AGENDA. Regular Meeting Wednesday, February 13, :30 a.m. Oak Park City Hall, Oak Park Blvd

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1 * Berkley * Beverly Hills * Bingham Farms * Birmingham * Clawson * Huntington Woods * Lathrup Village * Pleasant Ridge * Royal Oak * Southfield * Southfield Township AGENDA Regular Meeting Wednesday, February 13, :30 a.m. Oak Park City Hall, Oak Park Blvd 1. Meeting Called to Order 2. Roll Call & Recognition of Visitors 3. Approval of Agenda 4. Approval of Minutes Regular Meeting January 9, Approval of Warrants WA ADMINISTRATIVE REPORTS A. GLWA Rate Process for 2019/20 B. Projected Water Sales Rates for 2019/20 C. PA 202 Reporting D. Quarterly Report January 2019 E. Quarterly Legal Report F. Investments October to December 2019 G. GLWA Issues H. Replacement of 16 Water Main in 14 Mile Road I. Water Service to Village of Franklin SOCWA 3910 W. Webster Road Royal Oak Michigan Phone Fax socwa@socwa.org Printed on Post Consumer Recycled Content Paper

2 J. Lead and Copper Rule Update K. 12 Mile and Telegraph Lease Amendment 7. ITEMS NOT ON AGENDA 8. MONTHLY REPORTS A. Water Consumption Report January 2019 B. Budget Analysis January 2019 C. Budget Analysis July 2018 January 2019 D. Water Samples January 2019 E. Precipitation Inches (Webster Pumping Station) Notice: The Southeastern Oakland County Water Authority will provide necessary, reasonable auxiliary aids and services, such as signers, for the hearing impaired, or audiotapes of printed materials being considered at the meeting to individuals with disabilities. All such requests must be made at least five days prior to said meeting. Individuals with disabilities requiring auxiliary aids or services should contact the Southeastern Oakland County Water Authority by writing or calling: General Manager's Office, 3910 W. Webster Road, Royal Oak, MI 48073; (248)

3 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY Regular Meeting January 9, 2019 Table of Contents Agenda Approved as Submitted MINUTES Meeting Minutes Regular Meeting December 12, 2018 Approved WARRANTS Warrant No. WA-801 Approved ADMINISTRATIVE REPORTS GLWA Rate Process 2019/20 Received and Filed GLWA Issues Received and Filed Rehabilitation of 16 Water Main in Coolidge Received and Filed Water Service to Village of Franklin Received and Filed Lead and Copper Rule Update Received and Filed Worker s Compensation Lawsuit Received and Filed Meeting Adjourned 10734

4 5619. MINUTES OF THE REGULAR MEETING OF THE SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY Wednesday, January 9, 2019 Royal Oak Senior Center The meeting was called to order at 9:05 a.m. by Mr. Harry Drinkwine, Chair. Present Votes Municipality D. Schueller 2 Berkley K. Marten (Alternate) 1 Bingham Farms P. O Meara 4 Birmingham H. Drinkwine 1 Clawson R. Fortura 1 Huntington Woods S. Mitchell 1 Lathrup Village S. Pietrzak 1 Pleasant Ridge G. Rassel 7 Royal Oak L. Sirls 13 Southfield TOTAL 31 Absent C. Wilson 1 Beverly Hills C. Wilson 1 Southfield Township Also Present J. A. McKeen, General Manager R. Jackovich, Operations Manager C. Farris, Organizational Development Manager R. Davis, General Counsel

5 Page 2 Water Authority Minutes January 9, Motion by Mr. G. Rassel, supported by Mr. D. Schueller: That the agenda be approved as submitted. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion carried Motion by Mr. G. Rassel, supported by Mr. S. Pietrzak: That the December 12, 2018 Regular Meeting minutes be approved as submitted. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion carried Motion by Mr. G. Rassel, supported by Mr. K. Marten: That Warrant No. WA-801 in the amount of $2,587, be approved and payments authorized. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion carried Motion by Mr. G. Rassel, supported by Mr. D. Schueller: That the report on the GLWA Rate Process for 2019/20 be received and filed.

6 Page 3 Water Authority Minutes January 9, Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion carried Motion by Mr. G. Rassel, supported by Mr. D. Schueller: That the report GLWA issues be received and filed. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion Carried Motion by Mr. G. Rassel, supported by Mr. D. Schueller: That the report on the Rehabilitation of 16 Water Main in Coolidge be received and filed. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion Carried Motion by Mr. G. Rassel, supported by Mr. D. Schueller: That the report on Water Service to Village of Franklin be received and filed. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion Carried.

7 Page 4 Water Authority Minutes January 9, Motion by Mr. G. Rassel, supported by Mr. P. O Meara: That the report on MDEQ Lead and Copper Rule Update be received and filed. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion Carried Motion by Mr. D. Schueller, supported by Mr. P. O Meara: That the report on Worker s Compensation Lawsuit be received and filed. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) Motion Carried Motion by Mr. G. Rassel, supported by Mr. P. O Meara: That the meeting be adjourned. Yeas: Schueller, Marten, O Meara, Drinkwine, Fortura, Mitchell, Pietrzak, Rassel, Sirls (31 votes) Nays: None Absent: Wilson (1 vote), Wilson (1 vote) The meeting was adjourned at 9:28 a.m. APPROVED: Chair Secretary

8 SOCWA Check Warrant January 2019 WA 802 ACCT PAYEE AMOUNT PURPOSE Acme Ladder & Supply Maintenance of Equipment - Webster Batteries Plus Supplies - Webster Bowlers Supply LLC Uniforms Comcast Cable Internet - Gare Consumers Energy 1, Natural Gas Service Contractors Clothing Co Supplies-Webster DTE Electric Service Durst Lumber Company Maintenance of Equipment - Webster Michigan.com Office Expense Standard Insurance Company Life Insurance Verizon Wireless Internet Windstream 1, Office Telephone WOW! Business Internet - Webster Pace Analytical Services LLC 0.00 Void Check Pace Analytical Services LLC 0.00 Void Check Pace Analytical Services LLC 8, Water Sample Analysis Great Lakes Water Authority 1,850, Water Purchase Acme Ladder & Supply Supplies - Webster Applied Imaging Office Copier Contractors Connection 9.00 Supplies - Webster Davis Listman Legal Services Delwood Supply Company Maintenance of Equipment Michigan Municipal Risk Mgmt 8, Property & Liability Insurance Motor City Industrial Maintenance of Equipment Technical Hot & Cold Building Services Maintenance of Buildng Billy J Young - Cleaning Service Maintenance of Buildng Acme Ladder & Supply Supplies-Webster Consumers Energy Natural Gas Service DTE 0.00 Electric Service DTE 1, Electric Service Downriver Refrigeration Supply Maintenance of Building Durst Lumber Company 5.99 Maintenance of Equipment Idexx Distrubution Inc. 6, Water Sample Bottles Office Depot Office Supplies

9 SOCWA Check Warrant January SALUS GROUP 21, Health Insurance UWA Local Union Dues Billy J Young - Cleaning Service Maintenance of Building Michigan Graphics Awards Retirement Plaque-Ford Michigan Graphics Awards Retirement Plaque-Guarano Bowlers Supply LLC Uniforms Acme Ladder & Supply Supplies - Webster AT&T Mobility Cell Phone Service CCP Industries Supplies - Webster Consumers Energy 1, Natural Gas Service DTE 0.00 Electric Service DTE 1, Electric Service Downriver Refrigeration Supply Maintenance of Building Durst Lumber Company Supplies - Webster Home Depot Credit Services Supplies - Webster Infoview Systems Inc. 2, Computer Software License Office Depot Office Supplies The City of Southfield 5.08 Water service Southfield Muffler 1, Maintenance of Equipment Vantagepoint Transfer Agents 4, Deferred Compensation Verizon Wireless Internet - SCADA WOW! Business Internet -14 mile Anne Farris Petty Cash Reimbursement SOCRRA Reimburse for Shipping Expense WOW! Business Internet - Shafter Debuck Construction Inc. 7, Maintenance of Water Main Klein Brothers Fence and Sales Supplies - Webster DTE Electric Service DTE Electric Service DTE 0.00 Electric Service DTE 1, Electric Service Comcast Internet - Gare Consumers Energy 1, Natural Gas Service DTE Electric Service Guardian Alarm Alarm Monitoring Standard Insurance Company Life Insurance The TM Group, Inc Computer support Windstream 1, Office Telephone

10 SOCWA Check Warrant January Billy J Young - Cleaning Service Maintenance of Building Deluxe Office supplies - checks WOW! Business Internet-Webster Great Lakes Water Authority 1,767, Water Purchase eft Flagstar Credit Card 2, Credit Card - supplies eft MERS of Michigan - ACH/Epay 1, Defined Contribution eft MERS of Michigan - ACH/Epay 17, Defined Benefit Dec 2018 eft MERS of Michigan - ACH/Epay 2, MERS HCSP eft MERS of Michigan - ACH/Epay MERS 457 eft MERS of Michigan - ACH/Epay Define Benefit Dec 2018 (addtl emp.) 3,722, CHECK # VENDOR AMOUNT DETAIL 3842 Core & Main LP Check Valve for Meter Replacement CHECK # VENDOR AMOUNT DETAIL Employee Optical, Dental Reimburse 2, Employee Reimbursement 2, SUMMARY OF PAYMENTS 1020 OPERATION AND MAINTENANCE FUND 3,722, IMPROVEMENT FUND 1, DENTAL/OPTICAL FUND 2, ,726, I HEREBY CERTIFY THAT I HAVE EXAMINED THE INVOICES COVERED BY THE ABOVE VOUCHERS FOR RECEIPT OF MATERIALS OR SERVICES RENDERED AND THAT THE PRICES AND COMPUTATIONS ARE CORRECT. Treasurer General Manager The payments listed above were presented to the board of Trustees and were reviewed with no objection February 13, Secretary

11 Board of Trustees Southeastern Oakland County Water Authority January 25, 2019 Subject: GLWA Rate Process for 2019/20 Board Members: GLWA announced their proposed rates for 2019/20 at a customer meeting on January 24, GLWA is proposing a rate decrease of 0.1% SOCWA. The average rate increase was 0.8% for all GLWA water customers. The components to this proposed rate decrease are as follows: 1. The overall expense level for GLWA is increasing 3.5% from the 2018/19 budget. This includes all costs for Operations and Maintenance, debt service, non-operating expenses and revenue financed capital. This is the expense level that GLWA has committed to grow at a maximum annual rate of 4%. Therefore, GLWA has met their 4% commitment for 2019/20. GLWA has not yet published detailed actual results for the 2017/18 fiscal year and for the current fiscal year to date. The GLWA O&M budget for 2019/20 have increased by 9.8% from 2018/19 and are probably overly conservative. I will be working on this issue with GLWA management. The increase in GLWA expenses caused an increase of $670,200 to SOCWA. 2. GLWA has been receiving higher levels of interest income due to higher overall interest rates and due to construction spending being slower than planned. GLWA has recognized this higher level of income which reduces SOCWA s costs by $347, Costs were shifted among customers due to a large number of contract renegotiations that allowed customers, including SOCWA, to reduce their contract volumes. As a result, $30,100 of costs were shifted to SOCWA. 4. Costs were shifted from non-metered customers (Dearborn, Detroit and Highland Park) to metered customers (such as SOCWA) due to the implementation of the recently completed study of the units of service for the non-master metered customers. As a result, $20,700 were shifted from SOCWA. 5. Costs were shifted from sewer customers to water customers as a result of a thorough review of GLWA s administrative and shared costs, between water customers based on an update of the inventory of GLWA wholesale water meters and how costs are allocated to cost pools. The net of these changes is a decrease of SOCWA s costs of $212, Projected water sales for 2019/20 were slightly higher than the water sales projected for 2018/19. GLWA used the same methodology for estimating sales volumes as was 6-A

12 used last year. This uses a three year average of peak flow months (April to September) combined with a three year average of non-peak flow months (October to March) reduced by 2.5% per year to reflect the continuing decline in non-peak water sales. GLWA is projecting that their water sales to SOCWA will increase slightly. This increase reduced SOCWA s costs by $148,900. These changes are summarized in the table below: SOCWA Cost Change % GLWA Expense changes +$670, % Higher Interest Revenue -$347, % Contract Reopeners +$ 30, % Costs from non-metered customers -$20, % Other cost shifts -$212, % Sales adjustment -$148, % Net -$ 29, % The GLWA Board will be holding a public hearing on both their proposed 2-year budget and the proposed customer charges on February 27, GLWA s 5-year plan continues to call for 4% budget increases in the final 4 years of the plan. At the moment, I do not plan to provide any public comment. GLWA also issued a third draft of the 5-year Capital Improvement Program which was very similar to the first two drafts. I have provided comments on this plan to GLWA management. The GLWA Board is attempting to approve the proposed rates by March 31, GLWA has committed that the final rates will be equal to or less than the rate projections provided on January 24. The approval of the rates requires a supermajority (5 out of 6 votes) vote of the GLWA Board. It appears as if the Board has concerns regarding the overall spending level, the removal of GLWA sewer facilities located within the City of Detroit from the City customer base, the cost shifts from the non-master metered customers and the pending transfer of the Northeast Sewer Pump Station from GLWA to the Oakland-Macomb Drainage District. It is unclear how and when these concerns are going to be resolved. I will update the Board on any additional developments in the GLWA rate process at future Board meetings. Respectfully submitted, Jeffrey A. McKeen, P.E. General Manager Suggested Resolution: That the report on the GLWA Rate Process for 2019/20 be received and filed.

13 January 31, 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: Projected Water Sales Rates for 2018/19 Board Members: I am proposing that SOCWA use the 2018/19 rate structure for 2019/20. The primary reason for this is the slight rate reduction from GLWA combined with a small decrease in budgeted sales for 2019/20. I am also proposing that SOCWA continue to recover 10% of its projected costs through a fixed monthly charge. This proposed rate increase assumes water sales volumes equal to the average of the sales for the two-year period from January 1, 2017 through December 31, This volume is 2.4% lower than the volume used to establish the SOCWA rates for 2018/19 and is also 1.4% higher than the volume being used by GLWA to establish SOCWA s rates. Following the February Board meeting, I will communicate this proposed rate to each member community and to Bloomfield Hills and Bloomfield Twp. We have begun to prepare the 2019/20 budget for SOCWA, which will determine the actual SOCWA sales rate for 2019/20. I plan to have the budget completed for distribution to the Board at the April Board meeting. Respectfully submitted, Jeffrey A. McKeen, P.E. General Manager Suggested Resolution: That the report on the Projected Water Sales Rate for 2019/20 be received and filed. 6-B

14 January 10, 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: PA 202 Report Board Members: PA 202 of 2017 requires additional reporting on the status of SOCWA s pension and OPEB (Other Post Employment Benefit) plans to the State and to the SOCWA Board. This information was already included in our June 30, 2018 audit. The required information was submitted to the State in December and is attached, as required by PA 202. The summary of the information is as follows: The combined union and salaried pension plan are 91.5% funded as of December 31, The union OPEB plan is 91.6% funded and the salaried OPEB plan is 97.5% funded as of June 30, None of the plans are in underfunded status. Additional contributions have been made to all of the plans since their last actuarial valuations. MERS will be providing their 12/31/2018 pension actuarial valuation before June 30, 2019 and Gabriel Roeder will be providing their 6/30/2018 OPEB valuation after June 30, I will review these analyses with the Board when they are received. Respectfully submitted, Suggested Resolution: That the PA 202 Report be received and filed. Jeffrey A. McKeen, P.E. General Manager 6-C

15 Michigan Department of Treasury 5572 (09-18) Public Act 202 of 2017 Pension Report Enter Local Unit Name Southeastern Oakland County Water Authority Enter Six-Digit Municode Unit Type Authority Fiscal Year (four-digit year only, e.g. 2018) 2018 Contact Name (Chief Administrative Officer) Jeff McKeen Title if not CAO General Manager CAO (or designee) Address Contact Telephone Number Instructions/Questions: For a list of detailed instructions on how to complete and submit this form, visit michigan.gov/localretirementreporting. For questions, please LocalRetirementReporting@michigan.gov. Return this original Excel file. Do not submit a scanned image or PDF. Pension System Name (not division) 1 SOCWA DB Pension Pension System Name (not division) 2 Pension System Name (not division) 3 Pension System Name (not division) 4 Pension System Name (not division) 5 If your pension system is separated by divisions, you would only enter one system. For example, one could have different divisions of the same system for union and non-union employees. However, these would be only one system and should be reported as such on this form. Line Description Source of Data Statute Reference System 1 System 2 System 3 System 4 System 5 1 Provide the name of your retirement pension system Calculated From Above Sec. 5(6) SOCWA DB Pension 2 Enter retirement pension system's assets (system fiduciary net position) Most Recent Audit Report Sec. 5(4)(b) 5,463,141 3 Enter retirement pension system's liabilities (total pension liability) Most Recent Audit Report Sec. 5(4)(b) 5,970,135 4 Date (system year ending) of valuation of system's assets and liabilities (e.g. 12/31/2017) Most Recent Audit Report Sec. 5(6) 12/31/17 5 Actuarially Determined Contribution (ADC) Most Recent Audit Report Sec. 5(4)(b) 134,817 6 Governmental Fund Revenues Most Recent Audit Report Sec. 5(4)(b) 26,812,134-7 Pension Trigger Summary 8 Is this unit a primary unit (County, Township, City, Village)? From Municode NO NO NO NO NO 9 Funded ratio Calculated Sec. 5(4)(b) 91.5% 10 All systems combined ADC/Governmental fund revenues Calculated Sec. 5(4)(b) 0.5% 0.0% 0.0% 0.0% 0.0% 11 Does this system trigger "underfunded status" as defined by PA 202 of 2017? Primary units trigger: Less than 60% funded AND greater than 10% ADC/Governmental fund revenues. Non-Primary units trigger: Less than 60% funded Sec. 5(4)(b) NO NO NO NO NO By ing this report to the Michigan Department of Treasury, the local unit of government acknowledges that this report is complete and accurate in all known respects. Public Act 202 of 2017 also requires the local unit of government to electronically submit the report to its governing body.

16 Michigan Department of Treasury 5572 (09-18) Public Act 202 of 2017 Health Care (OPEB) Report Enter Local Unit Name Southeastern Oakland County Water Authority Enter Six-Digit Municode Unit Type Authority Fiscal Year (four-digit year only, e.g. 2018) 2018 Contact Name (Chief Administrative Officer) Jeff McKeen Title if not CAO General Manager CAO (or designee) Address Contact Telephone Number Instructions/Questions: For a list of detailed instructions on how to complete and submit this form, visit michigan.gov/localretirementreporting. For questions, please LocalRetirementReporting@michigan.gov. Return this original Excel file. Do not submit a scanned image or PDF. OPEB System Name (not division) 1 SOCWA Union OPEB Plan OPEB System Name (not division) 2 SOCWA Salaried OPEB Plan OPEB System Name (not division) 3 OPEB System Name (not division) 4 OPEB System Name (not division) 5 If your OPEB system is separated by divisions, you would only enter one system. For example, one could have different divisions of the same system for union and non-union employees. However, these would be only one system and should be reported as such on this form. Line Description Source of Data Statute Reference System 1 System 2 System 3 System 4 System 5 SOCWA Union OPEB SOCWA Salaried OPEB 1 Provide the name of your retirement health care system Calculated From Above Sec. 5(6) Plan Plan 2 Enter retirement health care system's assets (system fidicuary net position) Most Recent Audit Report Sec. 5(4)(a) 842, ,348 3 Enter retirement health care system's liabilities (total OPEB liability) Most Recent Audit Report Sec. 5(4)(a) 919, ,413 4 Date (system year ending) of valuation of system's assets and liabilities (e.g. 12/31/2017) Most Recent Audit Report Sec. 5(6) 6/30/18 6/30/18 5 Actuarially Determined Contribution (ADC) Most Recent Audit Report Sec. 5(4)(a) 27,736 3,021 5a Do the financial statements include an ADC calculated in compliance with Numbered Letter ? Most Recent Audit Report Sec. 5(4)(a) YES YES 6 Governmental Fund Revenues Most Recent Audit Report Sec. 5(4)(a) 26,812,134 26,812,134 7 Health Care Trigger Summary 8 Is this unit a primary unit (County, Township, City, Village)? From Municode NO NO NO NO NO 9 Funded ratio Calculated Sec. 5(4)(a) 91.6% 97.5% 10 All systems combined ADC/Governmental fund revenues Calculated Sec. 5(4)(a) 0.1% 0.1% 0.0% 0.0% 0.0% 11 Did the local government pay the retiree insurance premiums for the year? Accounting Records Sec. 4(1)(ii) YES YES 12 Did the local government pay the normal cost for employees hired after June 30, 2018? Accounting Records Sec. 4(1)(i) YES YES 13 Does this system trigger "underfunded status" as defined by PA 202 of 2017? Primary units trigger: Less than 40% funded AND greater than 12% ADC/Governmental fund revenues. If No ADC is provided, will trigger if less than 40% funded. Non-Primary units trigger: Less than 40% funded. All units trigger: Failure to make required retirement system payments. Sec. 5(4)(a) NO NO NO NO NO By ing this report to the Michigan Department of Treasury, the local unit of government acknowledges that this report is complete and accurate in all known respects. Public Act 202 of 2017 also requires the local unit of government to electronically submit the form to its governing body.

17 January 29, 2019 Board of Trustees SOCWA Subject: Quarterly Report January 2019 Board Members: The January 2019 Quarterly Report is either included with your agenda packet or has been sent to you electronically. We encourage you to use this electronic version to disseminate the report to your Council/Commission members. If you need paper copies, please let us know. It is recommended that the Quarterly Report January 2019 be received and filed. Submitted by: Approved by: Amy McIntire Accountant/Treasurer Jeffrey A. McKeen, P.E. General Manager Suggested Resolution: That the Quarterly Report January 2019 be received and filed. 6-D

18 * Berkley * Beverly Hills * Bingham Farms * Birmingham * Clawson * Huntington Woods * Lathrup Village * Pleasant Ridge * Royal Oak * Southfield * Southfield Township QUARTERLY REPORT JANUARY 2019 FBOARD OF TRUSTEES Representative Municipality D. Schueller City of Berkley C. Wilson Village of Beverly Hills K. Jones Village of Bingham Farms P. T. O Meara City of Birmingham H. Drinkwine City of Clawson R. Fortura City of Huntington Woods S. Mitchell City of Lathrup Village S. Pietrzak City of Pleasant Ridge G. Rassel City of Royal Oak L. Sirls City of Southfield C. Wilson Township of Southfield OFFICERS Chairman: Vice Chairman: Secretary: Advisory Committee: H. Drinkwine G. Rassel C. Wilson H. Drinkwine, S. Pietrzak, G. Rassel, C. Wilson J. A. McKeen General Manager R. Jackovich Operations Manager SOCWA 3910 W. Webster Road Royal Oak Michigan Phone Fax socwa@socwa.org Printed on Post Consumer Recycled Content Paper

19 January 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: Quarterly Report - January 2019 Board Members: Attached is a copy of the Southeastern Oakland County Water Authority's Quarterly Report covering the first six months operation of the fiscal year 2018/19. The report contains a financial statement of the Authority's operation and an outline of projects in progress or completed during the second quarter. The report also contains statistical information and other information of general interest to the members of this Authority. FINANCIAL STATEMENT The total net operating income before depreciation for the first 6 months of 2018/19 was $1,568,199, which was $213,391 lower than budgeted. This was a decrease from the net income of $1,897,022 for the first six months of 2017/18. Actual Compared to Budget Revenue $14,962,849 - $550,857 Expenses $13,394,650 - $337,467 Net Income (before depreciation) $ 1,568,199 - $213,390 SOCWA s working capital was 23.0% as of December 31, This is higher than the 8.3% working capital goal approved by the Board but a decrease from the 28.5% working capital as of December 31, 2017 due to the money expended on capital projects in 2018/19, see discussion below. The decrease in revenue was primarily due to lower (-3.5%) than planned water sales to both the member communities (-$127,000) and to Bloomfield Hills and Bloomfield Twp. (-$422,000). Revenue from rentals (-$25,000) were below budget while interest revenue (+$22,000) was greater than budget. Water sales volumes for the six-month period were 1.2% lower than the actual water sales for the same period in 2017/18. The decrease in expenses was due largely to decreased cost for water purchased (-$283,000) and lower than planned expenses for maintenance (-$29,000), utilities (-$14,000), supplies (-$9,000), regulatory required water testing (-$9,000) and non-labor Administrative & General (-$9,000) which were partially offset by increased costs for Miss Dig service (+$12,000). Capital expenditures for the first six months of the fiscal year totaled $1,232,185 and were for the rehabilitation of the 16 water main in Coolidge from 13 Mile to 14 Mile ($1,191,200), the initial engineering expenses for the replacement of the 16 water main in 14 Mile between

20 Greenfield and east of Coolidge ($37,000) and partial expenses for the replacement of a two water meter locations ($4,000) meter. Additional financial detail is attached. The following is the Authority s record of revenues and expenditures based on the average cost per 1,000 cu. ft. of water. 2016/ / /19 Over or Under 2017/18 Total Sales (MCF) 763, , ,542-8,875 Water Sales $19.90 $20.06 $ Other Income Total Income $19.97 $20.16 $ $0.38 Water Purchased for Resale Operating Expenses Total Operating Expenses $16.69 $17.59 $ $0.80 Available for Improvements $3.28 $2.57 $2.15 -$0.42 COMPARATIVE STATEMENT The following is a comparison of the first six months operation of the current fiscal year with the same period of the previous fiscal year. Revenues From the Sale of Water + $84,225 Revenues From Other Sources + 14,613 TOTAL REVENUES + $ 98,838 Operating Expenses Water Purchased for Resale + $234,435 Other Operating Expenses + 193,272 TOTAL EXPENDITURES + $427,707 NET INCOME BEFORE DEPRECIATION - $328,869 The following is the record of water sales to member municipalities for the period July 1 through December 31. The six month record shows a decrease in water sales of 3.3% during the current fiscal year compared with the same period of the previous fiscal year. For the six month period, our sales were almost exactly the same as the budgeted sales.

21 WATER CONSUMPTION DAILY AVERAGE (MGD) JULY 1 THROUGH DECEMBER 31 Over or Under 2017 Month July August September October November December Average Variance +5.6% +7.8% -3.6% -1.2% The following is the precipitation record, as recorded at the Webster Station: PRECIPITATION INCHES Month July August September October November December Total: MAJOR PROJECTS GLWA WATER RATES GLWA will be announcing the rates for 2019/20 in late January. GLWA is budgeting water sales for 2019/20 that will be slightly higher than the 2018/19 budget. GLWA also reduced their interest costs on some of their outstanding bonds through a refinancing completed in the fall of SOCWA was also able to renegotiate our contract with GLWA to include lower water demands. Those three factors should help to mitigate the rate increases from GLWA that we have received in the past several years. SOCWA water rate estimates will be provided to the SOCWA Board at their February meeting. GLWA ISSUES GLWA Customer Outreach GLWA has adopted the same Customer Outreach Program that DWSD has used for many years. SOCWA staff is continuing to participate in the GLWA Customer Outreach Process. I have been serving as one of five elected customer co-chairs of the Technical Advisory Committee that guides this process. Significant progress has been made in improving the level of

22 communication and understanding between GLWA and its customers through this process, which will be a continuing effort. SOCWA continues to be a strong proponent of GLWA s customer partnering process. The principals of Project Innovations, the third-party facilitator that ran the Customer Outreach Program, retired in mid The third-party facilitation role has been assumed by Bridgeport Consulting. Bridgeport has done an excellent job in getting up to speed on the many Customer Outreach activities. The Customer Outreach Program continues to be very important in continuing the excellent relationship between GLWA and its customers. GLWA Board of Directors Mr. Brian Baker, the GLWA Director representing Macomb County was elected Board Chair for Mr. Baker replaces Mr. Freman Hendrix, one of the City of Detroit representatives, who was Board Chair for Highland Park Highland Park continues to owe GLWA approximately $6.5 million in unpaid water bills and $34 million in unpaid sewer bills. Highland Park continues to make partial payments to GLWA but these payments are not large enough to keep the total balance owed from continuing to grow. GLWA is continuing to pursue collection of the unpaid amounts. GLWA Website The GLWA website, is a great source of information regarding GLWA. The agendas and minutes for all Board and Board Committee meetings are posted along with procurement information about all projects being performed by GLWA. PENSION FUNDING The Board continued to take additional steps to address the underfunded status of SOCWA s pension plans by contributing additional funding to both the salaried and union pension plans. SOCWA has been contributing substantially above the actuarially required amounts to the salaried pension plan for six years and the unfunded liability for that plan has been significantly reduced. The 2018 incremental contribution to the Union plan was the third year we have made an incremental contribution. MERS will complete their actuarial study to determine the funding status of the pension plans before June COOLIDGE AND 14 MILE ROAD WATER MAIN REHABILITATION PROJECTS SOCWA has completed the rehabilitation of a one-mile section of 16 cast iron water main in Coolidge between 13 Mile and 14 Mile by installing a 16 polyethylene plastic liner inside of the old cast iron water main. This is the first installation of this type and size in Michigan. The contractor will be returning in the spring of 2019 to finish a small punch list of items including the final restoration of the areas excavated during construction. We have also taken proposals for the replacement of approximately 2 miles of 16 cast iron in 14 Mile Road from Greenfield to just east of Coolidge. This section of 14 Mile is being repaved by Birmingham and Royal Oak in the spring of Our existing water main is under the pavement for the majority of the repaving project. This project, which will be performed by pipe bursting the existing 16 cast iron main and replacing it with 16 polyethylene plastic main, was awarded to Verdeterre Contracting at the December SOCWA Board meeting. The project is scheduled to be completed before the repaving work starts. Included in this project is the replacement of a pressure reducing valve currently located in the intersection of 14 Mile and

23 Coolidge, which is a very difficult location to service. This valve is being relocated south of 14 Mile. The total cost of this project is approximately $2 million and it will be funded through retained earnings. SALE OF WATER TO THE VILLAGE OF FRANKLIN The village of Franklin is exploring alternatives to supply water to the commercial area on Franklin Road south of 14 Mile. Under SOCWA s Articles of Incorporation, which date to 1993, Franklin can become a member of SOCWA when a water system is installed. The Articles need to be updated to reflect the many changes that have occurred since Franklin becoming a member of SOCWA could provide the opportunity to update the Articles. SOCWA staff and legal counsel are working on revised Articles that will be reviewed by the SOCWA Board. Revising the Articles will require the unanimous approval by the governing bodies of all SOCWA member communities. ANNUAL AUDIT The audit report for the 2017/18 fiscal year was completed by our auditors, Plante & Moran, and was reviewed at the November SOCWA Board meeting. The audit found the Authority to be in complete conformity with generally accepted accounting practices. The auditors concluded that the Authority s level of working capital increased by $1,285,000 during the fiscal year and that working capital continues to be maintained above the goal level established by the Board. The net position of SOCWA increased by $1,429,000 during the year. We will be spending a significant portion of our working capital on the water main projects discussed above. Respectfully submitted, Jeffrey A. McKeen, P.E. General Manager

24 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY BUDGET ANALYSIS Period: 07/01/18..12/31/18 SOCWA Fiscal Start Date: 07/01/18 G/L Budget Filter: FY All amounts are in USD. Description ACTUAL BUDGET VARIANCES OVER OR UNDER REVENUES OPERATIONS SALE OF WATER 9,434, ,561, , SALE OF WATER OTHERS 5,439, ,861, , ,874, ,422, , OTHER INCOME RENTALS 34, , , WATER ANALYSIS-LAB & MISC 5, , INTEREST ON INVESTMENTS 48, , , , , , TOTAL REVENUES 14,962, ,513, , EXPENSES WATER PURCHASED FOR RESALE 6,862, ,029, , WATER PURCHASE IN TRANSIT 5,404, ,521, , POWER, PUMPING & GROUNDS WEBSTER 291, , , POWER, PUMPING & GROUNDS 86, , , COMPUTER OPERATIONS 44, , , PURIFICATION 37, , , METERS & MAINS 125, , , ADMINISTRATIVE & GENERAL 541, , , ,394, ,732, , TOTAL EXPENSES 13,394, ,732, , NET INCOME BEFORE DEPRECIATION 1,568, ,781, ,390.87

25 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY BUDGET ANALYSIS Period: 07/01/18..12/31/18 SOCWA Fiscal Start Date: 07/01/18 G/L Budget Filter: FY All amounts are in USD. Description ACTUAL BUDGET VARIANCES OVER OR UNDER REVENUES OPERATIONS SALE OF WATER 9,434, ,561, , SALE OF WATER OTHERS 5,439, ,861, , ,874, ,422, , OTHER INCOME RENTALS 34, , , WATER ANALYSIS-LAB & MISC 5, , INTEREST ON INVESTMENTS 48, , , , , , TOTAL REVENUES 14,962, ,513, , EXPENSES WATER PURCHASED FOR RESALE 6,862, ,029, , WATER PURCHASE IN TRANSIT 5,404, ,521, , POWER, PUMPING & GROUNDS WEBSTER 291, , , POWER, PUMPING & GROUNDS 86, , , COMPUTER OPERATIONS 44, , , PURIFICATION 37, , , METERS & MAINS 125, , , ADMINISTRATIVE & GENERAL 541, , , ,394, ,732, , TOTAL EXPENSES 13,394, ,732, , NET INCOME BEFORE DEPRECIATION 1,568, ,781, ,390.87

26 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY STATEMENT OF REVENUES & EXPENDITURES COMPARED WITH TOTAL BUDGET Period: 07/01/18..12/31/18 SOCWA Fiscal Start Date: 07/01/18 G/L Budget Filter: FY Description TOTAL ACTUAL 6 MONTHS TOTAL BUDGET REMAINING BUDGET % Received or expended REVENUES OPERATIONS SALE OF WATER 9,434, ,900, ,466, % SALE OF WATER OTHERS 5,439, ,995, ,556, % 14,874, ,896, ,022, % OTHER INCOME RENTALS 34, , , % WATER ANALYSIS-LAB & MISC 5, , , % INTEREST ON INVESTMENTS 48, , , % 88, , , % TOTAL REVENUES 14,962, ,078, ,115, % EXPENSES WATER PURCHASED FOR RESALE 6,862, ,070, ,207, % WATER PURCHASED IN TRANSIT 5,404, ,521, , % POWER, PUMPING & GROUNDS WEBSTER 291, , , % POWER, PUMPING & GROUNDS 86, , , % COMPUTER OPERATIONS 44, , , % PURIFICATION 37, , , % METERS & MAINS 125, , , % ADMINISTRATIVE & GENERAL 541, , , % 13,394, ,724, ,329, % NET INCOME BEFORE DEPRECIATION 1,568, ,645, ,214, % DEPRECIATION 249, ,249.00

27 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY COMPARATIVE STATEMENT Period: 07/01/18..12/31/18 SOCWA Fiscal Start Date: 07/01/18 All amounts are in USD. 2018/ /2018 OVER OR (UNDER) REVENUES OPERATIONS SALE OF WATER 9,434, ,282, , SALE OF WATER OTHERS 5,439, ,506, (67,174.43) 14,874, ,789, , OTHER INCOME RENTALS 34, , (2,809.20) WATER ANALYSIS-LAB & MISC 5, , , INTEREST ON INVESTMENTS 48, , , , , , TOTAL REVENUES 14,962, ,864, , EXPENSES WATER PURCHASED FOR RESALE 6,862, ,659, , WATER PURCHASE IN TRANSIT 5,404, ,373, , OPERATING EXPENSES 1,127, , , FIXED CHARGES 13,394, ,966, , NET INCOME BEFORE DEPRECIATION 1,568, ,897, (328,869.10)

28 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY TOTAL CHARGES Period: 7/1/18-12/31/18 SOCWA Fiscal Start Date: 7/1/18 MUNICIPALITY WATER CONSUMPTION CUBIC FEET TOTAL WATER CHARGES BERKLEY 27, $ 478, BEVERLY HILLS 22, $ 395, BINGHAM FARMS 6, $ 115, BIRMINGHAM 67, $ 1,159, CLAWSON 23, $ 393, HUNTINGTON WOODS 14, $ 251, LATHRUP VILLAGE 11, $ 201, PLEASANT RIDGE 6, $ 112, ROYAL OAK 128, $ 2,208, SOUTHFIELD 229, $ 3,956, DETROIT ZOO & RACKHAM 9, $ 162, MEMBERS 548, $ 9,434, NON-MEMBERS BLOOMFIELD HILLS 34, $ 1,032, BLOOMFIELD TOWNSHIP 145, $ 4,407, , $ 5,439, TOTAL 728, $ 14,874,027.08

29 SOUTHEASTERN OAKLAND COUNTY WATER AUTHORITY Improvement Fund Period: 7/1/18-12/31/18 FIXED ASSET EXPENDITURES COOLIDGE MAIN REPLACEMENT 1,191, MILE MAIN REPLACEMENT 37, METER REPLACEMENTS 3, ,232,185.25

30 6-E

31 February 1, 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: Investments July 1, 2018 through December 31, 2018 Board Members: Attached is a list of the investments made by the Authority during the period July 1, 2018 through December 31, These investments are in compliance with Act 79 of the Public Acts of The Board of Trustees has authorized the General Manager to enter into agreements with Comerica, Michigan First CU, Flagstar, PNC, The Oakland County Local Government Investment Pool and Ambassador Capital Management for the investment of surplus funds as provided for in Public Act 367. The attached list shows the interest made from these investments: Interest Fiscal Year Earned 2010/11 15, /12 30, /13 29, /14 42, /15 27, /16 25, /17 39, /18 61, /19 1 st half 56,605 The investment policy followed by the Authority is to have 90% or more of all available funds invested. On December 31, 2018 the Authority had 99.9% of all funds invested and accruing interest. It is recommended that this report be received and filed and made a part of the Board record. Submitted by: Amy C. McIntire Accountant-Treasurer Approved by: Jeffrey A. McKeen, P.E. General Manager Attach. Suggested Resolution: "That the report on investments made by the Authority during the period July 1, 2018 through December 31, 2018 be received and filed and made a part of the Board record." 6-F

32 SOCWA Investments July 1, December 31, 2018 ACCOUNT Institution Amount Purchase Date Maturity Date Yield FLAGSTAR BANK - CDARS Flagstar 503, /13/2018 3/14/ FLAGSTAR BANK - CDARS Flagstar 604, /2/2018 1/31/ FLAGSTAR BANK - CDARS Flagstar 607, /23/2018 2/21/ FLAGSTAR BANK - CDARS Flagstar 611, /18/2018 4/18/ FLAGSTAR BANK - CDARS Flagstar 610, /8/2018 5/9/ FLAGSTAR BANK - CDARS Flagstar 506, /29/2018 5/30/ $3,443, July August September October November December Total SOCWA RECEIVING FUND Comerica FLAGSTAR SAVINGS Flagstar 1, , , , , , , SOCWA O & M FUNDS Flagstar , SOCWA RECEIVING FUND Flagstar , LONG TERM INVESTMENT Michigan First , MMRMA INVESTMENT MMRMA 0.00 OAKLAND COUNTY SAVINGS Oakland County 2, , , , , , , PNC LONG TERM INVESTMENT PNC Total Interest Income $ 5, $ 8, $ 10, $ 14, $ 11, $ 7, $ 56,605.28

33 February 4, 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: GLWA Issues Board Members: This report is intended to update the Board on the GLWA issues that have been discussed at recent Board meetings. GLWA Board The Governor s Office appoints one of the 6 GLWA Board members. It appears that the Governor will be appointing a Flint resident to replace Craig Hupy, who is the Public Services Area Administrator for the City of Ann Arbor. The State and Flint apparently agreed that the Governor would appoint a Flint representative to the Board, but Governor Snyder never made that appointment. It is unclear when the new appointment will be made and if the new appointment will delay the approval of the 2019/20 rates, which require a supermajority of 5 votes from the 6-member GLWA Board. Investigation of Prestressed Concrete Cylinder Pipe (PCCP) GLWA has begun the inspection of 8 miles of the 48 PCCP on 14 Mile Road in the Farmington Hills area that had the major main break in This $2.2 million inspection contract will have 3 phases: using a ball type device that travels inside the pipe to look for existing leaks; a separate electromagnetic device that also travels inside the pipe to examine the condition of the internal surface of the pipe and to examine the condition of the prestressed wire imbedded in the pipe; and an acoustic fiber optic cable placed inside of the pipe and left in place while the pipe is in service to monitor for future breaks of the prestressed wires. The goal of this project is to determine if this relatively new technology can successfully determine the condition of PCCP in order to develop long term maintenance and replacement plans. This project will take about 2 years to complete. GLWA and the communities served by this dead-end system have field tested the procedures that will be used for inserting and retrieving the ball type device. The ball type device should be run through the pipe during February. SOCWA staff will be following this project very closely to determine if this technology can be used in the PCCP mains in the SOCWA system. Respectfully submitted, Jeffrey A. McKeen, P.E. General Manager Suggested Resolution: That the report on GLWA issues be received and filed. 6-G

34 February 6, 2019 Board of Trustees Southeastern Oakland County Water Authority Subject: Replacement of 16 Water Main in 14 Mile Road Board Members: The contract for the replacement of the 16 water main in 14 Mile Road from Greenfield to east of Coolidge has been reviewed by Mr. Davis and our insurance agent. The suggested revisions to the contract and the insurance coverages have been made and the contract has been signed. The contractor plans to begin work on February 11 with the replacement of the pressure reducing valve at Coolidge and 14 Mile Road. Shortly thereafter, the contractor will also begin the installation of the new main at Greenfield and 14 Mile. The traffic control on 14 Mile is to be placed on February 7. The current schedule calls for the water main work to be completed by July 3. SOCWA staff is working to revise our water system configuration to allow the 14 Mile Road main to be taken out of service. HRC is continuing to work with the CN Railroad to obtain the permit required to install the new main underneath the railroad viaduct at 14 Mile and Coolidge. CN is requiring the installation of a steel casing pipe which would require significant excavation underneath the viaduct in a very congested right-of-way. The installation of a casing would be significantly more expensive and intrusive than the pipe bursting method that is specified in our contract. CN railroad did not notify HRC of the casing requirement until months after the permit application had been submitted. If we are not able to obtain the permit, we may wind up leaving the existing main in service underneath the railroad viaduct. We are also working with HRC to identify a cost-effective method of replacing this main as it crosses Woodward. As our 16 main crosses Woodward, the diameter of the main changes from 16 to 24 and returns to 16 on the opposite side of Woodward. The current contract includes the cleaning and televised inspection of the 24 main in order to determine if this main needs to be replaced. Alternative methods of replacing the 24 main would be to slip line the existing main with polyethylene pipe or directionally boring a new 16 main under the other utilities in Woodward. We have a very expensive price quote for the directional boring option which would result in the new main being 15 feet deep. We are awaiting a price quote for the slip lining alternative. HRC is working with MDOT to modify our permit for this job to allow excavations in the right-of-way if they are required. We hope to determine our course of action regarding this main by the February 13 Board meeting. Respectfully submitted, 6-H Jeffrey A. McKeen, P.E. General Manager Suggested Resolution: That the report on Replacement of 16 Water Main in 14 Mile Road be received and filed.