in the greater Madison area. He requested that the development community have a seat at the table to discuss the matter and asked for a delay in implementation of the proposed fees. Chad Lawler, Madison Area Builders Association (Attachment 2: A2) Mr. Lawler provided the Commission with a written handout and addressed the Commission stating concerns around affordability for developers and homeowners. He asked the Commission to consider reduced fees and staggered increases. Greg Fries, City of Madison (Attachment 3: A3) Mr. Fries provided the Commission with a written handout and addressed the Commission summarizing Mayor Soglin s support of the administrative changes and his desire for the District to reach out to impacted parties to discuss the rate increase. Mike Lawton, Boardman & Clark Mr. Lawton spoke on behalf of the development community and shared an idea related to payment of impact fees at the time a building permit is granted. He further stated the proposed fees will affect current housing costs and then requested the chance to give input. 6

7 Return to Agenda 8. Curt Brink, Curt Vaughn Brink LLC Mr. Brink addressed the Commission expressing that in development loads must be fully collateralized-and that immediate fee increases have not been planned for. He requested more information on the purpose of the fee increases and noted that connection charges concentrate costs on developers. He requested the opportunity to sit down with developers, engineers, and bankers to discuss the matter. Andrew Homburg, Homburg Inc. Mr. Homburg addressed the Commission explaining that his business is a niche business that would be greatly impacted by the proposed rate increase. He asked for the Commission to pause on decision making. Close Public Hearing on Proposed Connection Charge Regulations and Ordinance Amendments Action: Commission President, Tom Hovel, closed the public hearing after hearing from all parties wishing to speak. 9. Chief Engineer and Director s Report 10. Future Agenda Topics 11. Other Business by Law 12. Adjournment A. Updates-Mucha Mr. Mucha, Chief Engineer and Director, discussed with the Commission alternative ideas to wrap-up the policy governance work. A single meeting at night to complete this work is the preferred solution. Staff will follow-up with the Commission on potential dates/times. Action: No action necessary. B. Ecosystem Services Update-Taylor Mr. Taylor, Director of Ecosystem Services, presented on department efforts. Action: No action necessary. C. History of the District Part II-Nehm This topic was deferred to a later date. Action: No action necessary. D. Regulatory Review-Kent Mr. Kent provided a brief overview of regulatory and legislative happenings. Action: No action necessary. E. Review of Commission Calendar Action: No action necessary. Action: No other business was discussed, no action necessary. Action: No other business was discussed, no action necessary. Action: Commissioner Martin moved, seconded by Commissioner Meyer that the meeting be adjourned. 7

8 Motion carried 5-1 (Commissioner Eskrich absent from the vote). Regular Meeting of the Commissioners April 27, 2017 Angela James, Secretary Future Meetings: Thursday, May 11, :00 a.m. Regular Commission Meeting Thursday, May 25, :00 a.m. Regular Commission Meeting Thursday, June 15, :00 a.m. Regular Commission Meeting 8

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30 WELLS FARGO CREDIT CARD BILLING DATE 4/04/2017 VENDOR Description Total Amt Amazon Computer products $ J2 efax services efax services via J2 MetroFax and efax Services and Constant Contact $44.90 United Airfare $ NACWA Registration $ Renaissance Hotel $ E.H. Sahneh taxi Taxi $35.00 Madison Airport Parking Parking $27.00 Food $26.38 UW - The Nelson Institute Registration $65.00 WalMart World Water Day thank you cards $50.56 Party City World Water Day thank you cards $18.41 Glass Nickel Pizza Food $ Kwik Trip Gas $11.61 Craigslist Job ad postings $25.00 LinkedIn March business subscription for recruiting $24.95 Indeed March job postings $88.20 DSPS Service fee $40.80 Spiral Brushes Standard Line Wheel brush $69.90 Amazon Boot scraper $19.99 Amazon Test Probe set $42.87 Ideal Print Solutions Printed Tape $ Locker Box Supplies $ WalMart Bleach $8.94 Amazon Tools $80.08 Defelsko Corporation Cabled Probe of PosiTector $2, Amazon B&G Supplies $ Amazon Self lock 16-foot power tape $47.70 Amazon Tactical LED flashlight $35.98 Amazon Smoke alarm $59.95 Amazon D-Con wedge bait $ Redhawk Energy Corporation Battery lift sling $ Ride-4-Fun 2005 & nwer GEMs supercharger $ Ride-4-Fun Shipping $31.00 Coverking Seat covers $ Amazon MS/SM Supplies $78.07 Amazon Gloves $24.48 Amazon Bleach $40.12 Air Sea Containers Metal Paint Can box kit $ Smoky Jons Safety meeting $ Amazon Refrigerator-Metrogro $87.95 Waukesha-Pearce Registration "Gas Engine Technology" training course $2, Farm & Fleet Sockets $ Center for Professional Registration "Culture Eats Stategy" course $ Amazon Chlorine test strips $40.74 Amazon Hydrogen Sulfide test strips $43.96 Wisconsin Taxpayers Alliance Subscription $29.98 Craigslist Purchasing and Inventory Assistant job ad $25.00 Madison Top Company MetroGro Hats $ Madison Top Company MetroGro Hats $1, NACWA 2017 National Water Policy Fly-In Registration - M. Mucha $ Metro Airport Taxi $

31 Subway Food $13.42 Boldtypetickets.com Save Our Community breakfast $ Expedia Inc. (American Air) Airfare - M. Mucha $ Expedia Inc. (American Air) Airefare - A. James $ istock Marketing Projects $ Amazon Wall Clocks $

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33 Return to Agenda COMMISSION AGENDA REPORT Meeting of May 11, 2017 Review and Approval of Sanitary Sewer Extensions Lead Staff: Jim Post, GIS/CAD Specialist Requested Action: Adopt resolutions approving sanitary sewer extension plans. Attachments: Attachment 1: Attachment 2: Attachment 3: Attachment 4: Sewer Extension Vicinity Map Sewer Extension Financial Summary Prairie Place - Resolution & Map MMSD Lower Badger Mill Creek Interceptor Phase 4 - Resolution & Map Financial Impact: A plan review fee of $1, will be due for the New Construction projects which propose to install new publicly owned sewers. Interceptor and Treatment Plant Connection Charges will also be due for the lands which can be served from the sewers being installed, as identified above. Background: The District is directed under Section 66.24(3) of the Wisconsin Statutes and NR108.04(4) of the Wisconsin Administrative Code to review and approve any proposed sanitary sewerage system construction or installation projects within the Madison Metropolitan area for which Wisconsin Department of Natural Resources approval is required. Request adoption of resolutions for sanitary sewer extension plans that were reviewed by staff and placed on file with the District. New Construction Projects: Prairie Place, Village of McFarland This project will install 2,673 LF of 8-inch sanitary sewer in Shooting Star Court, North Peninsula Way, Meadowsweet Terrace, White Daisy Court, Shooting Star Trail and within an easement at the end of Shooting Star Court to serve residential development on the southeast side of the village. 33

34 Return to Agenda Lower Badger Mill Creek Phase 4, MMSD This project will install 3,810 LF of 30-inch sanitary sewer to provide gravity sewer service for the entire Lower Badger Mill Creek drainage basin and is located between Hubble Road on the Epic Campus and CTH PD, in the City of Verona and the Town of Verona. Analysis and Options: Recommendation: Adopt resolutions approving the sewer extension plans. Key Considerations: Plans have been reviewed by the Planning Department and are acceptable. Option 1: Approve sewer extensions, with modifications determined by the Commission. Key Considerations: The Commission may choose to place conditions on the approval, as necessary. Option 2: Other options brought forward by the Commission. Next Steps: Upon Commission approval, plans will be forwarded to the Wisconsin DNR for final approval, prior to construction. 34

35 Attachment 1 Return to Agenda Prairie Place Village of McFarland LBMC Interceptor Phase 4 MMSD Vicinity Map Sewer Extensions 35 Prepared by: JP Date: 04/27/2017

36 Attachment 2 Sewer Extension - Resolution Approvals - Year 2017 Sewer Plan Agenda Item Sewer Extension Community Proposed Use Meeting Apvl Date 5/11/2017 a. Prairie Place Village of McFarland TPCC (Treatment Plant Length and Size Plan Review Fee ICC (Interceptor Charges) Charges) Sewer Plan Total 55 Residential Lots 2,673-8" 1, , , , /11/2017 b. Lower Badger Mill Interceptor - Phase 4 MMSD Interceptor Extension 3,810-30" Charges Approved: Current Meeting $1, $76, $15, $93, Previous Total Approved (by Resolution) $24, $382, $96, $503, Current Total Approved (by Resolution) $25, $458, $111, $596, Actual vs. Budget comparison Plan Review Interceptor & Treatment Plant 2017 Income: Actual Collected $25, $408, Income: Budgeted $61, $1,800, Percent of Budget 42.05% 22.69% 36

37 Return to Agenda R1 RESOLUTION WHEREAS, plans for sanitary sewer extensions were submitted to the Madison Metropolitan Sewerage District (MMSD) for Prairie Place, in the Village of McFarland on April 12, 2017, by Charles Nahn, Royal Oak Engineering, and WHEREAS, the project will install 2,673 LF of 8 inch sanitary sewer on Shooting Star Court, North Peninsula Way, Meadowsweet Terrace, White Daisy Court, Shooting Star Trail and within an easement at the end of Shooting Star Court, and WHEREAS, the lands to be immediately served are Lots 1 58, and Outlots 1 6 of the unrecorded Prairie Place Plat, and WHEREAS, Outlots 1 5 of the unrecorded plat of Prairie Place are being dedicated to the Public for Park and Stormwater Management purposes, and are recognized as environmental corridor by the Capital Area Regional Planning Commission, and WHEREAS, Outlot 6 of the unrecorded plat of Prairie Place is dedicated to the Public for Sanitary Sewer and Recreation Path purposes, and WHEREAS, the proposed sanitary sewer extension will connect to the Village of McFarland s sewerage facilities and is within MMSD s Southeast Interceptor/Sigglekow Extension basin, and WHEREAS, plan review fees are due, and WHEREAS, interceptor and treatment plant connection charges for the areas being served have not been paid, and WHEREAS, the MMSD has received a sewer extension review letter # from the Capital Area Regional Planning Commission (CARPC) dated April 27, 2017 stating the CARPC staff has reviewed the proposed extension and determined that it is consistent with the urban service area provisions of the Dane County Water Quality Plan and the Dane County Land Use and Transportation Plan, and is consistent with the conditions of Resolution DCRPC No. 957, which added this area to the Central Urban Service Area, and WHEREAS, the Chief Engineer and Director of MMSD has recommended the approval of said plans, THEREFORE, BE IT RESOLVED, that the plans for sanitary sewer extensions for Prairie Place, in the Village of McFarland, submitted on April 12, 2017, by Charles Nahn, Royal Oak Engineering, be approved subject to the following conditions: 1. That the Village of McFarland shall pay the plan review fee of $1, to the MMSD within 30 days of receiving an invoice for the fee. 37

38 Return to Agenda 2. That MMSD interceptor and treatment plant connection charges for Outlots 1 5 of the unrecorded plat of Prairie Place be deferred. 3. That prior to connection of the proposed sewers serving said lands to the public sewerage system, the Village of McFarland shall have paid to MMSD the sum of $91, for payment of $76, in Southeast Interceptor/Sigglekow Extension basin connection charges and $15, in treatment plant connection charges; said lands being Lots Lots 1 58, and Outlot 6 of the unrecorded Prairie Place Plat. 4. That interceptor and treatment plant connection charges are adjusted from time to time, and said connection charges will be due based on the rate in effect at the time in which the payment is made. 5. That the Village of McFarland shall require the presence of an engineer or an inspector on the construction of said sewer extensions who shall make a record showing in detail the construction as built and shall furnish the MMSD with as built plans in the case of any significant deviations from the original design. 6. That the construction, operation, maintenance and use of said sewer extensions shall be in accordance with the lawful rules and regulations of the MMSD and with the applicable State of Wisconsin plumbing and sewerage codes. 7. That if construction of the sewer extensions covered by said plans has not commenced within four years following the approval date of this resolution, this approval shall become void and new plans shall be submitted. If construction has commenced but has not been completed within the four year approval period, the unbuilt portion must be submitted for reapproval if it is a significant portion of the project and would require DNR approval. The above resolution was adopted by the Commissioners of the Madison Metropolitan Sewerage District at their meeting held in the District office on May 11, MADISON METROPOLITAN SEWERAGE DISTRICT Thomas Hovel, President Attested by: Angela James, Secretary 38

39 Return to Agenda Shooting Star Tr Shooting Star Ct 'S it an 51 ary re we Se t. sm 56 *2014 Aerial Photography t12 aisy C D e t i Wh Wy nsula 58 ni N. Pe Holscher Rd t Tr Meadowswee Legend CTH MN Prairie Place: Lots Prairie Place: Outlots MMSD Boundary Map Scale 0 Proposed Sewers Feet Existing Sewers Prairie Place Village of McFarland MMSD Plan No Prepared by: CAS Date: 04/18/

40 R2 RESOLUTION WHEREAS, plans and specifications for the Lower Badger Mill Creek Interceptor Phase 4 project have been prepared for MMSD by Daniel Borchardt of MSA Professional Services, and were submitted for approval on April 27, 2017, and WHEREAS, the District s Lower Badger Mill Creek Sewer Service Report (January 2005) identified a need to provide a regional interceptor sewer in the Lower Badger Mill Creek drainage basin. Construction of the regional interceptor has been divided into phases, and WHEREAS, Phase 1 constructed the interceptor from Pump Station 17 to Edwards Street in the City of Verona. Phase 2 extended the interceptor northwesterly to the Epic Systems campus near the intersection of Cross Country Road and Nine Mound Road. Phase 3 continued northwesterly approximately 890 feet to the to allow expansion of Epic campus facilities, and WHEREAS, this project is required for further expansion of the Epic campus and future development north of County Highway PD, and WHEREAS, no new lands will be immediately served as part of this project. The proposed project will ultimately be connected to future planned phases of MMSD s Lower Badger Mill Creek Interceptor, and WHEREAS, Section (b), Wisconsin Statutes states "The commission shall prepare and by resolution adopt plans and standards of planning, design and operation for all projects and facilities which will be operated by the district, or which affect the services to be provided by the district, and WHEREAS, the MMSD has received a sewer extension review letter # from the Capital Area Regional Planning Commission (CARPC) dated April 27, 2017 stating the CARPC staff has reviewed the proposed extension and determined that it is consistent with the urban service area provisions of the Dane County Water Quality Plan and Land Use and Transportation Plan, and WHEREAS, the Chief Engineer and Director of the Madison Metropolitan Sewerage District has recommended the approval of said plans, THEREFORE, BE IT RESOLVED, that the plans and specifications for Lower Badger Mill Creek Interceptor Phase 4, prepared by Daniel Borchardt of MSA Professional Services and submitted for approval on April 27, 2017, for the Madison Metropolitan Sewerage District, be approved subject to the following conditions: 1. That connection charges are deferred pending the receipt of future sewer extension plans. 40

41 Return to Agenda 2. That the Madison Metropolitan Sewerage District shall have an engineer or an inspector on the construction of said sewer extensions who shall make a record showing in detail the construction as built information and shall complete as built plans in the case of any significant deviations from the original design. 3. That the construction, operation, maintenance and use of said sewer extensions shall be in accordance with the lawful rules and regulations of the Madison Metropolitan Sewerage District and with the applicable State of Wisconsin plumbing and sewerage codes. 4. That if construction of the sewer extensions covered by said plans has not commenced within four years following the approval date of this resolution, this approval shall become void and new plans shall be submitted. If construction has commenced but has not been completed within the four year approval period, the unbuilt portion must be submitted for reapproval if it is a significant portion of the project and would require DNR reapproval. The above resolution was adopted by the Commissioners of the Madison Metropolitan Sewerage District at their meeting held in the District office on May 11, MADISON METROPOLITAN SEWERAGE DISTRICT Thomas Hovel, President Attested by: Angela James, Secretary 41

42 Return to Agenda North Nine Mound Road Countryview Road Highway PD EPIC Campus, Verona Legend Phase 4 Map Scale 0 Existing LBMC Interceptor 500 Feet * 2014 Aerial Photo Lower Badger Mill Creek Interceptor Phase 4 Madison Metropolitan Sewerage District MMSD Plan No Prepared by: JP Date: 05/5/

43 Return to Agenda COMMISSION AGENDA REPORT Meeting of May 11, 2017 Resolution Approving Employee Compensation Lead Staff: Jenni Peters, Human Resources Manager Requested Action: The Commission is requested to adopt a Resolution with one of the three options for implementing the independent pay study. Attachments: Attachment 1: Attachment 2: Attachment 3: Attachment 4: Attachment 5: Commission Resolution ( R3) Commission Resolution ( R4) Commission Resolution ( R5) Exhibit A Salary Schedule Exhibit B 2017 Wage Schedule Financial Impact: The District budgeted $8,015,000 for employee wages and salaries in This amount assumed full implementation of the pay study results. The range of increases for the options is approximately $27,000 to $34,000. The District would manage the overall budget so that no additional 2017 budget capacity is needed. Background: Commission policy was to pay employees utilizing market based rates. The District retained an independent outside consultant during the latter half of 2015 to provide a comprehensive competitive review of its employee pay program relative to the market. The prior pay study was performed in 2011 and included only salaried employees. The Chief Engineer and Director presented the study findings and recommendations to the Commission in August The ELC and Executive Team worked collaboratively in 2016 to formulate a plan for how to phase in the recommendations in the study. Subsequent to this initial recommendation, the Commission participated in two study sessions on employee compensation to gather interests and further refine the implementation. The Commission reaffirmed its policy of utilizing market based rates, but requested the staff to present options responsive to the needs of the District and employees. Analysis and Options: The Chief Engineer and Director recommends the Commission incorporate the market results of the study, and support ongoing efforts to work with the Employee Leadership Council on a 43

44 Return to Agenda variety of individual pay implementation issues. There are three basic options for the Commission to consider: Option 1: Fixed Annual Lump Sum Payment for employees above the range maximum. The Commission is requested to adopt Resolution R3 approving implementation of independent pay study. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. Three employees below the new pay range minimums will be brought up to the minimum. Eight employees above the new range maximums will have their market adjustments temporarily limited. They will receive lump sum payments of $1,200 annually until a new pay study is conducted or within range. Employees in pay grades 5-11 with current pay within range, provide a base increase up to 2% or the range maximum. Five employees will reach the range maximum with a less than 2% base increase. Those 5 employees will also receive a one-time annual bonus of the difference between their annual increase and the $1,200. Employees in pay grades 12-18, provide increases in 2017 up to 3.5% not to exceed the range maximum. In subsequent years, provide an additional 1.5% increase until the full market adjustment has been reached. CED market increase for 2017 to be handled separately. Key Considerations: This option maintains the Districts pay in a market competitive position. Implementation phases in pay adjustments to employees who are positively and negatively impacted by the survey. The $1,200 lump sum payment will on average be a 1.8% increase in pay for employees over the maximum in 2017 and will hold steady in subsequent years until the market catches up. This is the only option that does not prolong or increase the number of employees over the pay grade maximums. Option 2: Graduated Base Adjustments for employees above the range maximum. The Commission is requested to adopt Resolution R4 approving implementation of independent pay study. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. 44

45 Return to Agenda Three employees below the new pay range minimums will be brought up to the minimum. Eight employees above the new range maximums will have their market adjustments temporarily limited. They will receive base increases of 25% of market in 2017, 50% of market in 2018, and 75% of market in 2019 and beyond until a new pay study is conducted or within range. Employees in pay grades 5-11 with current pay within range, provide a base increase up to 2% or the range maximum. Employees in pay grades 12-18, provide increases in 2017 up to 3.5% not to exceed the range maximum. In subsequent years, provide an additional 1.5% increase until the full market adjustment has been reached. CED market increase for 2017 to be handled separately. Key Considerations: This will extend the time the red-circled employees are over the maximum but move towards market based rates. Base increases will escalate for three years then hold steady until the market catches up. Option 3: Percent Increases that exceed Market for The Commission is requested to adopt Resolution R5 approving implementation of independent pay study. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. Three employees below the new pay range minimums will be brought up to the minimum. Employees in pay grades 5-11 will receive a base increase of 2% which can exceed the range maximum. Employees in pay grades 12-18, will receive a 3% base increase which can exceed the range maximum. CED market increase for 2017 to be handled separately. Key Considerations: Need further direction on the following: o How will the Commission handle base increases in future years for those below market? o Will the catch-up rate be increased from the proposed 1.5%? o How will those above market be handled in 2018 and beyond? Prolongs the issue of employees being paid above the pay ranges. This option also moves 7 more employees above their range maximum. Slows down the rate at which employees in ranges will catch up to the market increase. 45

46 MADISON METROPOLITAN SEWERAGE DISTRICT COMMISSION RESOLUTION NO R3 RESOLUTION APPROVING IMPLEMENTATION OF INDEPENDENT PAY STUDY WHEREAS, in 2015 and 2016, the Madison Metropolitan Sewerage District ( District ) worked with an independent advisor, to prepare an independent pay study that compares current pay information from credible external sources to similar jobs at the District and recommends actions to keep District pay in line with market minimums and maximums; and, WHEREAS, in his August 2016 presentation to the Commission, Michael Mucha, the Chief Engineer and Director ( CED ) of the District, described the District s efforts to complete a comprehensive evaluation of all employee positions in the District, provided an overview of the District pay delivery systems, summarized the Consultant Report s ( Report ) conclusions and recommendations, and outlined an implementation plan involving the MMSD Employee Leadership Council ( ELC ), the District Executive Team ( E-Team ) and the Commission; and WHEREAS, the Commission has had an opportunity to review and consider the Report, the ELC Memorandum dated December 29, 2016 summarizing the ELC s recommendations, the Commission has participated in two study sessions on employee compensation to gather interests and further refine the implementation and has reviewed the May 11, 2017 Commission Agenda Report and such additional information as the Commission deemed relevant; and WHEREAS, following consideration of the information described in the above recitals and the presentation made on May 11, 2017, the Commission has determined that implementation shall proceed as set forth herein. NOW, THEREFORE, THE MMSD COMMISSION HEREBY RESOLVES AS FOLLOWS: 1. The Commission acknowledges the validity of the District s job evaluation process and wage survey as summarized in the Report presented to the Commission on August 25, The Commission approves the wage and salary schedules attached hereto as Exhibits A and B, respectively, with adjustments in pay to be retroactive to January 1, 2017, and with Exhibit A to replace the wage schedule attached to the Employee Handbook and Exhibit B to replace the salary schedule incorporated in the 2017 Operating Budget. 46

47 3. The Commission directs the CED to implement the following actions, and provide the guidance that is prudent and necessary to administer District pay, all as authorized by Commission Resolution R1 Approving 2017 Operating, Capital Projects and Debt Service Budgets. a. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. b. Three employees below the new pay range minimums will be brought up to the minimum. c. Eight employees above the new range maximums will have their market adjustments temporarily limited. They will receive lump sum payments of $1,200 annually until a new pay study is conducted or their wage is within range. d. Employees in pay grades 5-11 with current pay within range, provide a base increase up to 2% or the range maximum. Five employees will reach the range maximum with a less than 2% base increase. Those 5 employees will also receive a one-time annual bonus of the difference between their annual increase and the $1,200. e. Employees in pay grades 12-18, provide increases in 2017 up to 3.5% not to exceed the range maximum. In subsequent years, provide an additional 1.5% increase until the full market adjustment has been reached. f. CED market increase for 2017 to be handled separately. Adopted by the Madison Metropolitan Sewerage District Commission at a duly noticed meeting on this 11th day of May, 2017 by a vote of in favor, opposed and abstaining. MADISON METROPOLITAN SEWERAGE COMMISSION By: Thomas Hovel, President Attested to: 47

48 By: Angela James, Secretary Exhibits Attached and Incorporated: Exhibit A: 2017 Wage Schedule Exhibit B: 2017 Salary Schedule 48

49 MADISON METROPOLITAN SEWERAGE DISTRICT COMMISSION RESOLUTION NO R4 RESOLUTION APPROVING IMPLEMENTATION OF INDEPENDENT PAY STUDY WHEREAS, in 2015 and 2016, the Madison Metropolitan Sewerage District ( District ) worked with an independent advisor, to prepare an independent pay study that compares current pay information from credible external sources to similar jobs at the District and recommends actions to keep District pay in line with market minimums and maximums; and, WHEREAS, in his August 2016 presentation to the Commission, Michael Mucha, the Chief Engineer and Director ( CED ) of the District, described the District s efforts to complete a comprehensive evaluation of all employee positions in the District, provided an overview of the District pay delivery systems, summarized the Consultant Report s ( Report ) conclusions and recommendations, and outlined an implementation plan involving the MMSD Employee Leadership Council ( ELC ), the District Executive Team ( E-Team ) and the Commission; and WHEREAS, the Commission has had an opportunity to review and consider the Report, the ELC Memorandum dated December 29, 2016 summarizing the ELC s recommendations ( ELC Memo ), the Commission has participated in two study sessions on employee compensation to gather interests and further refine the implementation and has reviewed the May 11, 2017 Commission Agenda Report and such additional information as the Commission deemed relevant; and WHEREAS, following consideration of the information described in the above recitals and the presentation made on May 11, 2017, the Commission has determined that implementation shall proceed as set forth herein. NOW, THEREFORE, THE MMSD COMMISSION HEREBY RESOLVES AS FOLLOWS: 1. The Commission acknowledges the validity of the District s job evaluation process and wage survey as summarized in the Report presented to the Commission on August 25, The Commission approves the wage and salary schedules attached hereto as Exhibits A and B, respectively, with adjustments in pay to be retroactive to January 1, 2017, and with Exhibit A to replace the wage schedule attached to the Employee Handbook and Exhibit B to replace the salary schedule incorporated in the 2017 Operating Budget. 49

50 3. The Commission directs the CED to implement the following actions, and provide the guidance that is prudent and necessary to administer District pay, all as authorized by Commission Resolution R1 Approving 2017 Operating, Capital Projects and Debt Service Budgets. a. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. b. Three employees below the new pay range minimums will be brought up to the minimum. c. Eight employees above the new range maximums will have their market adjustments temporarily limited. They will receive base increases of 25% of market in 2017, 50% of market in 2018 and 75% of market in 2019 and beyond until a new pay study is conducted or within range. d. Employees in pay grades 5-11 with current pay within range, provide a base increase up to 2% or the range maximum. e. Employees in pay grades 12-18, provide increases in 2017 up to 3.5% not to exceed the range maximum. In subsequent years, provide an additional 1.5% increase until the full market adjustment has been reached. f. CED market increase for 2017 to be handled separately. Adopted by the Madison Metropolitan Sewerage District Commission at a duly noticed meeting on this 11th day of May, 2017 by a vote of in favor, opposed and abstaining. MADISON METROPOLITAN SEWERAGE COMMISSION By: Thomas Hovel, President Attested to: By: Angela James, Secretary Exhibits Attached and Incorporated: Exhibit A: 2017 Wage Schedule Exhibit B: 2017 Salary Schedule 50

51 MADISON METROPOLITAN SEWERAGE DISTRICT COMMISSION RESOLUTION NO R5 RESOLUTION APPROVING IMPLEMENTATION OF INDEPENDENT PAY STUDY WHEREAS, in 2015 and 2016, the Madison Metropolitan Sewerage District ( District ) worked with an independent advisor, to prepare an independent pay study that compares current pay information from credible external sources to similar jobs at the District and recommends actions to keep District pay in line with market minimums and maximums; and, WHEREAS, in his August 2016 presentation to the Commission, Michael Mucha, the Chief Engineer and Director ( CED ) of the District, described the District s efforts to complete a comprehensive evaluation of all employee positions in the District, provided an overview of the District pay delivery systems, summarized the Consultant Report s ( Report ) conclusions and recommendations, and outlined an implementation plan involving the MMSD Employee Leadership Council ( ELC ), the District Executive Team ( E-Team ) and the Commission; and WHEREAS, the Commission has had an opportunity to review and consider the Report, the ELC Memorandum dated December 29, 2016 summarizing the ELC s recommendations, the Commission has participated in two study sessions on employee compensation to gather interests and further refine the implementation and has reviewed the May 11, 2017 Commission Agenda Report and such additional information as the Commission deemed relevant; and WHEREAS, following consideration of the information described in the above recitals and the presentation made on May 11, 2017, the Commission has determined that implementation shall proceed as set forth herein. NOW, THEREFORE, THE MMSD COMMISSION HEREBY RESOLVES AS FOLLOWS: 1. The Commission acknowledges the validity of the District s job evaluation process and wage survey as summarized in the Report presented to the Commission on August 25, The Commission approves the wage and salary schedules attached hereto as Exhibits A and B, respectively, with adjustments in pay to be retroactive to January 1, 2017, and with Exhibit A to replace the wage schedule attached to the Employee Handbook and Exhibit B to replace the salary schedule incorporated in the 2017 Operating Budget. 52

52 3. The Commission directs the CED to implement the following actions, and provide the guidance that is prudent and necessary to administer District pay, all as authorized by Commission Resolution R1 Approving 2017 Operating, Capital Projects and Debt Service Budgets. a. Wage adjustments in January 2017 will be based on the proposed 2017 pay grade midpoints as determined by the market data. This will result in adjustments that are not across the board. b. Three employees below the new pay range minimums will be brought up to the minimum. c. Employees in pay grades 5-11 will receive a base increase of 2% which can exceed the range maximum. d. Employees in pay grades 12-18, will receive a 3% base increase which can exceed the range maximum. e. CED market increase for 2017 to be handled separately. Adopted by the Madison Metropolitan Sewerage District Commission at a duly noticed meeting on this 11th day of May, 2017 by a vote of in favor, opposed and abstaining. MADISON METROPOLITAN SEWERAGE COMMISSION By: Thomas Hovel, President Attested to: By: Angela James, Secretary Exhibits Attached and Incorporated: Exhibit A: 2017 Wage Schedule Exhibit B: 2017 Salary Schedule 53

53 Return to Agenda Attachment 4: Exhibit A # of Positions in Pay Grade Grade January 2017 Position Titles Total Chief Engineer & Director Assistant Chief Engineer &Director of Administration Director of Operations & Maintenance, Director of Engineering, Director of Ecosystems Services, Director of Planning and Strategy Operations Manager IS/IT Manager, Maintenance and Reliability Manager, Capital Planning Engineer HR Manager, Sustainable Infrastructure Manager, Comptroller/Budget Manager Electrical Engineer, Electrical Construction Manager, Project Engineer II, Lab Manager, Environmental Specialist, Metrogro Manager, Assistant Operations Engineer, Process & Research Engineer, Regulatory and Process Engineer, Operations Supervisor Electrical Maintenance Supervisor, Mechanical Maintenance Supervisor, Senior Maintenance Supervisor, Pre Treatment/Waste Acceptance Coordinator, Collection System Supervisor, Building & Grounds Supervisor, Programmer II Project Engineer I, Purchasing Inventory Manager, Chemist II, Health and Safety Specialist, PCS Programmer, Pollution Prevention Specialist, Executive Coordinator, Network Administrator Staff Accountant, Engineering Technician, GIS/CAD Specialist, Business Software Analyst, PT Strategic Communications Coordinator, Asset Information Specialist Microbiologist, Chemist I, Programmer I Program and Resource Associate, Network Technician Accounting Assistant, Program and Resource Assistant # of Managerial/Professional Positions 54 Min Mid Max $66.95 $54.83 $49.84 $78.77 $64.51 $58.64 $90.59 $74.19 $67.44 $45.48 $41.51 $53.50 $48.83 $61.53 $56.15 $37.88 $44.57 $51.26 $34.63 $40.74 $46.85 $31.64 $37.22 $42.80 $28.89 $33.99 $39.09 $26.42 $31.08 $35.74 $24.10 $22.00 $20.17 $18.50 $16.96 $28.35 $25.88 $23.73 $21.76 $19.95 $32.60 $29.76 $27.29 $25.02 $22.94

54 Return to Agenda Attachment 5: Exhibit B Pay Grade 5 Progression with Minimum/Maximum Limits Hourly Rates Current Range 8 Step 1 $16.96 $18.43 Step 2 $17.30 $18.80 Step 3 $17.65 $19.17 Step 4 $18.00 $19.55 Step 5 $18.36 $19.95 Step 5 plus 15% longevity $21.11 $22.94 Step 5 $23.81 $25.88 Step 5 plus 15% longevity $27.39 $29.76 Pay Grade 8 Progression with Minimum/Maximum Limits Hourly Rates Current Range 7 10 Step 1 $22.00 $23.91 Step 2 $22.44 $24.39 Step 3 $22.88 $24.88 Step 4 $23.35 $25.37 Pay Grade 10 Progression with Minimum/Maximum Limits Hourly Rates Current Range Step 1 $26.42 $26.97 $27.54 $28.12 $28.71 Step 2 $26.97 $27.54 $28.12 $28.71 $29.30 Step 3 $27.54 $28.12 $28.71 $29.30 $ Step 4 $28.12 $28.71 $29.30 $29.90 $30.48 Step 5 $28.71 $29.30 $29.90 $30.48 $31.09 Step 5 plus 15% longevity $33.02 $33.70 $34.38 $35.06 $35.74

55 Return to Agenda COMMISSION AGENDA REPORT Meeting of May 11, 2017 Connection Charges: Ordinance Amendments, Regulations and Rates Lead Staff: William D. Walker, Director of Planning & Strategy Requested Action: Provide guidance to District staff on how to proceed with the proposed connection charges Ordinance amendments, Regulations, and rates. Attachments: Attachment 1: Written Public Comment Received Attachment 2: Minutes from April 27, 2017 Public Hearing Attachment 3: Establishing Policy for District Connection Charges ( R1) Financial Impact: Connection charges revenue is deposited in the District s capital fund. Revenue varies by year, depending on the pace of development in the area. Based on the annual average since 2015, the proposed rate increases would yield approximately $1.28 million per year in additional connection charges revenue for an average year. The District s adopted 2017 budget assumes higher connection charges rates will apply July 1, 2017, yielding an assumed $600,000 increase in revenue to the capital fund in If connection charges rates remain unchanged, the District would need to reduce the capital fund balance further than anticipated. This would have no effect on capital projects in However, the lower balance would require adjustments to the District budget in Adjustments would be a combination of: (a) delay in some capital projects; and (b) operating budget changes to service charges, debt levels, or fund balances. No specific budgetary decisions can or should be made now. Background: The District seeks to revise connection charge policies for two purposes: (1) Recover more system capital costs from new users (paid via connection charges), with correspondingly less from current users (paid via service charges). (2) Improve overall administration of connection charges. The District has worked on this issue since spring 2014, including reviewing options, meeting with customer communities, presenting to the Commission, working with a technical 56

56 subcommittee of customer communities, and contracting for geographic analysis from the Capital Area Regional Planning Commission. In October 2015, the Commission adopted a Resolution establishing major connection charges policies. In the Resolution, subsequent discussions, and adoption of the 2017 budget, the Commission set a goal of recovering more capacity costs from connection charges, and less from service charges. The intent is to align connection charges revenue with capital costs of the treatment plant and conveyance facilities. This intent would be accomplished by changing the rate-setting method for treatment plant connection charges and adjusting the chargeable area estimate for conveyance facility connection charges. Specifically, the 2015 Resolution made the following changes: (1) Base treatment plant connection charges rate on net plant cost, plant capacity, and average residential lot size and capacity use. (2) Adjust the average residential lot size figure to reflect changing development patterns. (3) Adjust estimated chargeable area percentage to reflect changing development patterns. The first item makes the treatment plant connection charge rate reflect the full cost of the plant, net of grants. The previous method considered only the portion of plant cost related to debt financing for excess capacity. The second and third items align system capacity with average use per area. Previous rates assumed an average lot size of 20,000 square feet. The current estimated average is 11,500 square feet. Previous rates also assumed that 70% of connected areas would be chargeable. The current estimate is 57%, based on analysis of existing land uses by the Capital Area Regional Planning Commission. The previous figures yielded rates that were too low to recover capacity costs from chargeable areas. Since 2015, the District has worked to implement the Resolution s policies. At the February 9, 2017 Commission meeting, District staff reviewed that work, including recommendations of the technical subcommittee. The Commission received proposed Regulations on March 3 rd and discussed them on March 16 th. The Commission received accompanying proposed Ordinance Amendments on April 11, The Commission held a public hearing on April 27 th and received written comment through May 4 th. Minutes of the hearing and copies of written comments are attached. Briefly, the main public comments were as follows: Concern with the timing of increased rates, including: (a) request for delay of months for any rate increase; (b) request for a phase-in period; and (c) emphasis on the need for developers to arrange project financing in advance. Concern with the magnitude of increased rates, including points regarding: (a) effects on availability of affordable housing; (b) risk of encouraging development on septic systems or on lots further away from the Madison area; (c) effects on financial viability for 57

57 Return to Agenda housing development; (d) questions on the tangible benefit of increased connection charges revenue to the District; and (e) concentration of increased connection charges on development and diffusion of reduced service charges among all users. Objection to the lack of outreach to developers and a request for future outreach. Objection to the area basis for connection charges, including suggestions to consider an impact fee model, a capacity-use basis, and payment-proportional-to-use model. Interest in understanding the origin and details of the new rate methods. Interest in understanding deferred payment provisions and adjustment charges triggered by redevelopment. The following table summarizes the major events in the process. The three bolded items are the changes in rate-setting methods, discussed above. Event Reg. & Ord Commission, Customers & Study Set Policy Goal: Improve Administration of Conn. Ch. CFCC TPCC Set Policy Goal: Shift Revenue to Conn. Ch. Evaluate New Rate Setting Methods 2015 Resolution Continue Charging on Area Basis Update Chargeable Area Ratio Allocate New Costs Proportional to Capacity* 2016 Customers & Study Many Implementation Details Recommended Geographic Analysis to Adjust Chargeable Area Fall 2016 Budget for 2017 Spring 2017 Staff Work Finalize Regulations Prepare Needed Ordinance Amendments April 27 Hearing General Support General Support Concerns with Timing and Magnitude of Increase, etc. Base Rate on Net Plant Cost Update Lot Size Estimate Budget Assumes $600K Increased Conn. Ch. Revenue for 2017 * For projects that increase system capacity, allocate connection charge costs proportional to the capacity increase. i.e., allocate costs for repair or replacement of existing facilities where capacity is not increased to service charges. This method will apply when costs of new capacity-increasing projects are added to connection charges rates. It does not affect the proposed rate table, which includes only costs already figured into rates. Analysis and Options: Under the schedule set by the Commission in January, the May 11, 2017 meeting was to have included adoption of Ordinance amendments, Regulations, and rates. However, because of the 58

58 Return to Agenda detailed comments received during and after the April 27 hearing, the Commission will instead consider the public comments and decide next steps. Questions: The Commission is encouraged to discuss the following questions generally: (1) Does the Commission wish to reconsider the 2015 Resolution s directions regarding: a. basing connection charges on an area basis, rather than a capacity usage basis, b. basing Treatment Plant Connection Charges on net plant cost, rather than on debt financing for excess capacity, or c. adjusting estimates of net chargeable area and average lot size? (2) Does the Commission wish to re-examine the connection charges topic generally? (3) Does the Commission wish to consider a phase-in approach, in which connection charges rates would be increased gradually over some number of years? (4) Does the Commission wish to formally involve customer communities and other interested parties in further work on connection charges (beyond involvement in the process to date)? (5) If so, does the Commission wish to specify participants, topics, or other aspects of a public engagement process? Rate Phase In: A phase-in approach involves distinguishing Regulations from rates. The proposed rate increases stem from the three changes in rate-setting methods, discussed above. The methods reflect extensive study and discussion, were set as District policy in the 2015 Resolution, and yield rates that accurately represent the amounts needed to recover capacity cost from connection charges. The methods are codified in the proposed Regulation. To address concerns with the size of rate increases, the Commission could adopt the methods in the Regulation, and then adjust the resulting rates downward for some period. Arithmetically, that approach would mean choosing a percentage throttling factor for the treatment plant connection charge (T tp ) and one for conveyance facility connection charges (T cf ). During the phase-in period, staff would calculate the rate table using the Regulation s methods, then multiply each rate in the table by the corresponding factor. Thus, the rates charged to customer communities would be: TPCC Rate Charged = T tp * (Unmodified TPCC Rate) CFCC Rate Charged = T cf * (Unmodified CFCC Rate) To illustrate, this approach could keep rates at current levels, by setting T tp = 20.3% and T cf = 81.4%. (The proposed rates increase by the reciprocal of those factors.) 59

59 Return to Agenda A phase-in approach would allow adoption of the Regulation and Ordinance amendments without delay. This would have the following benefits: Increase clarity and consistency for customer communities. Allow the District to use new rate methods for anticipated conveyance facility capacity increases in the near term. Enable consistent application of late fees and penalties. Allow deferral of connection charges under certain conditions. Establish clear standards for chargeable area determinations. Authorize development of District Guidance. Discussion Options: The Commission may wish to begin discussion with the following options. No recommendation is given. Option 1: Staff-developed rate phase-in plan Direct staff to develop a phase-in plan for connection charges rates. Schedule one or more Commission meetings to review and approve the plan. Optionally: Direct staff to review or revise specific items in the proposed Ordinance amendments and Regulations. Option 2: Public engagement process (rate phase-in plan only) Direct staff to develop a public engagement process, limited to phase-in of rates. Schedule one or more Commission meetings to review and approve the process. Optionally: Specify participants or topics for staff to include in the process. Option 3: Public engagement process (rate phase-in plan and additional topics) Direct staff to develop a public engagement process on connection charges generally. Schedule one or more Commission meetings to review and approve the process. Optionally: o Specify participants or topics for staff to include in the process. o Limit the process to topics for which policy was not set in the October 2015 Commission Resolution. Next Steps: Staff will implement the Commission s directions. 60

60 Attachment 1 Office of the Mayor Paul R. Soglin, Mayor City-County Building, Room Martin Luther King, Jr. Boulevard Madison, Wisconsin Phone: (608) Fax: (608) mavorecitvofmadison.com April 21, 2017 TO: Michael Mucha, MMSD Chief Engineer & Director MMSD Commissioners FR: Mayor Paul R Soglin RE: Proposed Regulations District Connection Charges Thank you for the opportunity to comment on the proposed changes to the District Regulations regarding District Connection Charges. I am writing to offer a few comments and to respectfully request that the commission defer a decision until more input can be obtained from those impacted by the changes. Administrative Changes Mike Dailey, our Assistant City Engineer worked on the Task Team that derived many of the proposed changes. I appreciate the Commission including Mr. Dailey on the Task Team. I understand that the team attained consensus on all of its decisions, and I fully support their recommendations. However, the team's decisions were limited to administration of the collection process; there was no task team input into the actual rates or methodology for rate setting. A s explained below, I believe the issue of rates would benefit from more external feedback and discussion. Conveyance Facility Connection Charges (CFCC) I support the revision to the CFCC charge. Historically, MMSD has used an estimate that 70% of a basin would be "developable" or net area for collection of these charges. It is clear that the 70% is no longer an accurate estimate for a typical basin. A 57% rate is now proposed (the lower the percentage, the higher the CFCC rate). This 57 % is based on a study by CARPC of some recent Urban Service Area approvals. This change will increase the CFCC by about 23%. Treatment Plant Connection Charges (TPCC) I cannot support the increase in the TPCC until further outreach and input is obtained from area developers and the member communities. Moving to a "full buy in" type charge for TPCC seemed to be the goal and directive from the prior Commission. From that standpoint, the proposal makes sense. However, this is an extraordinary increase. The TPCC is presently $21.37/1000 sf and is proposed to rise to approximately $110/1000 sf. This would be an increase of more than a 400%. For atypical 10,000 sf lot, this portion of the connection charge would rise from $214 to $1100. A methodology should be developed that can justify a lower rate than that proposed. There may be other models used by other Sewer Districts that could also be considered. 61 Return to Agenda

61 Return to Agenda Making Subdivisions Without Sewer More Viable While we want to be fair to existing customers and future customers, it is important to not levy the highest possible charges to new development. As the cost of developing lots within MMSD's boundaries become more expensive, we risk encouraging development on septic systems, or on lots further away from the Madison area. MMSD connection charges are only a piece of the total sewer costs a new development faces. There are the local interceptor and impact fee charges for municipal sewers, costs for the local sewer main and the individual property laterals, and many permitting and regulatory costs. Further, fees related to sewage collection and treatment are only a part of all of the fees that are attached to new lots. Attached are some examples of the total costs (typical) and the effects of the increase. Greater Outreach I understand and agree that adjustments need to be made that will undoubtedly and increase connection charges and that those charges will rightfully be passed on to the development community. However, those affected likely have no knowledge of these changes. The document put out for comment is clear and fairly detailed on the administrative process, but it does not articulate actual rate impacts. For example, a developer reading the document is unlikely to realize that the connection rates will more than double for a 10,000 sf lot. Given the potential size of the changes, I request that the Commission delay action on the proposal in order to conduct greater outreach to the developers and the member communities. It may be a good idea to mail information directly to the development community; most of the municipalities could provide common contacts they work with. An actual example or two of the impacts of the proposed rate change should be included. Again, thank you for the opportunity to comment. I f you would like more information, or have questions, please feel free to contact me, or contact Greg Fries gfries@cityofmadison.com , or Mike Dailey mdailey@cityofmadison.com in our Engineering department. Sincerely Paul R Soglin Mayor 62

62 Return to Agenda TO: MMSD Board FROM: Terrence Wall DATE: April 25, 2017 RE: MMSD Proposed Fee Increase INTRODUCTION I am writing in regards to the recent proposed fee increase for the Madison Metropolitan Sewerage District ("MMSD"). Generally speaking, I have to agree with Mayor Paul Soglin who said "The TPCC is presently $21.37/1000 sf and is proposed to rise to approximately $110/1000 sf. This would be an increase of more than a 400%. For a typical 10,000 sf lot, this portion of the connection charge would rise from $214 to $1100." I t is stunning at a time when the county is holding a housing affordability summit that MMSD is proposing massive increases in fees. Worse, no developer has this budgeted for developments beginning in 2017 or NOTICE PERIOD I just want to inform you that I only learned about this public hearing Tuesday before a Thursday hearing. I am disappointed that the development community was not brought to the table earlier in this process. Everyone knows there is a developer's association called Smart Growth Greater Madison, which the public sector can reach out to in order to forge win-win solutions and vet changes in policy or fee structures. Such short notice and lack of transparency creates distrust and the appearance of secrecy rather than a proper public vetting process that would build trust. Recent examples of similar behavior in other "public" processes with short notices and lack of reaching out to the community to forge win-win solutions resulted in the MMSD board being reconstitute based on prior "bad behavior" (attempts at extorting fees from adjacent property owners for open space); CARPC being neutered as a result of its past behaviors (going well outside their legal jurisdiction); and towns being allowed to opt out of Dane County Zoning (due to Dane County being too restrictive on town development). I would hope that at some point that people in local government in this county would learn from these past examples and start to work with the housing industry and real estate industry to jointly address each other's concerns and forge win-win solutions. FEE INCREASES From my understanding of the table I have received from MMSD, MMSD staff is proposing increases in fees ranging from 71%-191%, which is outrageous. (The mayor's letter is even more concerning - as it appears that MMSD is attempting to secure a 400% increase in rates.) How are consumers supposed to pay these kinds of increases on top of a host of other recent increases in government fees on new development? Lot prices and apartments rents can't keep going up forever as consumes have limited budgets. 63

63 Return to Agenda I would also recommend that any increases should be phased in over time rather than forced onto the housing community with only 2 months to plan for the increases - as existing developments have approved loan amounts that cannot be increased based upon approved appraisals that are not going to increase. These fee increases will serve to jeopardize existing housing developments that will then further limit supply! No wonder we have a homeless problem in Dane County; local governments and MMSD keep pushing higher fees and taxes. Why should we even develop here anymore? AFFORDABILITY The overnight increase proposed by MMSD will have a disastrous effects on housing affordability. As you may be aware, there is a severe housing shortage in Dane County. The shortage coupled with rising construction costs has resulted in dramatically more expensive new housing. The largest soft cost for new housing is municipal fees like those imposed by MMSD, which in turn requires developers to charge more for the end-product to consumers to cover such municipal fees. Accordingly, by pushing this increase the cost for the housing is pushed higher to the point of being out of reach for new home-buyers. DEVELOPMENT DELAYS Meanwhile, when developers are surprised with "overnight" fee increases, like the one MMSD is proposing, then it results development delays. Developers have locked in loans and appraisals and need eighteen months advance warning. For example, a bank will require a developer to obtain a new appraisal and additional underwriting when an increased fee hits an existing development. Fewer houses under construction during the current severe shortage is not what results in the best outcome for the constituents of Dane County given the housing shortage. OVERRIDE LEGISLATION The Wisconsin legislature has overridden CARPC, Dane County, and even reconstituted the MMSD board (at my request and that of Soglin). I f MMSD continues with a massive rate increase rather than a reasonable increase then there is a little doubt that the legislature will be asked to override MMSD with a permanent cap on annual increases. Accordingly, I urge MMSD to reconsider the rate increase and come up with: a) a reasonable increase of 3% per year; b) delayed implementation of 18 months; c) a more reasonable public review process; and d) a detailed explanation for the increase. Where is this money going? Thank you. Terre e R. Wall 64

64 Return to Agenda April 26, 2017 TO: MMSD Commissioners FR: Smart Growth RE: MMSD Proposed Fee Increase To Whom It May Concern: lam writing on behalf of Smart Growth in regards to the proposed fee increase for district connection charges by MMSD. Smart Growth currently represents 10 Dane County developers and over 60 associate members, all with ties to the development industry. We wish to register our surprise and concern over the proposed increase and question why there has been no outreach to the community that would be required to pay these fees. If there was outreach, we don't understand why our membership seems unaware of this proposed action. Candidly, these fee increases need to be evaluated based on their impact on Dane County residents and developers Dane County depends on to bring desperately needed supply of real estate to the market. There are projects in the pipeline that are ready to go but will now be faced with unplanned costs and potential financing complications due to such dramatic cost increases. Future projects are also threatened by these increases. I t is unclear why there has not been more outreach performed by MMSD or a reasonable timeframe planned for implementation that will not cause undue harm to pending and planned projects. These costs are passed onto users and their ability to afford such increases is important to recognize. The double impact of increasing the CFCC charge by roughly 23% as well as increasing the TPCC charge by roughly 415% are increases that are outside any rational expectation from the development community. These increases, coupled with a truncated timetable for enactment do not recognize how such cost increases impact developers and their users. I f the commission does not recognize this as a hardship to developers, does it understand the resulting cost of living increase on new residents? This outcome for new residents is certain. Is this reality concerning to the commission? The City of Madison passed a substantial increase on Park Impact Fees in CARPC is in the process of trying to increase the storm water infiltration standard from the DNR benchmark of 90% to 100%, which will add $3,000 to $10,000 in cost per lot And the City of Madison just increased property tax assessments by an average of 10% on properties across the city. There are additional examples I omitted in the interest of brevity. The challenge of housing affordability is becoming more and more impossible with these increases on top of MMSD's proposed increases. The incomes earned by the residents of Madison are not rising at the same rate as the totality of fee increases imposed on new construction and recurring costs such as property taxes. The proposed increase by MMSD would be another barrier to developers bringing affordable housing and rental supply to the Madison market In light of these concerns, Smart Growth is asking the commission for the following: 1. Delay any fee increase for at least 18 months to minimize impact on currently planned projects 2. Suggest a moderate, annual fee increase that can be absorbed and budgeted for in new builds 3. A seat at the table during the drafting of any legislation pertaining to fee increases as opposed to after the process is almost complete 4. Clear justification for any proposed increase in fees. We would welcome an opportunity to discuss our concerns with the Commission in person and ask that you give serious consideration to the requests above. Respectfully, Matt Brink - Executive Director, Smart Growth 65

65 Return to Agenda MADISON AREA BUILDERS ASSOCIATION April 27, 2017 To: M i c h a e l Much, MMSD Chief Engineer & Dir. of MMSD Commissioners MMSD Commissioners From: Madison Area Builders Association Re: P r o p o s e d Increases to Distrist Connection Charges On behalf of the over 500 members of the Madison Area Builders Association (MABA), we appreciate the opportunity to provide comments on the Commission's proposed rate increases for District connection charges. I t is with great respect and concern that we must oppose the proposed changes that include excessive increases in connection charges. Excessive Increases to District Connection Charges hurt home afforadibility The Madison Area Builders Association and its members are concerned with the extraordinary increases to District connection charges that range from increases of 74% to 191%, with a majority of interceptors/basins increases more than doubling for District connections. Although we understand the need to cover costs associated with expanded coverage, the proposed increases are excessive, unnecessary, unfair and inequitable. According to a May 2016 National Association of Home Builders (NAHB) study, on average, 24.3% of home building costs are tied to government regulation and associated delays. O n a $350,000 home, that accounts for over $86,000 in regulatory costs. We are already pricing out families from being able to afford housing options and each new regulation prices out even more families from homeownership. I n fact, for every $1,000 in additional costs, over 400 families in Dane County can no longer afford the home. As developers and builders, we understand the value of reasonable government regulation and associated costs; however, when cost and cost increases are excessive, as it is in this case, we cannot support these initiatives. We ask the commission to explore more reasonable District connection charges and to look at alternative funding sources. Lack of Stakeholder Feedback and Information The Madison Builders Association and its members only recently were made aware of the proposed District connection charges and we are concerned that the Commission and MMSD failed to reach out to stakeholders, such as developers and builders, to gather information and feedback on the impact of proposed changes to the connection charges. 66

66 Return to Agenda Common practice for governmental boards, committees and commissions is to conduct studies and needs assessments that provide a detailed rationale for regulatory cost increases and provide a methodology to determine the appropriate and reasonable costs. These studies almost undoubtedly include meetings with stakeholders to provide information to those directly impacted by the changes and to receive feedback to avoid unintended consequences. I t is unfortunate that the Commission and MMSD has failed to comply with this standard practice, especially when the current proposal looks to place the cost of all expansion of a new plant on to the backs of developers and builders, although in truth, on the backs of the families building homes. We ask the Commission to withhold voting on the proposed District connection charges until staff and Commissioners can receive detailed feedback from the stakeholders directly impacted by this proposal, including the development community and building industry. Lack of Lead Time for Effective Date of Implementation Further troubling with the Commission's proposal to implement excessive connection charge increases is the lack of lead time prior to the effective date of the proposal. Those stakeholders impacted by the proposed changes will not be provided the opportunity to prepare for the impending changes before the proposed effective date of July 1, I n fact, many pending projects that have already received financing commitments will require additional or new funding based upon these unexpected expenses. It is our hope that the Commission, upon passage of any increase in District connection fees, would provide reasonable lead time for stakeholders to work these costs into their financing and feasibility studies. I f and when any proposal for increased costs is implemented, we hope that the Commission will extend the effective date at least 90 to 180 days from passage and would implement a staggered implementation of the fees over 2 or 3 years. Summary of Concerns and Requests With great respect and concern, the Madison Area Builders Association and its members must oppose the proposed changes that include excessive increases in connection charges; however, we are optimistic that through stakeholder engagement we can resolve many of the points that lead to our Association's opposition to this proposal. In summary, The Madison Area Builders Association and our members ask the Commission to withhold voting on the proposed District connection charges until staff and Commissioners can 1) receive detailed feedback from the stakeholders directly impacted by this proposal, including the development community and building industry; 2) explore less excessive District connection charges, as well as alternative funding sources; and 3) consider a staggered and delayed effective date for implementation of any changes to allow those impacted the opportunity to prepare for this unforeseen cost increase. Thank you for your time and consideration. For additional information or to setup stakeholder meetings, please contact Chad Lawler at clawleramaba.org - or - (608) Sincerely, Chad M. Lawler Madison Area Builders Association. 67

67 From: Steve Fahlgren Sent: Tuesday, May 02, :34 AM To: William Walker Subject: District Connection Charges Hi William, I appreciate the opportunity to testify before the Commission last week. It is great that they are interested in hearing about the potential and real impact to all parties involved. This is truly a complicated situation. As many mentioned last Thursday, we would really like to see the data that supports the rates proposed. I am formally requesting that a copy of the report/data be provided before the Commission takes further action. Again, my main points of concern are: Proportionality of charge (does the development fee represent the use of capacity by the end user) Equity/Fairness (greenfield & redevelopment are considered) Timing of payment (developer funded at service extension is extremely burdensome ñ especially with the proposed increases at over 400%) I had the opportunity to speak with a number of people after the public hearing and I shared with them a possible solution that came to me during the testimony. Curt Brink, Terrance Wall, Mike Lawton, Matt Brink and Chad Lawler were all interested in this potential solution. The solution will require local municipal reporting and administration, but I believe will address my (and others) concerns noted above. The potential solution I am proposing is similar to someone joining a club that requires a membership fee. In the case of MMSD the membership fee is buying into the capacity of the collection system and treatment facilities. The end user is charged a fee in addition to the normal collection and treatment fee that existing customers pay. This; in affect, is a buy-in paid over time. (perhaps 5 yearsö) This satisfies the Timing of payment concern above. This may also provide a more consistent & predictable revenue stream for MMSD. 68

68 The end user pays this additional charge based on water usage which satisfies the Proportionality concern above. All new customers that benefit from MMSD services pay the buy-in fee. This satisfies the Equity/Fairness concern above. From an administrative standpoint, the local governments would self-report new customers to MMSD periodically (monthly or quarterly). Local governments would submit payment of fees collected in the timeframe agreed upon ñ likely quarterly due to typical billing methods. The local government would need to execute start up and stoppage of the buy-in fee. Perhaps the rate could include and administrative fee for the local government to cover the additional local effort. Determining capacity recovery rates and buy-in payment duration will still need to be determined, but are not insurmountable tasks. Thank you for your consideration of my concept. -Steve Steven J. Fahlgren Village Administrator 120 S. Stevenson Street Village of DeForest, WI (608)

69 Office of the Mayor Gurdip Brar City of Middleton 7426 Hubbard Ave Middleton, WI (608) May 3, 2017 To: Michael Mucha, MMSD Chief Engineer & Dir. of MMSD Commissioners From: Mayor Gurdip Brar Re: Proposed Increases to District Connection Charges Thank you for the opportunity to comment on the proposed changes to District Regulations. I am writing to respectfully request that the Commission defer its decision to increase District connection charges until after further discussion and impact analysis can occur with those directly impacted. As the newly elected Mayor of the City of Middleton, one of my goals is to improve the livability of the City of Middleton for all residents. The City of Middleton, which is the home to 19,000 jobs, is becoming too expensive for many of its residents to afford. Of the 19,000 jobs, a mere 3,000 are held by residents of Middleton. Meaning that a vast majority of those who work in our great community, are driving in from other portions of Dane County and beyond. During my campaign, many local business owners and employees impressed upon me the lack of affordable housing in Middleton. I fear that with such a substantial increase in the connection charges, we are continuing to negatively impact affordable housing options in the City of Middleton. Affordable housing developments are already cost prohibitive in the City and these type of charge increases can only further this problem. Given the size of the proposed connection charge increases and the closeness of the proposed effective date, I must add my voice to those who request the Commission delay action on the connection charge proposal in order to conduct greater outreach to builders, developers and the member communities. Again, I fear that without more discussion and analysis on the impact of these charges, we will continue to make the City of Middleton and other members communities too expensive to reside within. Thank you for the opportunity to comment. If you would like more information, or have questions, please feel free to contact me: mayor@ci.middleton.wi.us OR (608) Sincerely Gurdip Brar, Ph.D. Mayor, City of Middleton 70

70 Return to Agenda Meeting of the Commissioners of the Madison Metropolitan Sewerage District Thursday, April 27, :00 a.m. MMSD Maintenance Facility Training Room, 1610 Moorland Road, Madison, WI Present: Commissioner Tom Hovel Commissioner Angela James (attendance via teleconference) Commissioner Ken Clark (excused absence) Commissioner Sara Eskrich Commissioner James Martin Commissioner Ezra Meyer Commissioner Brad Murphy Commissioner Brian Potts (excused absence) Commissioner Tom Wilson (excused absence) Commission Meeting 1. Opening A. Commissioner Hovel called the meeting to order at 8:00 a.m. B. Welcome guests: Matt Brink, Smart Growth; Curt Brink, Curt Vaughn Brink LLC; Bill Cole, Legal Counsel for City of Monona; Andrew Disch, Apartment Association of South Central Wisconsin; Jodi Dobson, Baker Tilly; Chris Ehlers, Ehlers Development Company; Steve Fahlgren, Village of DeForest; Greg Fries, City of Madison; Andrew Homburg, Homburg, Inc.; Chad Lawler, Madison Area Builders Association; Mike Lawton, Boardman & Clark; April Little, City of Monona; Mark Moder, City of Madison; Dave Sarbacker, City of Middleton; Tony Stolper, City of Monona; Terrence Wall, T. Wall Enterprises; Todd Wozniak, Veridian Homes C. Announcements: None. 2. Appearances by the Public 3. Consent Calendar None. A. Approval of Commission Meeting Minutes from B. Review and Approval of Sewer Extension Plans ( R1 through R3). Discussion: The minutes and Review and Approval of Sewer Extension Plans were reviewed and placed on file ( R1 through R3). Action: Commissioner Martin moved, seconded by Commissioner Murphy to approve items A-B of the Consent Calendar. 71

71 Return to Agenda Motion carried unanimously. 4. Convene in Closed Session in accordance with Wis. Stat. s (1)(e) for the purpose of conducting specified public business involving competitive reasons associated with the City of Monona s request for cost sharing for relocation of the District s Southeast Interceptor sewer easement and in accordance with Wis. Stat. s (1)(g) to confer with legal counsel who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation in which it is or is likely to become involved associated with the District s Southeast Interceptor sewer easement in Monona-Mucha Presenter: Michael Mucha, Chief Engineer and Director Description: Closed Session of the Commission. Discussion: Mr. Mucha introduced the topic to the Commission and the Commission agreed to hear comments from City of Monona representatives prior to going into Closed Session. Mr. Cole, legal counsel for the City of Monona, spoke on behalf of the City, summarizing benefits of the pipe relocation. Action: Commissioner Meyer moved, seconded by Commissioner Eskrich to Convene in Closed Session in accordance with Wis. Stat. s (1)(e) for the purpose of conducting specified public business involving competitive reasons associated with the City of Monona s request for cost sharing for relocation of the District s Southeast Interceptor sewer easement and in accordance with Wis. Stat. s (1)(g) to confer with legal counsel who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation in which it is or is likely to become involved associated with the District s Southeast Interceptor sewer easement in Monona. Roll call vote: Commissioner Eskrich-aye Commissioner Meyer-aye Commissioner Hovel-aye Commissioner Murphy-aye Commissioner Martin-aye Commissioner James-aye Motion carried unanimously. 72

72 Return to Agenda 5. Reconvene in Open Session Action: Commissioner Eskrich moved, seconded by Commissioner Meyer to reconvene in Open Session. Roll call vote: Commissioner Eskrich-aye Commissioner Meyer-aye Commissioner Hovel-aye Commissioner Murphy-aye Commissioner Martin-aye Commissioner James-aye Motion carried unanimously. 6. Discussion or Action, if any, relative to the Closed Session (agenda item number 4) Action 1: After a risk analysis, Commissioner Martin moved, seconded by Commissioner Eskrich : The Commission authorizes the District to contribute $250,000 to the relocation of the sewer main on the condition that the District and Monona enter into an acceptable intergovernmental agreement (IGA) which includes the following: Relocation of the main shall be to the location shown on the map included in the 4/27/17 Commission packet; and There will be no reduction in the capacity of the main (the relocated main will be expanded from 60 to 63 inches); and There will be mutually acceptable easement language and a 30 foot easement; and The relocated main will be relocated to public right-of-way; and Relocation will occur before the demolition and reconstruction; and The Commission directs staff and legal counsel to prepare the IGA with the City of Monona Motion carried 5-1 (Eskrich voted nay). Action 2: If a raze order for the bank building is issued prior to relocation of the main, legal counsel and staff are authorized to engage in litigation for a declaratory judgment and injunction, as appropriate. Motion carried 6-0. NOTE: The Chief Engineer and Director s Report (originally item #7 was deferred until after the Public Hearing). 73

73 Return to Agenda 7. Public Hearing on Proposed District Regulations and Ordinance Amendments Regarding Connection Charges (to begin at or after 9:30 a.m.) Discussion: Commission President Mr. Hovel opened the floor to those interested in speaking on the subject with a 5 minute time-limit. The following meeting attendees spoke on the subject: Matt Brink, Smart Growth (Attachment 1: A1) Mr. Brink provided the Commission with a written handout and summarized his main points. He requested that the Commission delay fee increases, consider a smaller ongoing annual fee increase in lieu of the current proposed fee increase, consider involving the development community in discussions, and explain the reasons for the proposed increase in fees. Terrence Wall, T. Wall Enterprises Mr. Wall addressed the Commission stating that the proposed fees are not reasonable, objecting that the development community was not involved, suggesting that the proposed fee increase would slow or stop development projects, noting that immediate fee increases have not been planned for and would be paid from project profits. He requested the Commission to slow down and work with the housing community. Steve Fahlgren, Village of DeForest Mr. Fahlgren addressed the Commission and stated he was not representing his board at the hearing. He questioned the logic and fairness of using an area basis for connection charges. He stated that the fees should be based on usage and proportionate cost. Todd Wozniak, Veridian Homes Mr. Wozniak addressed the Commission and stated concerns he had about the impact the proposed fees would have on new home buyers and affordable housing in the greater Madison area. He requested that the development community have a seat at the table to discuss the matter and asked for a delay in implementation of the proposed fees. Chad Lawler, Madison Area Builders Association (Attachment 2: A2) Mr. Lawler provided the Commission with a written handout and addressed the Commission stating concerns around affordability for developers and homeowners. He asked the Commission to consider reduced fees and staggered increases. Greg Fries, City of Madison (Attachment 3: A3) Mr. Fries provided the Commission with a written handout and addressed the Commission summarizing Mayor Soglin s support of the administrative changes and his desire for the District to reach out to impacted parties to discuss the rate increase. Mike Lawton, Boardman & Clark Mr. Lawton spoke on behalf of the development community and shared an idea related to payment of impact fees at the time a building permit is granted. He further stated the proposed fees will affect current housing costs and then requested the chance to give input. 74

74 Return to Agenda 8. Curt Brink, Curt Vaughn Brink LLC Mr. Brink addressed the Commission expressing that in development loads must be fully collateralized-and that immediate fee increases have not been planned for. He requested more information on the purpose of the fee increases and noted that connection charges concentrate costs on developers. He requested the opportunity to sit down with developers, engineers, and bankers to discuss the matter. Andrew Homburg, Homburg Inc. Mr. Homburg addressed the Commission explaining that his business is a niche business that would be greatly impacted by the proposed rate increase. He asked for the Commission to pause on decision making. Close Public Hearing on Proposed Connection Charge Regulations and Ordinance Amendments Action: Commission President, Tom Hovel, closed the public hearing after hearing from all parties wishing to speak. 9. Chief Engineer and Director s Report 10. Future Agenda Topics 11. Other Business by Law 12. Adjournment A. Updates-Mucha Mr. Mucha, Chief Engineer and Director, discussed with the Commission alternative ideas to wrap-up the policy governance work. A single meeting at night to complete this work is the preferred solution. Staff will follow-up with the Commission on potential dates/times. Action: No action necessary. B. Ecosystem Services Update-Taylor Mr. Taylor, Director of Ecosystem Services, presented on department efforts. Action: No action necessary. C. History of the District Part II-Nehm This topic was deferred to a later date. Action: No action necessary. D. Regulatory Review-Kent Mr. Kent provided a brief overview of regulatory and legislative happenings. Action: No action necessary. E. Review of Commission Calendar Action: No action necessary. Action: No other business was discussed, no action necessary. Action: No other business was discussed, no action necessary. Action: Commissioner Martin moved, seconded by Commissioner Meyer that the meeting be adjourned. 75

75 Motion carried 5-1 (Commissioner Eskrich absent from the vote). Regular Meeting of the Commissioners April 27, 2017 Angela James, Secretary Future Meetings: Thursday, May 11, :00 a.m. Regular Commission Meeting Thursday, May 25, :00 a.m. Regular Commission Meeting Thursday, June 15, :00 a.m. Regular Commission Meeting 76

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88 Attachment R1 MADISON METROPOLITAN SEWERAGE DISTRICT COMMISSION Resolution Adopted October 7, 2015 ESTABLISHING POLICY FOR DISTRICT CONNECTION CHARGES Recitals WHEREAS, the Madison Metropolitan Sewerage District (the "District") operates in a capital intensive environment, designing infrastructure to accommodate future growth and recovering costs associated with future capacity infrastructure to new customers through connection charges, all in accordance with industry practice and the law; and WHEREAS, the District currently applies two connection charges: the Interceptor Connection Charge ("ICC"), which recovers the cost of District conveyance infrastructure serving a particular service area or basin, and Treatment Plant Connection Charges ("TPCC"), which recovers the cost of the District's wastewater treatment facilities; and WHEREAS, to assure that the connection fees continue to meet the District's and its customers' current needs, the Madison Metropolitan Sewerage District Commission (the "Commission") directed District staff to evaluate current connection charge practices and policies; and WHEREAS, District staff met with its customer communities ("District Communities") for input and comment on t h e current connection charge system July 24, 2014, and considered community input during the evaluation process; and WHEREAS, District staff worked together and closely with legal and financial consultants to evaluate the current ICC and TPCC system and review the connection charge methodology to address changes in local development patterns, consider alternatives based on current industry best practices, fully recover costs associated with capacity planned for future users1 and mitigate the need to recover these costs through user charges on existing users; and WHEREAS, on September 10, 2015, Baker Tilly Virchow Krause, LLP ("Baker Tilly") presented a summary report and connection charge alternatives for consideration by the Commission, and the Commission identified those alternatives for further evaluation and input from the District Communities; and WHEREAS, District staff and consultants met with the District Communities on September 29, 2015 for a connection charge follow-up meeting, and presented a status update on the interceptor connection charge paid-area audit and t h e connection charge study ("2015 Connection Charge Report"), which is incorporated herein by reference; and 1 Capacity planned for future users, which has sometimes been referred to as "excess capacity," shall be referred to in District connection charge policies as future capacity. 89 Return to Agenda

89 4 Return to Agenda WHEREAS, on October 7, 2015, the Commission held a public hearing on the 2015 Connection Charge Report and thereafter considered public input, the District staff's and consultants' recommendations, and a compilation of comments from District Communities, each and all of which have been duly considered by the Commission; and WHEREAS, following review and consideration, the Commission wishes t o establish t h e underlying direction that will serve as the basis for development of the District's connection charge policies, all as set forth herein. RESOLUTION NOW, THEREFORE, in consideration of the above recitals, which are incorporated herein as findings of the Commission, the Commission resolves as follows: 1. Area Basis. F o r both the ICC and TPCC, connection charges shall continue to be calculated on an area basis. The Commission has reviewed alternative options and has concluded that the area basis most closely achieves the objective of recouping future capacity costs. The area "per thousand square foot" basis fairly distributes connection charges throughout the service area and simultaneously simplifies administration. 2. Recoverable Project Costs. T h e recoverable project costs assigned to new users for replacement and relief sewers shall be based on the proportion of capacity reserved for new users, rather than on the incremental cost of the replacement or relief sewer itself. 3. Interceptor Connection Charge (ICC). The ICC is calculated by multiplying the ICC rate times the net chargeable area. The ICC rate per thousand square feet shall be equal to (the actual cost of the conveyance facilities required to serve the basin) divided by (the net chargeable area of the basin) times (the ENR CCI index). The definitions of each component of the ICC rate shall be updated to reflect current development patterns and industry practices. a. Actual Cost of Interceptor Facilities (Numerator): The ICC shall continue to be calculated on a basin-by-basin or main interceptor basis because that method most closely reflects actual costs incurred to serve a particular area and is a reasonable basis for allocation o f interceptor costs. Blended o r single rate methods a r e n o t desired b y Customer Communities. Consequently, t h e numerator in the ICC rate shall remain the basin interceptor rate added to the downstream facility rates needed to serve the area in which the connection occurs. b. N e t Chargeable Area (Denominator): T h e r e has been a change i n local development patterns that needs to be incorporated in the ICC rate calculation. On a District-wide basis, t h e n e t developable o r chargeable area i n developments has decreased due to: increased requirements for stormwater management on site; changes in the width o f public right-of-way; additional parks, golf courses, gardens and green space; and, changes in designation of 90

90 4 Return to Agenda environmental corridors. Review of development in the District over the past fifteen years indicates that chargeable area has decreased from 70% to 50% of the gross area. These percentages shall be subject to periodic verification by the District. To accurately recoup interceptor costs, the ICC rate calculation needs to be consistent with and reflect current ratios between gross and net acreage in local developments. c. Annual Escalation Factor Used with ICC Rate: The ICC rate for a particular basin needs to be updated annually to accurately reflect current costs. The ENR CCI index is a construction cost index and a common industry standard. The District shall continue to use the ENR CCI index as the escalation factor to annually update the ICC rates. 4. Treatment Plant Connection Charge (TPCC). The TPCC shall be applied District-wide and based on the total cost of the treatment plant and the total plant capacity. T h e historical cost of the treatment plant, net of grants, divided by the millions of gallons per day capacity shall be calculated to determine the cost per gallon per day. The average number of gallons per residential customer per day shall be multiplied by the cost per gallon per day to reach the TPCC per connection. The TPCC rate shall be applied on a per thousand square foot basis. Therefore, the per connection charge shall be converted to an area basis using recent averages of single family residential lot size following consideration of development patterns. 5. Authority, Adoption and Implementation. Section of the District's Sewer Use Ordinance authorizes the District to establish connection fees. T h e policies for determining the ICC and TPCC set forth in this Resolution shall serve as the basis for the District's connection fees upon adoption of this Resolution by the Commission, and shall be implemented as set forth herein.. Implementation of the policies shall be achieved through administrative guidelines that define terms, set an implementation plan with an effective date, and calculate costs and rates, all as developed by the Chief Engineer and Director in consultation with District staff, legal counsel, consultants and a technical subcommittee that includes representatives from Customer Communities. Adopted by the Madison Metropolitan Sewerage District Commission on the 7th day of October, 2015, by a vote of 1.-} in favor, 0 opposed and U abstaining. MADISON METROPOLITAN SEWERAGE DISTRICT COMMISSION Thomas Hovel, Vice President Caryl Terr, President 91

91 Return to Agenda COMMISSION AGENDA REPORT Meeting of May, 11, 2017 Study Session on Fund Reserves Policy Lead Staff: Jeff Brochtrup, Assistant Chief Engineer and Director of Administration Requested Action: Provide guidance to District staff on the Commission s interests related to the District s Fund Reserve Policy. Attachments: Attachment 1: Fund Reserves Policy Financial Impact: None. Background: The Commission adopted a set of financial policies in During budget deliberations last fall the Commission asked for a review of the fund reserve policy and the debt financing policy. This study session will cover the fund reserve policy, in particular: The purpose of the reserves The current reserve policy How we have used reserves What are the Commissioners interests regarding the reserve policy Analysis and Options: The study session will focus on identifying the interests of the Commissioners regarding the reserve policy. Next Steps: Staff will consider feedback received from the Commission during the study session and, if desired, develop modifications to the existing policy for future Commission consideration. 92

92 Return to Agenda Attachment 1 Madison Metropolitan Sewerage District Commission Policy Statement Re: Fund Reserves POLICY OBJECTIVE: The District s Reserves Policy is intended to ensure that the District has adequate working capital to meet financial demands of unforeseen circumstances, provide adequate liquidity to support efficient operations, and secure debt obligations. POLICY STATEMENT: The District will maintain reserves in each of its funds as delineated below. In the event that unforeseen circumstances necessitate the use of available reserves in any of its funds, the District will restore the designated reserve amount within one-to three years of its depletion below the targeted minimum endof-year reserve level. Operating Fund Reserves the District will maintain a targeted end-of-year minimum balance in its Operating Fund equal to the sum of: o 180 days of budgeted Operating Expenses (exclusive of debt service obligations) o the greater of $3,000,000 or the Equipment Replacement Fund 1 requirements of the Wisconsin Clean Water Fund (CWF) program. Capital Projects Fund Reserves the District will target a minimum end of year balance in its Capital Project Fund of the greater of $3 million dollars or 10% of the planned capital project expenditures for the forthcoming fiscal year. Debt Service Fund Reserves the District will maintain a minimum Debt Service Fund balance as prescribed by the terms of its current and projected CWF and other indebtedness obligations. Balances in excess of minimum requirements, due to transfers, interest accruals or debt retirements, may be applied to District debt obligations. None of the specific provisions of this statement shall be interpreted to require actions that will frustrate accomplishment of the stated policy objective. Adopted by Commission action on June 13, The District maintains an Equipment Replacement Fund for unbudgeted emergency repair and replacement as restricted funds of the Operating Fund and provides for regular equipment replacement requirements through Operating Fund budgeting. 93

93 Return to Agenda COMMISSION AGENDA REPORT Meeting of May 11, 2017 Review of the Lower Badger Mill Creek Interceptor- Phase 4 Project Lead Staff: Tim Stieve-Project Engineer Requested Action: No action required Attachments: Attachment 1: Lower Badger Mill Creek Interceptor Map Purpose: The purpose of this agenda item is to update the Commission on the current status of the Lower Badger Mill Creek Interceptor- Phase 4 Project. This is in preparation for bidding and awarding a construction contract for the project. Financial Impact: The preliminary construction cost estimate for this project is $1,170,000. The total project cost, which includes MMSD engineering staff time, external engineering consultant fees, and other miscellaneous costs, is estimated to be $1,305,000. The current estimate differs from the total project cost estimate of $977,000 included in the 2017 Capital Improvements Plan. This project will be funded via capital reserves, and will not be funded by a Clean Water Fund Loan. Background: The Lower Badger Mill Creek watershed is located along the District s westerly boundary and includes lands in the Town of Middleton, Town of Verona, City of Madison and City of Verona. The basin is served by Pumping Station 17, which conveys flow to Pumping Station 12 through a 16 diameter force main. Pumping Station 17 was constructed in 1995, soon after the City of Verona was annexed into the District service area and their wastewater treatment plant was abandoned. Since 1995, the District has been working with the City of Verona and City of Madison on the design of an interceptor that would serve the entire watershed. Construction of the interceptor began in 2006, with installation of Phase 1 (see Attachment 1) from Pumping Station 17 to Edwards Street. Phase II extended the interceptor to the Epic Systems Corporation campus at Cross Country Road in Phase III of the LBMC Interceptor was constructed in 2013 to facilitate roadway and infrastructure improvements at Epic. 94

94 Return to Agenda The Phase IV extension, which includes approximately 4,000 feet of 30-inch diameter pipe from the Epic campus to County Highway PD, is required for expansion of the Epic campus and future development north of County Highway PD. The District has tentative plans to extend the LBMC Interceptor from County Highway PD to Midtown Road in approximately 2022 (Phase V), depending on the pace of development in the watershed. Analysis and Options: The project update is being provided for informational purposes only. There are no options for the Commission to consider at this time. Next Steps: Complete plans and specifications for bidding. Receive approval for sewer extension through CARPC/MMSD (expected at 5/25/17 Commission meeting). Bid project during month of June. Commission approval and award of a construction contract at the July 13, 2017 meeting. Begin construction in October

95 Return to Agenda Attachment 1 Legend Black Earth Creek/ Wisconsin River Drainage Basin 15 Midtown LS LBMC - Phase V 16 Yahara River Drainage Basin Lower Badger Mill Creek Drainage Basin LBMC - Phase I (2006) LBMC - Madison (2012) LBMC - Phase II (2008) PumpStation LBMC - Phase III (2013) Existing Interceptor LBMC - Phase IV PS 17 Force Main Mineral Point Rd Madison Madison Meadowview Pioneer Rd 05 Sh Morse Pond and Upper Badger Mill Creek Drainage Basin Yahara River Drainage Basin Upper Badger Mill Creek Drainage Basin Midtown Rd Madison Fitchburg CTH PD Madison Lower Badger Mill Creek Drainage Basin 12 Verona PS 17 Fo rce Ma in Edwards Street Upper Sugar River Drainage Basin 17 Madison Metropolitan Sewerage District Figure 2 - Lower Badger Mill Creek Interceptor 96 Prepared by: Approved by: Date: 2/26/16 TWG TWG

96 Return to Agenda Meeting Date 05/11/17 05/25/17 06/15/17 06/29/17 Note: All dates are tentative and subject to change Type of Meeting Agenda Topics Cash Statements including Debt Service Fund Review and Approval of Sewer Extension Plans-Sauser New Construction Project o Prairie Place, Village of McFarland o Lower Badger Mill Creek-Phase 4, City of Fitchburg Employee Compensation-Peters Commission Connection Charges: Ordinance Amendments, Regulations and RatesMeeting Walker Study Session: Fund Reserves Policy-Brochtrup Review of Lower Badger Mill Creek Phase 4 Project-Stieve Chief Engineer and Director s Report Regulatory Review-Kent CED Update Recognition of Dave Taylor for his Years of Service Review and Approval of Sewer Extension Plans-Sauser Lower Badger Mill Creek Interceptor Phase 4 Auditors Financial Presentation for 2016-Fox Strategic IT Plan Presentation-Dunn Consultant Selection for the WAM v2 Assessment and PreCommission Implementation Plan-Bublitz Meeting Study Session: Debt Financing Policy-Brochtrup Chief Engineer and Director s Report Operations Report-Nehm Adaptive Management Quarterly Update-Ecosystem Services Team Regulatory Review and Report-Kent CED Update: 2018 Budget Process Excused absence: Sara Eskrich 06/15/2017 Please note 7:30 a.m. start time for the Policy Governance Recognition of Paul Nehm for his Years of Service Cash Statements Review and Approval of Sewer Extension Plans-Sauser Acceptance of Work: Maintenance Facility and Renovations to Shop 1 Commission and the Operations Building-Borelli Meeting Review of Bids and Award of Contract: Northend Interceptor Rehabilitation Klawes No Oral Updates due to Policy Governance NOTE: Policy Governance Discussion-Mucha Commission Review and Approval of Sewer Extension Plans-Sauser 97