BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT THIRD DISCOVERY REQUEST STORMWATER RATE CHANGE PROCEEDING

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1 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT THIRD DISCOVERY REQUEST ISSUE: WITNESS: SPONSORING PARTY: STORMWATER RATE CHANGE PROCEEDING METROPOLITAN ST. LOUIS SEWER DISTRICT RATE COMMISSION DATE PREPARED: APRIL 10, 2018 Lashly & Baer, P.C. 714 Locust Street St. Louis, Missouri 63101

2 BEFORE THE RATE COMMISSION OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT For Consideration of a Stormwater ) Rate Change Proposal by the Rate Commission ) of the Metropolitan St. Louis Sewer District ) DISCOVERY REQUEST OF THE RATE COMMISSION Pursuant to and of the Charter Plan of the Metropolitan St. Louis Sewer District (the Charter Plan ), Operational Rule 3(5) and Procedural Schedule 1, 17 and 18 of the Rate Commission of the Metropolitan St. Louis Sewer District ( Rate Commission ), the Rate Commission requests additional information and answers from the Metropolitan St. Louis Sewer District ( District ) regarding the Rate Change Proposal dated February 26, 2018 (the Rate Change Proposal ). The District is requested to amend or supplement the responses to this Discovery Request, if the District obtains information upon the basis of which (a) the District knows that a response was incorrect when made, or (b) the District knows that the response, though correct when made, is no longer correct. The following Discovery Requests are deemed continuing so as to require the District to serve timely supplemental answers if the District obtains further information pertinent thereto between the time the answers are served and the time of the Prehearing Conference. 2

3 THIRD DISCOVERY REQUEST 1. Please provide the number of parcels within the District which are not currently subject to District wastewater charges (e.g., because the land is vacant), but are included in the property tax rolls of St. Louis County of the City of St. Louis, and therefore are subject to the $0.10 O&M stormwater tax authorized by Proposition S (2016). (a) (b) (c) Of these parcels, please state what percentage have impervious area and therefore would also pay the proposed Stormwater Capital Rate. Please provide the anticipated potential new revenue from this group of ratepayers. Please state what percentage that amount of revenue represents of the total anticipated revenue from the proposed Stormwater Capital Rate. 2. MSD Exhibit 30N provides an assessed valuation trend analysis going back to Please provide such analysis for the years MSD Exhibit 30C lists the potential annual charges from the proposed Stormwater Capital Rate for five ratepayers. Please provide similar information for additional ratepayers, from various classes of ratepayers, such as commercial developments, including big box stores, large school campuses & universities, larger school districts (e.g., Rockwood, Parkway, Lindbergh), large non-profit entities, large churches in various areas of the District service area, casinos, and few large industrial or manufacturing facilities. 4. Please provide pie charts demonstrating the anticipated percentage of annual revenue from various classes and sub-classes of ratepayers from the proposed Stormwater Capital Rate. Specifically, please provide pie charts demonstrating the amount of anticipated annual revenue derived from the following classes/subclasses: Chart 1: Chart 2: Chart 3: Residential, Commercial, Large Industrial/Manufacturing, Non- Profit; Of the residential ratepayers, the amount per each of the 4 tiers; Of the commercial ratepayers, provide a breakdown by 4 sizes of parcels: (1) smaller (e.g., a typical of a single business); (2) medium (typical of a small strip mall or larger standalone business like a big box store, such as a Menards); (3) larger parcels (such as a major big box store development, car dealership, or similar larger 3

4 Chart 4: parcels or parcels developed together); and (4) mega-commercial (such as a shopping mall, larger car dealership, casino, etc.); and Of the Non-Profits, provide a breakdown similar to the commercial breakdown, showing the percentage of revenue to be derived from: (1) small single lots; (2) medium size churches or schools; (3) large churches or school campuses; and (4) larger universities, major universities & school districts, etc. 5. Please explain in detail how the District evaluated and chose the option of a onetime credit/incentive) as opposed to an ongoing credit/incentive program. Given the scope of the problems associated with flooding and erosion caused or worsened by stormwater runoff, please explain why an ongoing credit/incentive program was not justified. 6. Has the District considered a combined credit/incentive or cost-sharing program with the intent of reducing impervious surface in the District s service area? If such a program was considered, please explain in detail why it was rejected. 7. Has the District considered establishing an ongoing program of education and information funded through the proposed Stormwater Capital Rate to, at a minimum, encourage citizens to understand the need to reduce impervious surface and the impact of impervious surface on the public health and the area s water quality? If such a program was considered, please explain in detail why it was rejected. 8. Please provide any legal opinion prepared by the District, or on behalf of the District, analyzing whether the proposed Stormwater Capital Rate is a rate/charge under 3.020(16) of the District s Charter Plan, as opposed to a tax or special assessment. 9. In testimony at the April 4, 2018 technical conference, Brian Hoelscher testified that, if it is determined that the District lacks the authority to assess the proposed Stormwater Capital Rate against non-profit entities, or the District elects not to do so, that the District would reduce or eliminate the services that would be provided to non-profit entities. Please give 4

5 specific examples of what services a non-profit entity would not be eligible to receive from the District if non-profits do not pay the proposed Stormwater Capital Rate. 10. In testimony at the April 4, 2018 technical conference, Brian Hoelscher testified that the District intends to charge the Stormwater Capital Rate to residents/property owners who do not currently receive a bill for wastewater services. Please give one or more example(s) of the types of parcel(s) which would not be charged for wastewater services, but would be charged the Stormwater Capital Rate. 11. Does the District presently assess the property tax authorized by Proposition S (2016) against persons described in , RSMo. (residential real property owners within the District s service area whose property does not receive sanitary sewer services from the District and whose property does not cause stormwater to flow into the District s sewer system)? Please explain why or why not. 12. If the District later determines that the monthly charge per ERU ($2.25 per month) should be increased, is it the District s position that voter approval would be legally required? Please explain why or why not. Would the District seek voter approval even if it determined that it was not legally obligated to do so? If the District has prepared or received a legal opinion on this topic, please provide a copy of same. 13. Does MSD anticipate taking over maintenance of private detention/retention ponds/facilities, such as those currently owned and/or maintained by homeowners associations or subdivision trustees? 14. Does the District have a specific list of types of best management practices ( BMPs ) that would be eligible for the residential credit program? If such list exists, could residential ratepayers apply for a credit for items or features not on such list which they believe meet the minimum capture criteria (500 sq. ft. impervious area captured)? See MSD Ex. 1, p Would customers with rain gardens installed as part of the Combined Sewer Overflow ( CSO ) Rainscaping program receive the one-time incentive? 5

6 15. If a residential property owner receives the one-time credit, but sells the property within 10 years while the credit is active, is there a requirement for such property owner to reimburse the District the remaining amount? Would the new property owner be required to continue to maintain the BMP? Would the new property owner be required to reapply for the credit? Will such BMPs be inspected by the District? If yes, please state the frequency of such inspections. 16. Does the District believe that the upfront award of a credit would drive more participation than an ongoing 50% credit on the ratepayer s monthly bill? Explain why or why not. 17. Will the residential credit (50% of the average residential bill over 10 years) be calculated as 0.5 multiplied by the annual cost of 1 ERU over 10 years for all residential customers? Or will credits for residential ratepayers in each of the four tiers vary based on tiers? 18. Will private roads maintained by a homeowners association or subdivision trustees be included in calculations of impervious area throughout the District s service area? If the answer is yes, who will the District bill? Please explain the District s rationale for including or not including such roads in calculations of impervious area? 19. How frequently will the District update the stormwater billing database? Will updates be made monthly to address property owner changes, changes to impervious area, etc.? 20. Please provide a breakdown of the 40 full time employees that will be employed for stormwater capital projects funded by the Stormwater Capital Rate. How many of these will be new employees and how many will be current employees who will be moved from existing programs to this program? 6

7 21. In testimony at the April 4, 2018 technical conference, Marion Gee provided a summary of budgeted and actual bad debt allowance for Fiscal Year 2016 and Fiscal Year Can the District explain why Fiscal Year 2017 is nearly ½ lower than Fiscal Year 2016? 22. Table 4-6 (See MSD Ex. 1, p. 4-7) indicates that the costs of this program are being capitalized. Does the District envision that costs associated with billing, collections, inspections, etc., would be capitalized, or are such costs associated with the Stormwater Capital Rate anticipated to be recovered through the District s O&M fund? 23. In testimony at the April 4, 2018 technical conference, Tom Beckley indicated that he could provide a comparison of Proposition S revenues compared to projected revenue at the time of the last rate proposal. Please provide such an analysis. 24. Please describe how condominiums will be treated for purposes of billing the Stormwater Capital Rate. Will they be treated as commercial property? Will impervious area in common areas and driveways be included within calculations of impervious area? Who would the District bill for such impervious area? 25. Please provide the credit program manuals referenced by Henrietta Locklear in her testimony at the April 4, 2018 technical conference (Baltimore, Northeast Ohio Regional Sewer District). Please provide any manuals relating to credits for homeowners associations and/or subdivision trustees. 26. Please provide any study within the District s custody supporting its methodology for prioritizing projects in the CIRP-1 and CIRP-2 project lists. See MSD Ex. 1, p Please explain how the district calculates the cost and benefit of projects to determine a project s priority. Please provide examples of the District s scoring process. How has this cost/benefit analysis been modified based on homeowner input? 7

8 27. Please explain in detail how the conceptual cost estimate of $562 million will be adjusted over time as projects are completed, certain projects are eliminated, or certain projects become more pressing. 28. Please clarify whether (a) native, undeveloped property and/or (b) vacant property which was previously developed (e.g., a lot where a building has been razed and the soil compacted) would be subject to the proposed Stormwater Capital Rate. Please explain the District s rationale for including/excluding such properties. 29. Please explain how requirement that a BMP capture runoff from a minimum of 500 square feet of impervious area to qualify for a residential credit/incentive was determined? Respectfully submitted, /s/ Brian J. Malone Lisa O. Stump Brian J. Malone LASHLY & BAER, P.C. 714 Locust Street St. Louis, Missouri Tel: (314) Fax: (314) lostump@lashlybaer.com bmalone@lashlybaer.com 8

9 CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing was sent by electronic transmission to Janice Fenton, Office Associate Senior, Metropolitan St. Louis Sewer District; Susan Myers, Counsel for the Metropolitan St. Louis Sewer District; and Brandon Neuschafer, Counsel for the Missouri Industrial Energy Consumers, on this 10th day of April, Ms. Janice Fenton Office Associate Senior Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO JFENTON@stlmsd.com Ms. Susan Myers General Counsel Metropolitan St. Louis Sewer District 2350 Market Street St. Louis, MO smyers@stlmsd.com Counsel for the Metropolitan St. Louis Sewer District Brandon Neuschafer Bryan Cave Leighton Paisner LLP One Metropolitan Square, Suite 3600 St. Louis, MO bwneuschafer@bclplaw.com Counsel for Intervenor Missouri Industrial Energy Consumers /s/ Brian J. Malone Brian J. Malone 9