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MWMC MEETING AGENDA
Friday, May 10, 2019 @ 7:30 a.m.
City of Springfield City Hall, Library Meeting Room
225 Fifth St., Springfield, OR 97477
Turn off cell phones before the meeting begins.
7:30 – 7:35 I. ROLL CALL
7:35 – 7:40 II. CONSENT CALENDAR
a. MWMC 4/12/19 Minutes
Action Requested: By motion, approve the Consent Calendar
7:40 – 7:45 III. PUBLIC COMMENT
Request to speak slips are available at the sign-in desk. Please present request slips to
the MWMC Secretary before the meeting starts.
7:45 – 7:55 IV. FY 2018-19 SUPPLEMENTAL BUDGET #4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meg Allocco
Action Requested: By motion, move to approve Resolution 19-07
7:55 – 8:20 V. AWARD OF CONTRACT FOR PURCHASE OF RENEWABLE NATURAL GAS
EQUIPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Josh Newman
Action Requested: By motion, move to approve Resolution 19-08
8:20 – 8:45 VI. 2019 FINANCIAL PLAN ADOPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Katherine Bishop
Action Requested: By motion, move to approve Resolution 19-09
8:45 – 9:00 VII. STATE REVOLVING FUND (SRF) LOAN DISCUSSION . . . . . . . . . . . . . . . . . . . . .Meg Allocco
Action Requested: Discussion and direction on early retirement of debt
9:00 – 9:10 VIII. BUSINESS FROM COMMISSION, GENERAL MANAGER, & WASTEWATER DIRECTOR
9:15 IX. ADJOURNMENT
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The meeting location is wheelchair-accessible. For the hearing-impaired, an interpreter can be provided with 48-
hours-notice prior to the meeting. To arrange for service, call 541-726-3694. All proceedings before the MWMC are
recorded.
MWMC MEETING MINUTES
Friday, April 12, 2019 at 7:30 a.m.
City of Springfield City Hall, Library Meeting Room
225 Fifth St., Springfield, OR 97477
President Keeler opened the meeting at 7:30 a.m. Roll call was taken by Kevin Kraaz.
ROLL CALL
Commissioners Present: Pat Farr, Bill Inge, Doug Keeler, Joe Pishioneri, Peter Ruffier and Jennifer Yeh
Conference Phone: Walt Meyer
Staff Present: Meg Allocco, Todd Anderson, Nate Bell, Katherine Bishop, Dave Breitenstein, John Casto,
Mark Cooper, Steve Forrester, John Huberd, Laura Keir, Tonja Kling, Kevin Kraaz, Shawn Krueger, Barry
Mays, Troy McAllister, James McClendon, Todd Miller, K.C. Huffman (attorney), Josh Newman, Loralyn
Spiro, Matt Stouder. Mark Van Eeckhout and Greg Watkins
Guest: Wayne Gresh, Carollo Engineers
CONSENT CALENDAR
a. MWMC 3/08/19 Minutes
MOTION: IT WAS MOVED BY COMMISSIONER PISHIONERI WITH A SECOND BY COMMISSIONER
RUFFIER TO APPROVE THE CONSENT CALENDAR AS PRESENTED. THE MOTION PASSED
UNANIMOUSLY 7/0.
PUBLIC COMMENT
There was no public comment.
FY 2019-20 REGIONAL USER RATES, PUBLIC HEARING, AND ADOPTION
Katherine Bishop, ESD Program Manager, thanked the Commission for their input on the budget and
staff for their work on the budget, especially Tonja Kling who compiles the budget.
Ms. Bishop went over the rates and budget schedule, stating that after the two public hearings today,
the MWMC’s Budget and Capital Improvements Program will be going to the three partners for
ratification- Springfield City Council on Monday, May 6, Eugene City Council on Monday, May 13, and to
the Lane County Board of Commissioners on Tuesday, May 21. After the budget is ratified by all three
agencies, staff will return to the MWMC for final adoption at the June 14 meeting.
March 8, 2019 MWMC Minutes
Page 2 of 15
Ms. Bishop stated the proposed FY 2019-20 Capital Improvement Plan is budgeted for $18.5 million. This
includes $10.6 million in carryover funds. The Regional 5-year Capital Plan forecast reflects almost $57
million. The regional Operating Budget (Eugene and Springfield combined) includes funding one
additional FTE and a one-time expense in Capital Outlay. The actual Operating Budget change is 3%
when compared to the FY 2018-19 adopted budget, and when compared to the amended budget, it is a
2% change.
The proposed 2% rate change would go into effect July 1, 2019. For a customer that has 5000 gallons of
wastewater treated it would be a $0.53 monthly increase, which equates to $27.02 (regional monthly
charge). Ms. Bishop showed a slide with the following information on it.
MWMC Schedule of Regional Wastewater Sewer User Fees
for Fiscal Year 2019-2020
Base Charge per Account $13.35
Flow-Based Fee Per Unit (748 gallons) Per 1,000 gallons
Residential $2.016 $2.694
Low Strength $2.708 $3.622
Medium Strength $3.946 $5.276
High Strength $5.600 $7.487
Very High Strength $7.258 $9.703
Super High Strength $8.912 $11.916
Septage $132.00
Hauled Waste (non-septage) $132.00
Commissioner Ruffier asked if Ms. Bishop knew how many users were in the super high strength
category. Ms. Bishop said with Eugene combined she does not have that number off the top of her head.
She believes the microbreweries fall into that category.
Commissioner Inge said he has an issue with using the 5000 gallons for the comparison rate. He asked
what the actual average is. Ms. Bishop replied that Springfield’s average is 4,300 gallons and Eugene is
3,600 gallons. Commissioner Inge said what bothers him about using 5000 gallons is that it over inflates
what the increase would be and he does not understand why we do that.
Mr. Stouder replied that in the budget/rate presentation, staff does give the average amount for
Springfield and Eugene, but when comparing to other communities, we need to use a normalized
number and 5000 gallons is what is used in the industry. Commissioner Inge asked why they do not use
actual numbers. Mr. Stouder replied that their actual numbers are per unit and units vary from city to
city. Springfield’s unit is 748 gallons and Eugene’s is 1,000 gallons.
Commissioner Meyer said that when staff shows the table with the monthly increase amounts, it should
be using the actual average for each city and when we do the chart that shows how we compare to
other communities, he is okay with using the 5000 gallons.
Commissioner Farr asked why the two communities do not use the same unit. Ms. Bishop replied that
we have two different water purveyors – EWEB and SUB and they measure differently.
Public Hearing: President Keeler opened the public hearing on user rates. There were no comments.
President Keeler closed the public hearing.
March 8, 2019 MWMC Minutes
Page 3 of 15
DISCUSSION: Commissioner Ruffier stated he would like to reiterate his comments from the March
meeting about considering the review and possible reclassification of the position formerly held by John
Casto. He thinks a position that could provide more resources for strategic analysis is needed. He would
encourage Mr. Stouder not to hold that position vacant for budgetary reasons without seriously looking
at filling it to provide more resources. Mr. Stouder thanked Commissioner Ruffier for his suggestion. He
went on to say the position is in the budget and however long it remains vacant it will be a savings. He
has some ideas on how to move forward with that position and has planned, in the coming months, a
conversation around strategic planning with the Commission to flesh out ideas and direction the
Commission may have. Commissioner Ruffier stated that he recognizes that sometimes the internal
discussions with City bureaucracy can be challenging concerning reclassifying positions. He encouraged
Mr. Stouder to come back to the Commission if he needed any further direction.
Commissioner Ruffier said he attended Eugene’s Public Hearing on wastewater rates and there was only
one comment submitted and it was neutral. Mr. Breitenstein replied that he had seen a transcript of the
public hearing and there had been two written comments submitted in addition to the one given at the
hearing but the public hearing was on only the Eugene local rates.
MOTION: IT WAS MOVED BY COMMISSIONER PISHIONERI WITH A SECOND BY COMMISSIONER YEH
TO APPROVE RESOLUTION 19-05. THE MOTION PASSED UNANIMOUSLY 7/0.
FY 2019-20 RWP BUDGET AND CIP, PUBLIC HEARING, AND ADOPTION
Ms. Bishop asked for a public hearing on the Regional Wastewater Program Budget and Capital
Improvement Plan for FY 2019-20.
Public Hearing: President Keeler opened the public hearing on the FY 2019-20 the MWMC budget.
There were no comments. President Keeler closed the public hearing.
MOTION: IT WAS MOVED BY COMMISSIONER PISHIONERI WITH A SECOND BY COMMISSIONER YEH
TO APPROVE RESOLUTION 19-06. THE MOTION PASSED UNANIMOUSLY 7/0.
PROCUREMENT RULES UPDATE
K.C. Huffman, MWMC legal counsel, stated that Shawn Walker, an attorney from his office, worked on the
Procurement Rules for the MWMC. Mr. Huffman said that each time the state legislature meets and
makes changes to the Public Contracting Code; the Attorney General’s office is required to update its
Model Rules. Under ORS 279A.065(b), the MWMC is obligated to review Revised Model Rules to
determine whether the MWMC’s Procurement Rules should be modified to ensure compliance with the
Public Contracting Code. This year some of the changes made applied only to state agencies. The state
usually applies new rules to state agencies first to see how it works, and if it does well then they will
make them applicable to the local agencies. Therefore, he put them in the memo as a heads-up for staff
and Commission.
Commissioner Keeler stated that in the first paragraph of the memo (3rd line from bottom of paragraph)
it says, “…the Model Rules that are currently in the proposal process.” President Keeler asked if the
MWMC was ahead of the State. Mr. Huffman replied that he believes they had their meeting already and
the expectation was that they were going to approve as presented. He has not confirmed that it has
taken place, but will.
March 8, 2019 MWMC Minutes
Page 4 of 15
President Keeler asked why they are called the 2018 Procurement Rules. It seems as though we are
lagging there. Mr. Huffman replied they are based on the 2018 legislature. The legislature passed the
rules in 2018, and then the Attorney General has to update the Model Rules, which brings us into 2019.
Now we need to update our rules. If the legislature passes anything in 2019, they will be brought
forward as the 2019 Procurement Rules, which will probably be in 2020 when we bring them to the
Commission.
Mr. Huffman said in addition to the revisions to the MWMC Rules that are a result of revisions to the
Public Contracting Code and the Model Rules, the MWMC has the authority to adopt its own rules or
modify the Model Rules to specify procedures for public contracting under the Public Contracting Code.
The resolution adopting the MWMC Rules adopts the Attorney General’s Model Rules with enumerated
exceptions. The enumerated exceptions are the MWMC-specific rules that have been developed and
adopted through the years. There are three new possible MWMC-specific rules that could be developed
and which the Commission may elect to adopt. In addition to these possible rules, we may identify other
rule additions or revisions that are specific to the MWMC.
The three new MWMC-specific rules to consider are the following:
1. Sale, Transfer, and Disposal of Personal Property: Traditionally the MWMC has not sold
products. With the Poplar Plantation being a product generator now as well as the upcoming
RNG project, it may be time to have a rule on how the MWMC will market those products. Mr.
Walker (attorney) looked around the state at other agencies to see what they were doing, and
came up with a proposal. Mr. Huffman said if the Commission thinks that would be a good thing
to do, he would prepare some rules and come back at another meeting to have the Commission
to review and approve.
DISCUSSION: Commissioner Ruffier asked if those rules would also pertain to donations or transfer of
property to charitable, non-profit organizations, or schools. We have done some of that in the past. Mr.
Huffman said yes, we would want some guidelines on how to do that. He does not know if that means
limits on donations or just a process. Commissioner Ruffier said that typically, it is not high value items.
2. Price Regulated Items: There are currently procurement rules for price-regulated items, which
are different from free market items. However, for industries like utilities where the price may not
be regulated but the provider is, we do not have a current provision. Those contracts are
essentially price-regulated because there is only one utility that can do it.
DISCUSSION: Commissioner Pishioneri asked if this would pertain to the state contract items such as
vehicles and other types of goods. By policy, are we going to the state bid items first before we going
out to private industry, because there is a significant savings with state bid items. Mr. Huffman said that
was not something that he has come across. It may be an operational question. Mr. Breitenstein stated
that Eugene does the bulk of purchasing for fleet, materials and supplies, etc. by looking at the contracts
to get the best deal. The bulk of fleet is purchased through the state contract. Commissioner Pishioneri
asked if there is a policy or is it just a practice. Mr. Breitenstein replied it is more of a practice.
Commissioner Pishioneri asked who purchases the MWMC’s vehicles. Mr. Breitenstein replied Eugene
makes the purchase and it is titled to the MWMC. Discussion continued on which procurement rules are
being used for the purchase of items for the MWMC.
March 8, 2019 MWMC Minutes
Page 5 of 15
Mr. Huffman said the procurement rules are similar for Eugene, Springfield, and the MWMC. He does not
think there is a difference in the procurement rules for the purchase of vehicles. There is nothing in the
Model Rules that requires you to go to the State first to purchase vehicles. Commissioner Pishioneri said
he realizes it is a symbiotic relationship but it does take away oversight from the MWMC, it is a trust
thing.
Mr. Stouder said he would go back and review the Operation, Maintenance, and Administrative Services
(OMA) Agreement to see how it is spelled out. The OMA is part of the IGA that establishes the operations,
maintenance, and administration provisions and requirements for the two cities. He said he would
compare the rules that Eugene and Springfield are following to the MWMC’s procurement rules. Then
the Commission could decide if there are any changes proposed in the future by the two agencies, that
the agencies give notice to the Commission so it can decide if it will work for the MWMC.
Mr. Breitenstein added that the Wastewater Division has a purchaser on the plant site that purchases all
the operations and maintenance items and checks all the contracts available to get the best price. The
fleet is handled by the fleet division and they use the state contract.
Mr. Huffman said in the OMA at 1.2 it says, “…Eugene shall only make capital expenditures or outlays
that are within the limits of the budget approved pursuant to Section 3.1, and that are made using
Eugene’s adopted procurement and contracting procedures.” The budget that is referred to is the
Operating Budget that Eugene submits to the MWMC by April 15 of each year that is then approved by
the Commission (OMA 3.1).
Commissioner Meyer asked if the plant buys chlorine, whose procurement rules are they subject to for
the purchase. Mr. Huffman answered that they are subject to the budget they submitted and got
approval for and then the actual rules that they follow for purchasing are the Eugene Procurement Rules.
Commissioner Yeh commented to the Commission that this is a partnership and we all have to work
together and be careful to not micromanage. We have developed a system where certain agencies have
become experts in certain areas and she thinks that the Commission needs to trust that expertise.
3. Contracts for Personal Services: Mr. Huffman proposed to clean up the language so it is
exempt from the formal procurement under ORS 279B.050 to 279B.085. Such rules are common
and the vast majority of contracting agencies have adopted their own rules regarding the
procurement of personal services contracts.
DISCUSSION: President Keeler asked for an example. Mr. Huffman gave the example of marketing
services, which we did a couple of years ago and had to go through the whole process of competitive
sealed bidding. The MWMC already has a definition related to personal services contracts but another
MWMC procurement rule prohibits the MWMC from exempting such personal services contracts that
have been customized for the MWMC.
Mr. Huffman stated that the three items discussed are not in Resolution 19-04 because he wants first to
receive direction from the Commission to make those changes and then he will come back with the
language for the Commission to approve. Resolution 19-04 essentially updates the procurement rules.
Mr. Huffman asked for the Commission’s approval on Resolution 19-04 and direction in regards to the
three proposed items.
March 8, 2019 MWMC Minutes
Page 6 of 15
MOTION: IT WAS MOVED BY COMMISSIONER PISHIONERI WITH A SECOND BY COMMISSIONER YEH
TO APPROVE RESOLUTION 19-04. THE MOTION PASSED UNANIMOUSLY 7/0.
Commissioner Ruffier proposed for consideration by the Commission to direct legal services to bring
back language regarding sale or disposal of goods. Commissioner Ruffier asked if that would include
services too. For example, if the MWMC were to provide expert labor resources to someone (such as lab
services). [Mr. Huffman took notes.]
Commissioner Meyer said for contracts for personal service that the MWMC has the ability to use the
smaller contract to prevent going through a very complicated process. He wonders if this could open the
door to future abuse of personal services contracting. Mr. Huffman replied that he is correct in that if,
say, we had a $5000 contract for personal services that has its own special exception that we would not
have to go through the full procurement procedure. However, let us say it is for $500,000. Commissioner
Meyer said if it is for $500,000, he thinks we should follow the process because there will be more than
one firm that will be able to provide advice at that magnitude.
Mr. Huffman said that one option is to create a limit, which says that we will opt out for personal
services contracts but, if it reaches “X” dollar amount you will need to follow the full procurement
process. He does not have a proposal for the dollar limit. Commissioner Meyer said he would like a limit
on it; other agencies use something to the order of $50,000.
Mr. Huffman stated that one limit that he is aware of in 279B.030, if services are $250,000 or more, there
is a specific process to follow to justify it, if the agency cannot perform the services themselves. Mr.
Huffman said he would recommend having staff come back with the number of contracts that the
MWMC does per year and how many hours per year would be saved if they could streamline all the
contracts at $50,000 or $100,000. Also, to find out what the average contract amount is – this could
guide the decision on what the dollar limit would be. Commissioner Meyer said he would be very open
to a recommendation. Mr. Stouder said that staff would do that.
Commissioner Pishioneri agreed with Commissioner Meyer and asked Mr. Stouder to look for trends [in
the contracts] to see if there is a number that we are typically at.
RESILIENCY PLAN UPDATE
Josh Newman, Managing Civil Engineer, started with thanking staff from both cities for their
participation. He stated he has not ever been involved in a project that has touched on so many different
parts of both organizations.
Mr. Newman stated that Carollo Engineers was selected to lead this project because they demonstrated
a familiarity and experience with this type of work. The work started last summer, focusing primarily on
the impacts of a Cascadia Subduction Zone earthquake; impacts from flooding and the climate were also
looked at.
Wayne Gresh, Carollo Consultant, said his team really appreciated the staff’s input and for getting all the
data in a timely manner. Mr. Gresh gave an update on the work progress. He said they have completed
the level of service goals, performance objectives, and the geotechnical analysis. They are writing up the
findings from the vulnerability assessments, which will be submitted for review at the beginning of May.
Currently they are in the process of assessing the interdependencies. Next, they will need to identify the
March 8, 2019 MWMC Minutes
Page 7 of 15
upgrades that are required to address the deficiencies, a cost estimate of those upgrades, and preparing
a report with the compilation of those things.
The Level-of-Service Goals are set up in three phases: Phase 1 is in days, Phase 2 in weeks, and Phase 3 in
months. The goals for the conveyance system – pump stations and pipelines – is to have 30% of the
average wet weather flow (AWWF) routed to the plant in the first two weeks and 90% AWWF in three to
six months. For the treatment facilities, the first day after the event the flow goes straight out the
emergency bypass. In the first two weeks, the average dry weather flow (ADWF) would go through the
primary treatment and receive some level of disinfection. In three to six months, the ADWF would go
through the primary treatment, secondary treatment, and disinfection. Within nine to twelve months,
the plant is expected to be operating to meet regulatory requirements. Mr. Gresh said that these goals
are in-line with the Oregon Resiliency Plan and their target completion is 50 years.
Commissioner Pishioneri asked if the estimated time frames are based on current staffing levels at
current work hours or are they based on emergency hours. Mr. Gresh answered it would be an
emergency condition, therefore, emergency hours. Staff would be working at the plant and in the
community. Staffing is part of the interdependency analysis. There is protocol on where staff will be
assigned and how they will be utilized. Commissioner Pishioneri asked if they are based on assumptions
of who will show up. Mr. Gresh replied they are.
Mr. Newman said that at this point, we are not looking at how many people are going to be required or
where the people are going to come from; we are looking at goals. The goals will set criteria and then we
will have to figure out resources (people).
Commissioner Ruffier asked if the plant is not disinfecting for several weeks or months, is the drinking
water vulnerability taken into account. Mr. Gresh replied, definitely. The drinking water plants that are
implementing resiliency plans now have requirements that take into account the water quality. There
will be many things in the water, after an event, which are not customarily there. Therefore, there are
very robust water treatment processes being contemplated. In some cases, they may put in membranes
for filtration and advanced disinfection systems. Mr. Newman added that as he understands it, EWEB is
building a facility to generate sodium hypochlorite for disinfecting their drinking water.
Mr. Gresh explained the structural criteria and parameters that his team assessed for the Vulnerability
Assessment. The Oregon Seismic Safety Policy (OSSP) Risk Categories are the following:
IV – hospitals, fire stations, police stations, Emergency Operations Center, water facilities required
to maintain water pressure for fire suppression, etc.
III – schools, power generating stations, water and wastewater treatment facilities, etc.
II – typical buildings
The performance objectives are the following:
Operational, Immediate Occupancy – this designation corresponds to risk category type IV
buildings
Damage Control – this designation corresponds to type III buildings
Life Safety, Collapse Prevention, and Collapse – these designations correspond to other less
critical designations
Mr. Gresh stated if you had a wastewater process that collapsed, it would take more than a year to get it
back. In this type of incident, there are no contractors.
March 8, 2019 MWMC Minutes
Page 8 of 15
Commissioner Ruffier asked Mr. Gresh what he meant by “no contractors”; if he was assuming the
repairs would be done by staff. Mr. Gresh replied yes. Commissioner Ruffier asked if the assessment
would incorporate an analysis of staff’s capabilities to do that. Mr. Gresh answered that is correct – staff’s
capabilities and contracts that you have in place would be assessed. He clarified that if you had a
collapse of the digester complex, you would not be able to get it back within one year. You are going to
have design time and a significant construction contract to try to get while the community is putting
things back together such as roads, bridges, hospitals, and those kinds of major pieces. For minor
damage, staff could repair it.
Mr. Newman said in some ways, a disaster would fall into the local prioritization of emergency response.
That is somewhat out of our hands to where the MWMC falls in that prioritization. We have to prepare for
that and put mitigations in place. Mr. Stouder said that is part of the exercise as we get to the planning
stages and get a capital plan or planning level document. We will have buildings that will collapse or
have major damage. We will know that and in the 50-year planning horizon, we can choose to make
investments as we do construction projects to get them to a state where they could withstand a disaster.
Commissioner Inge asked why wastewater treatment facilities fall into category III instead of IV. Mr.
Gresh replied it is a national standard and they are not considered as critical as those items listed in IV.
Mr. Gresh said his team completed the assessments and separated them into the following categories:
buried pipes and utilities, facilities and structures, and non-structural components. In the assessment of
the facilities and structures, they looked at the process capacity and flow path and the above grade and
below grade structural components. The non-structural components included all the pipes and process
equipment, utility equipment, and how the power is fed. A large team was brought out to the site to
access everything; each team member with their specific field of expertise.
What they found overall for the geotechnical conditions is that there are no significant areas of
liquefaction or landslides or slip plain failures. The peak ground accelerations and velocities are well
within the design parameters. The MWMC’s facilities were designed to those standards and in some
cases, a higher standard. Overall, the MWMC is in good shape.
Commissioner Ruffier asked if the assessment is based just on regional assets. Mr. Gresh replied yes.
Commissioner Ruffier clarified that they did not look at the local collections system. Mr. Gresh said they
did not, but that the local collections systems will probably be in reasonable shape. He showed maps to
explain this. Commissioner Ruffier said he was interested in terms of landslides and slip plain failures; he
thought some areas of the community would be prone to that. Mr. Gresh replied they did look into that
and it is on the hill area where infrastructure is susceptible to landslides.
Mr. Newman replied to the comment that the local facilities are in reasonable shape, stating that looking
at the map a lot of infrastructure is in areas that do not look like they have liquefaction susceptibility.
However, we had to do a fair amount of work to identify where there were small areas that may present
some risks. Mr. Gresh added that he is sure there are areas down by the river, and, in fact, he is going to
recommend that further analysis be done in a few years in three locations.
President Keeler said he thought there probably was no geotechnical fieldwork done and wondered if
there was sufficient data. Mr. Newman replied that there were previous geotechnical investigations that
were fairly-reliable. He stated some of the recommendations that come out of this work would be to do
March 8, 2019 MWMC Minutes
Page 9 of 15
technical studies on those areas that are unclear. Mr. Gresh added that there is geotechnical information
available on the pump stations and there are the well logs and highway logs that can be relied on.
Mr. Gresh stated there are three sites that are recommended for further analysis; they are Goodpasture
Island Road Siphon, Q Street Floodway Siphon, and Canoe Way/Patterson Slough Siphon. He believes
there is potential there to cause damage to the facilities and pipelines. It would take some very specific
geotechnical information looking for either deep pockets of silt or some materials there that could
liquefy.
Peak ground velocity is used in assessment of structures. Peak ground acceleration is predominantly for
above ground - how fast it moves, and what the motions are. The peak ground acceleration for the area
is 10-20% of gravitational acceleration (referred to as “g”), which is a very reasonable design parameter.
Peak ground velocity has more to do with the buried structures – the below ground pump stations and
pipelines. It is moderate for most of the MWMC’s system and 15-30 inches per second on the west side of
the valley.
Structural Observations – Pump Stations: Almost every one of MWMC’s facilities will need to add lateral
bracing and anchors for equipment for seismic restraint.
Irvington Pump Station: It is in pretty-good shape – not a lot of damage is expected. It needs
lateral pipe braces and anchors to attach equipment to base.
Glenwood Pump Station: If it did not have cracks in it, it would withstand an earthquake. The
cracks are in the concrete walls, concrete floors, and in the masonry. The recommendation is to
have a study performed to determine why it is cracking and then repair it. Once it is repaired it
would be able withstand an earthquake. He said the cracks appear to be structural in nature such
as settlement or something. Mr. Newman added that the facility was built in the 1990’s and
anything built in the 90’s or later is expected to be in pretty good shape, generally speaking.
Wet Weather Pump Station: It will likely collapse due to its clearstory structure. He would
recommend that when this structure is due to be upgraded, that it be designed differently and
totally be replaced.
Willakenzie Pump Station: It requires moderate upgrades. Cracks in the older section need to be
analyzed and repaired. Electrical equipment should be assessed for seismic vulnerability and
anchored to the concrete; some bracing is needed.
Owasso Bridge: It carries power conduits and a force main. It is believed the bridge will collapse
as it has a connection at each of the piers that could fail. If the bridge collapses, the electrical
conduits and the force main fail. It is recommended for further analysis if the bridge is important
to the MWMC. There is also a pipeline under the river so maybe the bridge is not so important.
Mr. Newman added that the bridge provides more than just the electricity but also it is a way for
the community to get across the river.
Commissioner Keeler asked how hard it is to assess the structural issues. Mr. Gresh replied that it is
straightforward for an engineering firm. Mr. Newman added that we could add crack gauges to the
facilities to see if it is still moving.
Treatment Facility – Process Flows:
Phase 1 is immediately after the seismic event (0-1) days. The flow is routed to the emergency
bypass.
March 8, 2019 MWMC Minutes
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Phase 2 is intermediate term (1 to 2 weeks). The flow is routed up through the pump stations,
receives some degree of primary clarification, and then routed to the river. The decision is to take
it through the high-rate disinfection chlorine-contact basins that are already in place.
Phase 3 is long term (3 to 6 months). The secondary clarifiers will come back on along with
disinfection.
Typical Structural Deficiencies for Treatment Facilities: Mr. Gresh said they found that the structures built in
1979 typically have rigid wall/ flexible diaphragm deficiencies, the roof to wall connections are not
sufficient, clearstory construction will lead to failures, and to expect these buildings to be damaged and
red tagged after an event if not upgraded. Newer structures have some items that will need to be
addressed, but overall will not be severely damaged after the event. The tanks are all in very good
condition. The baffle walls that were added in the eastern four aeration basins were not designed for
seismic activity. They will fail and probably damage some of the diffusers and the basins.
Typical Nonstructural Deficiencies for Collection System: The construction from 1979 – 1990’s all need
lateral bracing and anchors, same as the pump stations. Recent construction has most of the needed
bracing and anchors, but some deficiencies were identified.
Next Steps: Carollo’s team will use the assessments to identify the upgrades needed to address the
vulnerabilities and then present those in a workshop to staff to be discussed. Regarding the
interdependency piece, Carollo’s team has started contacting utilities. The Emergency Managers
suggested that the team talk to the Public Works Directors because they are the ones that will report to
the Emergency Management team for the wastewater utility. The chain of command will come through
them. We need to know how they have set up staffing and those types of things for the wastewater.
They have Meeting 5 set up for the last week of April to discuss interdependencies and flood assessment
review. The MWMC will review draft Technical Memo 4 and provide comments for Carollo’s team to
address.
Commissioner Farr said that generally, Emergency Management comes under the County; he presumes
that it is going through Lane County’s Central Emergency Management. Mr. Newman replied that they
are now at the point in the project where that conversation will happen.
Commissioner Ruffier asked if the Climate Change Sensitivity Assessment has been completed. Mr.
Gresh replied, yes it is done. Commissioner Ruffier asked if the Commission could have access to it. Mr.
Gresh said yes. Mr. Newman stated that the technical memo (TM) was pretty thin; it just spoke about the
flood level that you should be looking to.
Mr. Stouder said that Wayne’s team has done a good job in analyzing all our information and structures.
What we heard today was a brief snapshot of that. When staff met with the team, it was a 5-hour
meeting. He can provide the Climate Change Sensitivity TM, but also the more detailed TM that has
more descriptions of what was presented today, for those who are interested. Mr. Gresh said he could
also send the Commission the full slide presentation if they are interested.
Commissioner Ruffier asked if there is a financial element in the Disaster Mitigation Recovery Plan
assessment. Mr. Gresh replied that the intent is the estimates, provided by his team, are to be brought
into the CIP level. As you develop the planning for the facilities or conveyance system, you could take
the estimates and insert them.
March 8, 2019 MWMC Minutes
Page 11 of 15
Commissioner Ruffier said what he was interested in was what the cost would be in the case of an event
and then whether or not there is a financial study on how we are to come up with the money. Mr. Gresh
replied that the Emergency Managers and the Finance Departments at both cities have already started
that process. The Emergency Managers are tackling the staffing issues, communication, financial and all
those aspects. Commissioner Farr asked if that would be under the next steps. Mr. Gresh replied that his
firm does not address finances.
Mr. Stouder clarified that cost of the projects will be provided and then when staff gets to the planning
level and has an idea of what is expected, they will coordinate with the cities to determine what policies
need to be put into place to assure that the money would be available. Staff will make sure the MWMC’s
Executive Officer/General Manager has special procurement authorization for emergencies. Mr. Gresh
said that when an emergency is declared, it will give everybody special purchasing authority and power.
The chain of command for that is what the Emergency Managers are setting up.
Commissioner Meyer said, along those same lines, we have earthquake insurance. He hopes that at the
end of the study we would have a better idea if what we are doing is on the right track. He asked if that
was a good assumption. Mr. Gresh replied that he believes it is. We give you the information to know
what level of repairs that are needed. By doing this planning work, you have set yourself up for being
able to reach out any time there is a disaster declared and getting money for analysis and upgrades.
Commissioner Inge stated that we have been talking about an earthquake event, is there consideration
in this for flooding. Mr. Gresh replied that it was done for both earthquake and flooding. Commissioner
Inge asked if there are other conditions that we should be aware of. Mr. Gresh replied that a multi-
hazard assessment is required for the water utilities and airports. They look at all types of hazards
including cyber-attacks and fire; it is called a broad-based assessment. Commissioner Inge asked if the
MWMC’s assessment covered all of that. Mr. Gresh replied, “No, it was specifically seismic and flooding.”
Mr. Stouder added that it was the Commission’s direction for the assessment.
PUBLIC INFORMATION PROGRAM UPDATE
Loralyn Spiro and Laura Keir, Communication Coordinators, made the staff presentation. The public
information program is guided by the MWMC Communication Plan, and by the MWMC’s Key Outcome
#5, “Achieve public awareness and understanding of the MWMC, the regional wastewater system, and
the MWMC’s objectives for maintaining water quality and a sustainable environment”.
The MWMC Communications Plan contains four main strategies to reach the overall goal of increasing
awareness of the MWMC and its role in the health and vitality of our community and environment. There
are 20 different tactics listed in the MWMC Communications Plan that support the four strategies. The
tactics that have had developments over the past year and some that are coming up are being
highlighted.
Tactics:
Signage around the wastewater treatment plant is a tactic that helps neighbors and others passing by to
understand what the facility is and the wastewater services that the MWMC provides. Two new signs
were installed on both the western and eastern ends of the plant, by the multi-use path. They are
double-sided so you can see them coming or going on the path.
Community Presentations: Three to four presentations per year is the goal. Usually Mr. Stouder and Mr.
Breitenstein give the presentations; they cover the history and mission of the MWMC, the services
provided by the MWMC, how wastewater is cleaned, and what residents can do to prevent pollution. In
March 8, 2019 MWMC Minutes
Page 12 of 15
the past year, almost 200 community members have been directly engaged with these presentations.
Audience members always have interesting questions as well as comments of appreciation for the
wastewater services the MWMC provides.
Sponsorship is another tactic to build community awareness. The MWMC sponsors EWEB’s Run to stay
Warm, the Lane County Fair, McKenzie River Trust’s Get Outdoors Day event, Lane County Home Garden
Show along with the Lane Area Pollution Prevention Coalition (P2C).
Tours: Over 1,200 children and adults toured the MWMC facilities in 2018. Tours of the Biosolids
Management Facility and Biocycle Farm are becoming more popular.
Annual Report: Three years ago, the Annual Report became digital in order to encourage the reader to
click to content that is built out on the website. It goes out to community groups and our partner
agencies.
Communications Support: The Communication Coordinators support a number of the MWMC projects.
They have been working closely with NW Natural on the RNG project on how to message the
community, and will be holding an open house this year for neighbors and other community members
before construction begins. The Recycled Water Demonstration Project, which includes street tree
watering in Eugene, will be taking place over the next couple of years. They will be carefully constructing
messages and starting outreach early to build support and community buy-in for additional future
recycled water uses. For the Owosso Bridge closure that occurred for electrical repairs last November,
they provided the news releases, social media posts, communications with agency partners, and support
on signage. On the Poplar Harvest, they are working to help create interest in logging and harvest
services that can match efficiency and innovation with target markets for wood chips, veneer, millwork,
and other uses. They have collaborated with OSU Extension Service to host a tour of the Biocycle Farm
and a workshop on June 13, 2019, to help develop interest.
Social Media: The MWMC has been growing its social media presence since launching Facebook and
Twitter accounts in the summer of 2017, and Instagram in the summer of 2018. Staff posts regularly with
photos from the MWMC facilities, about staff, tours, various videos, pollution prevention tips, notice of
Commission meetings, and share posts from other agencies and organizations. There has been a positive
response from community members and partner agencies. However, growth in followers is slow. They
are continually working to increase both followers and engagement with our social media posts.
Digital Marketing Strategy: A request for proposal (RFP) for a digital marketing strategy was issued in
February and two proposals were submitted. MIG, Inc. was selected, and the project kickoff meeting
takes place next week. For this project, MIG will analyze the MWMC’s current digital marketing efforts,
develop a new digital marketing strategy including target audiences, a media buy plan and schedule,
and creative content. The digital advertising will run on local platforms this July through September. This
could be in the form of paid social media posts, target online display advertising, or other means. The
hope is to increase the community’s awareness of the MWMC and its wastewater services, and to build
trust and positive perceptions.
Community Survey: The first survey was conducted in the fall of 2014 and created a baseline of data. The
second survey is planned for the fall of 2019. The objectives for the Communication Plan are:
Increase community awareness so that more than 30% of those surveyed are able to identify
the MWMC; up from 18%
Increase initial favorable response regarding the MWMC to 25%; up from 14%
March 8, 2019 MWMC Minutes
Page 13 of 15
Improve community opinion regarding the MWMC’s performance by 10% with overall
performance of 50% or better on all metrics up from an average of 45%
We will be going out for RFPs in early summer of this year, conduct the survey through focus groups and
phone calls to continue to have qualitative and quantitative data, and then report the result to the
Commission in the winter of 2020.
Branding: An official tagline clearly, easily, and quickly lets the community know the MWMC’s purpose
and the service it provides. It also helps support the MWMC as being seen as an industry leader. Staff
worked with legal counsel to register the verbiage “We Clean Water” as a trademark and more
specifically as our official tagline at the State level in 2018. However, when trying to register at the
Federal level, staff was given feedback that our trademark needed to be built out more in order to
register successfully. Based on the feedback, staff then worked with a graphic designer and produced
the “We Clean Water” graphic (a water droplet). Staff successfully resubmitted to the State and is waiting
to hear if we have successfully secured the trademark at the Federal level. The new graphic has been
implemented on social media channels, some promotional materials, and is being used to complement
the refreshed MWMC logo that occurred in June 2017.
Promotional Giveaway Items: With more opportunities to handout information and materials through
sponsorships, community presentations, and doing target pollution prevention education, staff has
increased the selection of promotional items that appeal to both adults and kids. This tactic continues to
help increase overall community awareness of the MWMC and to help support pollution prevention
education by providing information and tools to community members. Most of the pieces contain the
MWMC website address to encourage community member to learn more about the MWMC. Giveaway
items include the following: Freeze Fog kit, cell phone pocket, stress ball/monitor wipe, ink pen, tag line
stickers, and tag line lapel pins (buttons).
Questions and Comments: Commissioner Farr said, “Good work”; he likes the rolling numbers on the
Annual Report because they catch your eye.
Commissioner Ruffier said, “Good presentation, good work”. He asked about bill stuffers, if there was
any possibility about getting more through EWEB and SUB. Ms. Spiro said that they have a preset
schedule and there is not much leeway. We were able to get a third one last year but not on a regular
basis.
Commissioner Ruffier said, in regards to outreach and public exposure, a 10-15 minute presentation to
the City Councils and the Board of Commissioners on a quarterly basis might be a good idea. Not only
does it inform the elected officials but also it reaches a much bigger audience especially those that are
televised. Commissioner Farr said Resiliency is a hot item right now.
Matt Stouder said staff would be at all three agencies with budget presentations next month; he will talk
with leadership at the Cities regarding additional presentations. Commissioner Ruffier added that even
a work session item to bring them up to speed on what is happening may be good.
Commissioner Inge asked if we are going to connect the “We Clean Water” to the MWMC in some
fashion as opposed to standalone. Ms. Spiro replied that it is used as a compliment. For example, on the
MWMC’s website it is right next to Metropolitan Wastewater Management Commission at the top.
March 8, 2019 MWMC Minutes
Page 14 of 15
Mr. Stouder said we have the ability to put mwmcpartners.org under the tag line. It will be on the next
bunch of stickers we are buying. So it can be used as a compliment or as a standalone with our web
address.
Commissioner Inge said he thought it was pretty cool, but on its own, it does not say who cleans water.
Ms. Spiro responded the stickers were supposed to have the web address on them; it was a mistake.
However, the buttons that they are wearing do not have the web address on them to keep it cleaner.
The intent with the buttons is they are for staff and the Commission to wear and to prompt questions
from people to give you an opportunity to talk about the MWMC and what we do.
Commissioner Keeler thanked them for a good job.
BUSINESS FROM COMMISSION, GENERAL MANAGER, AND WASTEWATER DIRECTOR
Commission:
Commissioner Ruffier said that a while back he had asked about getting some information or
assessment about the utility of green roofs. He was wondering if that was being looked into. Mr.
Breitenstein said it is on the tracking spreadsheet and it has been assigned to Todd Anderson.
Commissioner Farr said that the Board of Commissioners, on Wednesday, had appointed a new
Sheriff, Cliff Harrold, who will be sworn in on Tuesday, April 16, 2019. If there is an emergency, he is
the Chief Public Safety Officer for the County.
President Keeler asked about future budgets, when, if ever, would it make sense to consider the
Poplar Harvest an operations account versus a capital project. It is an ongoing thing.
o Mr. Stouder replied that it had been discussed that after the harvest of Management Unit 3, it
would be a good time to move it over.
General Manager:
Mr. Stouder gave kudos to Ms. Spiro who has been giving a lot of tours this last week in the rain and
getting very wet.
Zuzana Caputova, Slovakia’s newly elected President had toured our plant a couple of years ago
when she was an Environmental Law Alliance Worldwide fellow.
The May meeting is scheduled for May 10 but it may be moved to May 17 or a time thereafter due to
the timeline for an agenda item. Mr. Stouder will be communicating with the Commission regarding
the date.
Wastewater Director:
For the latest storm event, the plant’s highest daily flow was 192 million gallons per day (mgd) but
the peak flow was 221.5 mgd. It was the second highest peak flow that the plant has experienced.
Mr. Breitenstein stated it was a great accomplishment that we got through the storm without any
sanitary sewer overflows (SSOs). We have never done that when the flow has exceeded 200 mgd. It is
a success for all the work done to expand the plant’s capacity and the local programs on I/I control.
o Commissioner Inge asked how many days did the plant hit that number (221.5). Mr.
Breitenstein replied one.
The homeless camp on the MWMC property near the Beltline Bridge was cleaned up; it took 3 days.
That helped address the concerns addressed at the public meeting about the camp affecting the
water quality. The timing was just right as it happened just before the storm event. Staff will be
March 8, 2019 MWMC Minutes
Page 15 of 15
policing that spot more intently to get people to move on. Just this one cleanup cost us several
thousand dollars.
o Commissioner Ruffier said one of the other issues with that site was access up onto the bike
path with vehicles coming around under the bridge. He noted that there were some rocks
placed to keep vehicles out but they are fairly small and could be moved. They probably
should be replaced with bigger boulders. Mr. Breitenstein responded that he plans to take a
closer look at the whole bike path from the end of River Avenue as it goes to the bridge
because that is entirely opened to vehicles.
ADJOURNMENT
President Keeler adjourned the meeting at 9:42 a.m.
Minutes submitted by Kevin Kraaz
________________________________________________________________________
ME M O R A N D U M
DATE: May 2, 2019
TO: Metropolitan Wastewater Management Commission (MWMC)
FROM: Meg Allocco, MWMC Accountant
SUBJECT: FY 2018-19 Supplemental Budget #4
ACTION
REQUESTED: Approve Resolution 19-07
_________________________________________________________________________________
ISSUE
The purpose of this memo is to request approval of Resolution 19-07 authorizing the proposed
supplemental budget request for FY 2018-19. This is the last of four supplemental budgets
processed this year to adjust for corrections and new information.
DISCUSSION
At the March 8 Commission meeting, staff requested approval to execute the contract with The
Freshwater Trust for Credit Program Manager Services (Phase I) as part of the larger Riparian
Shade Credit Program (Project P80080). The Commission approved this contract with resolution
number 19-03. In that resolution, it was also stated that the supplemental budget for an
authorized amount not-to-exceed (NTE) $193,063 plus 15% contingency would be presented
with the last supplemental budget of FY 2018-19. The total additional budget request including
the 15% contingency is $222,022.
ACTION REQUESTED
Approve, by motion, Resolution 19-07 authorizing the single budget action requested in this
memorandum.
ATTACHMENTS
1. Resolution 19-07
ATTACHMENT 1
Resolution 19-07
Page 1 of 1
METROPOLITAN WASTEWATER MANAGEMENT COMMISSION
RESOLUTION 19-07 ) IN THE MATTER OF APPROVAL OF FISCAL
) YEAR 2018-19 SUPPLEMENTAL BUDGET #4
WHEREAS, the Metropolitan Wastewater Management Commission (MWMC) approved
the FY 2018-19 Budget on April 13, 2018 pursuant to Resolution 18-05;
WHEREAS, sewer rates and budget amounts for the FY 2018-19 Budget were based upon
certain estimates;
WHEREAS, an increase of $222,022 to the Riparian Shade Credit Program project
(P80080) funded from capital reserves is appropriate to fund Phase I of the project;
WHEREAS, the MWMC has appointed a duly authorized Executive Officer for efficient
execution of the day-to-day administration of MWMC business;
NOW, THEREFORE, BE IT RESOLVED BY THE METROPOLITAN WASTEWATER
MANAGEMENT COMMISSION THAT:
The FY 2018-19 Supplemental Budget #4 as presented to the MWMC on May 10, 2019, is hereby
approved.
ADOPTED BY THE METROPOLITAN WASTEWATER MANAGEMENT COMMISSION OF THE
SPRINGFIELD/EUGENE METROPOLITAN AREA ON THE 10th DAY OF MAY 2019.
__________________________________________________
PRESIDENT: Doug Keeler
ATTEST:
_______________________________________
Secretary: Kevin Kraaz
Approved as to form: ________________________________
MWMC Legal Counsel: K.C. Huffman/ Brian Millington
____________________________________________________________________________________________________
M E M O R A N D U M
DATE: May 2, 2019
TO: Metropolitan Wastewater Management Commission (MWMC)
FROM: Josh Newman, Managing Civil Engineer
SUBJECT: Award of Contract for Purchase of Renewable Natural Gas Equipment
ACTION
REQUESTED: Approve Resolution 19-08
___________________________________________________________________________
ISSUE
Staff requests Commission approval of Resolution 19-08 authorizing the Executive Officer or his
designee to enter into a Goods Purchase Contract with the highest ranked equipment proposer for a
Not-to-Exceed (NTE) amount to be discussed at the Commission meeting on May 10, 2019. At that
meeting, staff will hand carry the final resolution identifying the contract NTE amount for
Commission review and consideration. This NTE amount will be based on the highest qualifying fee
proposal received. Proposal scoring and selection is on May 21. Staff anticipates execution of the
Contract in late May assuming no protests are filed.
BACKGROUND
As part of the predesign study performed by Kennedy Jenks Consultants (hereafter, K/J), the biogas
upgrading equipment was identified as the longest lead equipment item. K/J recommended that
the MWMC pre-purchase the equipment in consideration of the project schedule.
Staff identified the equipment purchase milestone as one of the next steps for Commission
consideration during staff’s presentation at the July 2018 Commission meeting. Over the following
months, staff developed and issued an Invitation to Bid for Biogas Upgrading Equipment on
September 28, 2018. Unfortunately, that solicitation did not produce a qualified bidder.
As staff reflected on the September 28, 2018, procurement process, a number of issues became clear.
First, the terms and conditions put forth in that procurement, while very protective of the MWMC,
were better suited for a general contracting construction bid process and may have shifted too much
risk onto the manufacturer, which had the impact of discouraging participation. Moreover, the low-
bid procurement process does not allow for negotiation of terms and conditions meaning potential
Memo: Award of Contract for Purchase of Renewable Natural Gas Equipment
May 2, 2019
Page 2 of 3
bidders would need to accommodate the MWMC’s standard terms and conditions wholesale. Finally,
the specifications were narrowly written around a specific type of membrane technology which
further reduced participation among competing technologies.
With these lessons in mind, staff and legal counsel arrived at an improved Request for Proposals
process—the two-step Request for Proposals (RFP) seemed to better fit the unique equipment
procurement landscape. In this two-step process, the first step is a request for qualifications.
Successful applicants are then “pre-qualified” to submit equipment and fee proposals, which is the
second step.
Staff issued the two-step RFP on February 21, 2019. The following four equipment vendors
succeeded in meeting the MWMC’s qualification requirements as put forth in the RFP.
Clean Methane Systems, LLC – The proposed equipment package is based on membrane CO2
removal technology
Guild Associates, Inc. – The proposed equipment package is based on pressure swing
adsorption CO2 removal technology
Greenlane Biogas North America, Ltd. – The proposed equipment package is based on
pressure swing adsorption CO2 removal technology
Unison Systems, Inc. – The proposed equipment package is based on membrane CO2
removal technology
Each of these manufacturers is a recognized leader in the biogas scrubbing and upgrading
equipment industry with successful projects operating in the United States.
Staff is now in the process of negotiating terms and conditions with each of the four prequalified
vendors independently as allowed under the two-step RFP process. Concurrently, each of these
vendors is in the process of developing proposals. The proposal due date is May 8, 2019. A proposal
review team made up of Springfield and Eugene Wastewater Division staff will review the proposals
and will meet on May 21, 2019, to score them in accordance with evaluation criteria and weighting
that was described in the RFP and is attached as Attachment 2
DISCUSSION
At the May 10, 2019, Commission meeting, staff will present the cost estimates received by the four
proposers listed above and describe each of the proposals received. The NTE amount requested shall
then be based on the highest cost received. Following successful vendor selection and expiration of
the seven-day protest period, with Commission approval of Resolution 19-08, staff would execute a
Goods Purchase Agreement with the highest ranked proposer. This would be in accordance with the
MWMC’s standard practice of granting 15% change order authority based on the selected proposer’s
equipment package and fee. Staff will notify the Commission through a communication packet item
and/or email of Intent to Award the contract to the highest ranked proposer following the May 21,
2019, proposal scoring meeting.
ACTION REQUESTED
Approve Resolution 19-08 authorizing the Executive office to negotiate and enter into a Goods
ATTACHMENT 1, Page 1 of 2
Resolution 18-11
METROPOLITAN WASTEWATER MANAGEMENT COMMISSION
DRAFT RESOLUTION 19-08 ) IN THE MATTER OF CONTRACT AWARD
) FOR PURCHASE OF BIOGAS UPGRADING
) EQUIPMENT
) MWMC PROJECT P80095 – RENEWABLE
) NATURAL GAS (RNG) UPGRADES
WHEREAS, the Metropolitan Wastewater Management Commission (MWMC) approved
the FY 18-19 Regional Wastewater Program Budget that includes $7,261,666 for Project P80095
– Renewable Natural Gas Upgrades;
WHEREAS, the MWMC has followed the procedures for Formal Selection set forth in
MWMC’s Procurement Rule 137-047-0260;
WHEREAS, the MWMC advertised a request for proposals (RFP) for the Purchase of
Biogas Upgrading Equipment on February 21, 2019;
WHEREAS, the RFP was structured as a two-step RFP process with a mandatory pre-
qualification as the first step and proposal development and submittal as the second step in
conformance with MWMC’s Procurement Rules 137-047-0260, 137-047-0550, and ORS 279B.125
(1);
WHEREAS, the MWMC received four (4) applications from qualified respondents on
March 7, 2019, meeting the requirements setforth in in ORS 279B.110 (2);
WHEREAS, staff pre-negotiated contract terms and conditions on behalf of the MWMC
with each of the four (4) pre-qualified respondants in accordance with the MWMC Procurement
Rule 137-047-0550 and X of the pre-qualified respondents were successful in reaching
agreement on contract terms and conditions with the MWMC. Pursuant to the MWMC
Procurement Rule 137-047-0260, only pre-qualified respondents who reached agreement with
the MWMC on the contract terms and conditions were allowed to submit Proposals;
WHEREAS, the MWMC received X proposals on May 8, 2019, from pre-qualified
respondents that also reached agreement with the MWMC on the contract terms and
conditions.
WHEREAS, the highest cost fee proposal received was $X,XXX,XXX.
WHEREAS, pursuant to the MWMC Procurement Rule 137-047-0260 the MWMC
described a rational criteria-based proposal evaluation method in the RFP. Staff will apply this
method and determine the proposal with the highest overall score (hereafter selected proposer)
on May 21, 2019.
ATTACHMENT 1, Page 2 of 2
Resolution 18-11
WHEREAS, pursuant to the MWMC Rule 137-047-0610, the MWMC intends to award the
Equipment Purchase Agreement (hereafter, Agreement) for the Biogas Upgrading Equuipment
to the selected proposer and shall issue a Notice of Intent to Award (NOI) to the selected
proposer on March 24, 2019 unless no such determination is possible.
WHEREAS, pursuant to the MWMC Procurement Rule 137-047-610 following the
expiration of the seven (7) day protest period with no protest, the MWMC shall be allowed to
enter into Agreement with the selected proposer;
NOW, THEREFORE, BE IT RESOLVED BY THE METROPOLITAN WASTEWATER
MANAGEMENT COMMISSION THAT:
Matt Stouder, as the duly authorized Executive Officer of the MWMC, is hereby
authorized to: (1) designate qualified staff to negotiate and execute the Agreement with the
selected proposal for the Biogas Equipment Purchase for an authorized not-to-exceed (NTE)
amount, which isthe lesser of: a) $X,XXX,XXX or, b) the contract price set forth in the selected
proposal; and (2) delegate performance of project management functions including, but not
limited to, issuance of notices to proceed, contract amendments not to exceed a cumulative
Agreement total of 15% of the contract amount, and management of the contract to ensure
deliverables and services meet the contract requirements.
ADOPTED BY THE METROPOLITAN WASTEWATER MANAGEMENT COMMISSION OF
THE SPRINGFIELD/EUGENE METROPOLITAN AREA ON THE 10th DAY OF MAY 2019.
_____________________________________________
MWMC President: Doug Keeler
ATTEST:
_______________________________________
Secretary: Kevin Kraaz
Approved as to form:____________________________
MWMC Legal Counsel: K.C. Huffman/ Brian Millington
Memo: Award of Contract for Purchase of Renewable Natural Gas Equipment
May 2, 2019
Page 3 of 3
Purchase Agreement with the highest ranked proposer once all proposals have been reviewed and
scored, a notice of intent to award has been issued, and the seven-day protest period has expired, for
a NTE amount to be discussed at the May 10, 2019, Commission meeting.
ATTACHMENTS
1. Draft Resolution 19-08 – P80095 RNG Equipment Purchase Agreement
2. Equipment Proposal Evaluation Criteria and Weighting Matrix
Evaluation Criteria and Weighting
ATTACHMENT 2, Page 1 of 1
# Criteria Considerations Score Weight
Maximum
Possible
Points
1 Estimated lifecycle
costs
Combination of capital and 10 years of annual
operation and maintenance costs 1 - 10 3 30
2 Media vessels
O&M requirements
Hazards, disposal requirements, labor requirements,
change-out frequency, spent media volumes, etc. 1 - 10 3 30
3
PM requirements
other than media
(spare parts list,
cost, and lead
times/availability)
Including reliability and number of moving
mechanical parts, lubricants, seals, heat transfer
fluids, membranes, filters, other disposables
1 - 10 3 30
4 Reliability in
meeting gas spec
Based on proposed product gas constituent levels
that are stated to be achieved with proposed
equipment
1 - 10 3 30
5 Overall annual
downtime/uptime Looking for highest uptime 1 - 10 3 30
6
Company
experience and
track record
Results of reference calling, consideration of similar
projects, historical service performance discovered
through research
1 - 10 2.5 25
7 Methane capture
efficiency Looking for highest methane capture 1 - 10 2 20
8 Automation and
controls
Convenient options for tracking and operational
decisions from the DCS based on the key parameters
and alarms
1 - 10 2 20
9
Turn up, turn down
range for diurnal
and future peak
throughput
Looking for greatest capacity flexibility 1 - 10 2 20
10 Footprint/Layout/A
ccess/Noise
Looking for compact layout that can conform to some
extent with current 60% design location and area
limitations
1 - 10 1.5 15
11
Negotiated
contract terms and
conditions
Protections for the MWMC such as liquidated
damages for late delivery, bonding, indemnification,
warranty terms if the equipment fails to perform
after some number of months, and other contract
terms
1 - 10 1 10
12 Duration of lead
time All points to the shortest lead time 10 1 10
Total 270
______________________________________________________________________________
M E M O R A N D U M
DATE: May 2, 2019
TO: Metropolitan Wastewater Management Commission (MWMC)
FROM: Katherine Bishop, ESD Program Manager
Meg Allocco, MWMC Accountant
SUBJECT: 2019 Financial Plan Adoption
ACTION
REQUESTED: Approval of Resolution 19-09
ISSUE
The MWMC 2019 Financial Plan is attached for the Commission’s review. Final edits have been
completed, including review and input provided by the MWMC’s Financial Advisors. The attached 2019
Financial Plan is being submitted for Commission consideration, with the option to adopt at the May 10,
2019 meeting.
BACKGROUND AND DISCUSSION
Staff began discussions, including a review of the financial administration of the Regional Wastewater
Program, as directed toward achieving the objectives required by Section 3.f of the MWMC
Intergovernmental Agreement (IGA). Staff and the Commission have discussed specific policies and
discussion areas within the currently adopted 2005 Financial Plan, over a series of meetings, with the
goal of updating specific policies to meet current standards and practices, including an update to the
appendices.
The 2019 Financial Plan (the Plan) incorporates updates to the following: reserve fund policies, asset
management policies, bond credit rating, user rate methodology for septage services, appendix I on
credit worthiness, appendix II on capital financing options, and appendix III best practices on financial
policies. It should be noted that the Investment and Portfolio policies of the City of Springfield
(appendix IV) are pending final updates and formal approval by the State of Oregon, and will need to be
incorporated in a future update to the Plan. In addition, minor edits/additions were incorporated into
the Introduction and Purpose, Scope and Methodology, and Financing sections to link recent and
current activities to the historical information.
Memo: 2019 Financial Plan Adoption
May 2, 2019
Page 2 of 2
The MWMC’s Financial Advisors (PFM Finanical Advisors LLC) have reviewed the Plan in detail, and their
input is incorporated. The Plan includes updated descriptive information, and incorporates revisions
recommended by the Commission and the contracted financial advisor.
At the Commission meeting on May 10, 2019, staff will provide a high level summary of the updates.
ACTION REQUESTED
Staff is requesting approval of Resolution 19-09 to formally adopt the MWMC 2019 Financial Plan
consistent with the financial planning objectives identified in the MWMC Intergovernmental Agreement.
ATTACHMENT
1. Resolution 19-09 adoption of the 2019 Financial Plan
2. 2019 Financial Plan
ATTACHMENT 1, Page 1 of 2
Resolution 19-09
METROPOLITAN WASTEWATER MANAGEMENT COMMISSION
RESOLUTION NO. 19-09 ) IN THE MATTER OF ADOPTING
) THE 2019 MWMC FINANCIAL PLAN
WHEREAS, on the 9th day of February, 1977, the City of Springfield and the City of Eugene,
municipal corporations of the State of Oregon, and Lane County, a political subdivision of the
State of Oregon, herein referred to as Governing Bodies, entered into an intergovernmental
agreement (IGA) establishing the Metropolitan Wastewater Management Commission (MWMC);
WHEREAS, the IGA, restated and amended in July 2005, provides “the Commission shall
construct, operate and maintain the regional sewerage facilities”; and
WHEREAS, the IGA further provides “the Commission shall finance these facilities in
accordance with the Commission’s Financial Plan”; and
WHEREAS, the IGA specifies that the MWMC shall, among other things update the
Financial Plan, as necessary from time to time, so as to provide guidance for the generation of
revenue sufficient for the Commission to fulfill its functions under the Agreement; and
WHEREAS, the staff has completed and the Commission has reviewed an update of its
2005 MWMC Financial Plan, which is entitled the 2019 MWMC Financial Plan;
NOW, THEREFORE, BE IT RESOLVED BY; THE METROPOLITAIN WASTEWATER
MANAGMENET COMMISSION THAT:
1) The 2019 MWMC Financial Plan (attached and incorporated herein by reference as
“the Plan”) is consistent with all of the financial planning objectives provided in the IGA as
guidance from the Governing Bodies (see IGA section 3.f. 1-7), and is hereby adopted as the Plan
by which the Commission will guide finance management of and budgeting for the regional
sewerage facilities;
2) The financial policies contained in the Financial Management Polices section of the
Plan shall guide the planning and administration conducted to support the Regional Wastewater
Program; and
3) If, in overseeing the Regional Wastewater Program, the Commission determines
waiving, or deviating from, one or more of the financial polices is appropriate and fiscally
prudent, the Commission may do so without violating the spirit and intent of the Plan.
NOW, THEREFORE, BE IT RESOLVED BY THE METROPOLITAN WASTEWATER MANAGEMENT
COMMISSION that the 2019 MWMC Financial Plan as presented to the MWMC on May 10, 2019, is
hereby approved and the Executive Officer/General Manager is directed to publish the Plan.
ATTACHMENT 1, Page 2 of 2
Resolution 19-09
ADOPTED BY THE METROPOLITAN WASTEWATER MANAGEMENT COMMISSION OF THE
SPRINGFIELD/EUGENE METROPOLITAN AREA ON THE 10th DAY OF MAY 2019.
_____________________________________________
Doug Keeler, MWMC President
ATTEST: _______________________________
Secretary: Kevin Kraaz
Approved as to form: ___________________________
MWMC Legal Counsel: K.C. Huffman/ Brian Millington
MWMC
2019 Financial Plan
Adopted by the MWMC on date, 2019
1
2
4
7
8
10
11
19
Appendix I “Credit Worthiness in the U.S. Public Wastewater Sector” 20
Appendix II “Summary of Capital Financing Options” 25
Appendix III “GFOA Recommended Financial Policies” 34
Appendix IV “City of Springfield Investment and Portfolio Policies” 37
Appendix V “List of Acronyms” 46
2019 MWMC Financial Plan Page 1
The 2019 Metropolitan Wastewater Management Commission (MWMC) Financial Plan updates
goals and policies in the 2005 MWMC Financial Plan update, as originally set forth in the 2003
MWMC Financial Master Plan. This Plan, in conjunction with municipal, State, and Federal law, is intended to guide the financial administration of the Eugene/Springfield Regional Wastewater Program (RWP).
Financial administration of the RWP is directed toward achieving the following objectives as
required by Section 3.f. of the MWMC Intergovernmental Agreement (IGA):
1. Establishing revenue adequacy to provide for long-term health and stability of the regional sewerage facilities through a program of monthly sewer user charges, and system development charges that are imposed uniformly throughout the service area to achieve full
cost recovery;
2. Fully funding the needs for equipment replacement and major rehabilitation to address the long-term preservation of the Regional Sewerage Facility capital assets;
3. Fully funding a program of capital improvements to address capacity, regulatory and
efficiency/effectiveness needs;
4. Ensuring equity between newly connected and previously connected users for their total contributions toward the Regional Sewerage Facilities;
5. Ensuring equity among various classes of users based on the volume, strength and flow rate
characteristics of their discharges together with any other relevant factors identified by the Commission;
6. Ensuring efficient and cost-effective financial administration of the Regional Sewerage
Facilities; and
7. Complying with applicable laws and regulations including those governing the establishment of user charges and the establishment of system development charges
pursuant to ORS 223.297 et seq.
To address these objectives, this Financial Plan contains sections and appendices detailing the financing history of the MWMC, financing options for the future, and financial strategies and policies.
The financial policies and strategies in this plan provide guidance to the Commission and staff in
daily operations, annual budgeting and rate setting, and decision-making when considering
competing projects or revenue sources.
2019 MWMC Financial Plan Page 2
The scope of the 2019 Financial Plan addresses the long-term stewardship of the Regional
Wastewater Facilities, as defined in the Intergovernmental Agreement. The 2019 Financial Plan
builds on the foundation established by the 2005 Financial Plan update, and the 2003 Financial Plan. The 2005 Financial Plan update was developed by a team of Eugene and Springfield RWP staff. The 2003 Financial Plan was developed by a team of Eugene and Springfield RWP staff
and senior-level financial analysts from the Lane Council of Governments (LCOG). The 2003
Financial Plan represented the first comprehensive effort to update MWMC’s financial policies
since 1992. Major tasks undertaken in the 2003 Financial Plan included:
A. A review, re-evaluation and update of the issues that framed the 1992 MWMC Financial
Master Plan;
B. An evaluation of the financial condition of the MWMC RWP and its preparedness to address future capital and operating financial needs; and
C. Development of financial policies to guide administration of MWMC finances and
budgeting for a ten-year period.
The foundation for the 2003 Financial Plan included:
A. Five, ten and twenty-year capital program projections (including Capital Improvement Plan, Major Rehab, and Equipment Replacement projections);
B. Long-term MWMC revenue and expenditure forecasts;
C. Government Finance Officers Association (GFOA) Recommended (Financial) Practices;
D. Comparative analyses with other similar utilities and industry standards;
E. A comparison of MWMC against national indicators of financial health in utilities, including those used by the major credit rating industries.
In 2004, the Commission completed and the Governing Bodies adopted the first comprehensive
regional facilities plan since the original “208 Plan”, which formulated the designs of the original regional wastewater facilities. The 2004 MWMC Facilities Plan includes a 20-year Project List, which will serve to guide MWMC’s Capital Improvement Program through 2025 to increase
performance and capacity of the facilities to meet regulatory and community growth needs.
Implementation of the 2004 Facilities Plan required strategic use of long-term borrowing and
careful management of revenues and reserves in order to maintain stable and competitive user rates. Therefore, in 2005, the Commission’s Financial Plan was re-evaluated and updated with the assistance of MWMC’s financial advisors and bond counsel. Again in 2019, the Financial
Plan was reevaluated and updated with the assistance of MWMC’s financial advisor (PFM).
2019 MWMC Financial Plan Page 3
The 2005 and 2019 Financial Plan updates generally included:
A. An update of the financial planning objectives to clearly reflect the directives of the
Governing Bodies (as stated in the MWMC IGA).
B. A general review to bring the information contained in the plan up to date;
C. A review of the policies by financial advisors to ensure adequacy; and
D. An update of the information pertaining to financing mechanisms suitable for the
MWMC’s uses in Appendices I, II and III.
2019 MWMC Financial Plan Page 4
Prior to the 1970s, the cities of Eugene and Springfield operated separate sewage treatment
systems. The passage of the Clean Water Act in 1972 required wastewater management to be
done by communities on a regional, rather than local, basis as a prerequisite to qualify for
Federal grant funding. As a result, Eugene, Springfield, and Lane County formed the MWMC in 1977.
MWMC was formed by Eugene, Springfield, and Lane County through an IGA in 1977 to
provide wastewater collection and treatment services for the Eugene-Springfield metropolitan
area. The MWMC is an “intergovernmental entity” as defined in the Oregon Revised Statutes (ORS 190).
The seven-member Commission is composed of members appointed by the Lane County Board
of Commissioners (2) and the City Councils of Eugene (3) and Springfield (2). The three bodies
appoint one member each from their respective Board or Council. In addition, Springfield and
Lane County each appoint one citizen (non-elected) Commissioner, and Eugene appoints two.
Staffing and services needed to run and maintain the RWP have been provided in various ways
over the years of MWMC’s existence. Since 1983, the Commission has contracted with the
cities of Eugene and Springfield for all staffing and services necessary to maintain and support
the RWP. This arrangement is stipulated in the MWMC IGA. MWMC has no employees.
Through an intergovernmental services agreement, the City of Eugene provides staff and materials necessary to operate and maintain RWP facilities. Through the same agreement, the
City of Springfield provides staff and materials necessary to perform the administration and to
construct RWP capital projects. Both cities are compensated for actual costs by the MWMC.
This division of duties has provided nearly seamless administration and operation of the RWP.
Lane County’s partnership has involved participation on the Commission and providing support to the Lane County Metropolitan Wastewater Services District (CSD), which managed the
proceeds and repayment of the RWP general obligation bonds issued to construct the RWP
facilities. These bonds were repaid in full in 2002.
Construction of the MWMC Regional Wastewater Facilities (RWF) began shortly after MWMC was formed. The new facilities became operational in 1984, with most of the RWF projects
being completed in the late 1980s. The primary sources of funding for the RWF projects were
approximately $80 million in Environmental Protection Agency (EPA) grants. In May 1978,
voters authorized the issuance of $29.5 million in general obligation (GO) bonds by the Lane
County Metropolitan Wastewater Service District (CSD) to fund the local share of the RWF. Environmental Protection Agency grants funded approximately $80 million in additional project
costs. The GO bond authorization was issued in its entirety in four separate series of bonds sold
between 1978 and 1982. A fifth series of bonds was issued in October 1989 for refinancing a
2019 MWMC Financial Plan Page 5
portion of the CSD’s Series 1980 and 1982 bonds. This refinancing resulted in approximately
$615,000 in debt service savings. All GO bonds were retired in September 2002.
Since the late 1980s, a number of projects have been completed using a combination of funds
remaining from the GO bonds, user fee revenue, and system development charges (SDCs). CIP budgets were primarily composed of projects identified by the 1996 Eugene/Springfield Water
Pollution Control Facility (WPCF) Master Plan, the Biosolids Master Plan, and the Wet Weather
Flow Management Plan (WWFMP). The 1996 Master Plan provided an assessment of facilities
improvements needed to enable regional wastewater treatment facilities to meet their intended
design capacity and regulatory requirements, address system deficiencies, and improve safety and operational performance. The Biosolids Management Plan and the WWFMP resulted from
recommendations included in the Master Plan. The Biosolids Management Plan remains the
basis for most of the biosolids-related CIP projects.
The WWFMP provided the basis for wastewater treatment facility performance improvements
related to wet weather peak flow that were to be constructed over an eight to ten year period. In order to identify the impacts of these projects on other treatment facility processes, a Wet
Weather Flow Pre-Design Project was initiated in FY 02-03. As work proceeded on the Pre-
Design Project, it became apparent that, due to increased environmental performance required by
the wastewater discharge permit and updated projections of population and capacity needed
through 2025, a comprehensive facility planning effort was needed. The 2004 MWMC Facilities Plan was a result of this effort and was adopted by the Commission and partner agencies in June
of 2004.
The 2004 Facilities Plan revealed several process areas which are at or near capacity and
identifies projects which will assure that all process areas will have sufficient capacity to meet
the needs of current and future users through the year 2025. The 2004 Facilities Plan also identifies alternative future uses of the Seasonal Industrial Waste Facility and addresses possible
regulatory compliance issues that may arise in the coming years. The needs identified in the 2004
Facilities Plan and anticipated permit standards, resulted in additional funding needs and the
subsequent issuance of the 2006 and 2008 revenue bonds.
The 2014 Partial Facilities Plan Update describes the regulatory landscape, provides an interim assessment of wastewater treatment capacity requirements, and recommends incremental
changes to the 2004, 20-year CIP schedule through the year 2025.
The MWMC's user fee system was developed and implemented in 1985. State and Federal
regulations require that MWMC’s system of charges and rates generate sufficient revenue to pay the total operation and maintenance costs necessary to fund the proper operation and
maintenance (including replacement) of the treatment works. Annual allocations are made to an
Equipment Replacement Reserve from user fee revenue. Funds from this reserve are used to pay
for timely replacement of equipment, with an original cost over $10,000, and with a useful life
expectancy greater than one year. User fee revenues are also used to fund capital projects.
MWMC’s original SDC, which was known as a Facilities Equalization Charge was first
implemented in 1991. In today’s terms, the Facilities Equalization Charge was a reimbursement
2019 MWMC Financial Plan Page 6
SDC. In 1997, MWMC adopted a major revision to its SDC methodology. The new
methodology included, in addition to the reimbursement SDC, an “improvement” SDC based
upon a 5-year CIP. In 2004, MWMC completed a comprehensive update of its SDC
methodology. The SDC methodology was updated again in 2006, and most recently in 2009.
2019 MWMC Financial Plan Page 7
MWMC maintains a Capital Improvements Program (CIP) and a Capital Financing Plan in order
to facilitate short-term and long-term budgeting and rate making decisions. The revenue or fund
forecast projects revenues available from user rates, SDCs, interest earnings and other miscellaneous income, and contains inflationary assumptions. The expenditure forecast is based on projected Operating budgets, with inflationary assumptions, and Capital budgets based on the
2004 Facilities Plan 20-Year Project List and projected equipment replacement and major
rehabilitation needs.
A 5-year CIP is maintained and supports the long-range expenditure/revenue forecasting process. The 5-year CIP includes projects identified in the 2004 Facilities Plan 20-Year Project List. Projects remaining from the Facilities Master Plan (1997), the Biosolids Management Plan
(1998), and the Wet Weather Flow Management Plan (WWFMP) (2000), were included in the
2004 Plan. In addition, projects are included that extend the life of the RWF and/or help meet
new National Pollutant Discharge Elimination System (NPDES) permit requirements. The 5-year CIP is based upon engineering cost estimates and identifies funding for each project. The 2004 Facilities Plan 20-Year Project List contains budget level estimates of project costs (in 2004
dollars) and approximate timing of projects. Since 2006, the NPDES permit has been
administratively extended by the Department of Environmental Quality (DEQ).
Since the original grant and GO bond proceeds have been exhausted, MWMC has met annual operating expenditure needs, including budgeted contributions to Capital Reserves (which fund the majority of the CIP) through user rate revenues. From 1996 through 2003 these revenue
requirements were met with only modest increases to user rates over time. However, the
combination of decreased per capita water consumption (through conservation programs and
improved plumbing fixtures) increased operating expenses at greater than inflationary rates, and the estimated $144M - $160M (in 2004 dollars) in capital project costs associated with the facilities plan 20 year project list, has led to the need for a combination of capital financing and
increased user rates. Subsequently, the MWMC issued revenue bonds in 2006 and 2008 to fund
capital project costs. These two revenue bonds were refunded and replaced, with the Series 2016
Revenue Bonds. SDCs and Clean Water State Revolving Fund (CWSRF) loans, other sources of revenue to support the Capital Improvement Program, are providing a portion of the funding for the projects in the 20-Year Project List.
2019 MWMC Financial Plan Page 8
Over the long term, MWMC must reinvest in infrastructure and equipment to maintain the value
of existing assets and, when feasible, to prolong the useful life of those capital investments. The
Commission must also ensure that the Regional Wastewater Facilities have capacity to keep pace
with new development and meet regulatory requirements. How the Commission funds these investments is critical to the timing, scope, and cost of the MWMC CIP, and the stability of
regional sewer user rates.
Based on the projected declines in Capital Reserves and user rate availability to fund capital
programs over the next several years (assuming rate increases match inflation only), a capital
financing strategy needs to be employed that will result in adequate funding without significant rate spikes and instability. Therefore, the most cost-effective mix of “pay-as-you go” and debt-
financing strategies should be applied.
A comprehensive review of available financial tools, including an evaluation of their
appropriateness to MWMC was conducted. Bonds, loans, grants, SDCs and user fee revenues are
all common methods of funding capital projects in the wastewater industry. The type of financing a wastewater management agency would use in a given set of circumstances depends
on the type of project, the size of the project, any statutory requirements and the financial health
of the utility. In examining the available financing options, staff has tried to identify and
segregate financial tools by the size of projects for which they are appropriate, administrative
ease of implementation, degree of risk, customer equity, and cost.
After a thorough evaluation of funding opportunities for capital projects, the mechanisms
described below were determined to be the most appropriate in the circumstances provided. A
complete discussion and analysis of these financing tools is found in Appendix II.
Whenever possible, state and federal grant funding will be sought to pay for projects
identified in the CIP.
For short-lived assets and relatively
small capital expenses, these pay-as-you-go options should be used. These revenues should be
accumulated in and drawn from dedicated reserves to avoid significant impacts to user rates. If
capital expenditures from these sources would cause significant changes in rates, other options
will be explored.
– In situations where grant funding is not available and pay-as-you-go
alternatives are either not appropriate or not available, the Commission will consider debt
financing options, including:
Internal borrowing from reserve funds is an excellent use of the
Commission’s cash resources for relatively small capital requirements and should be considered prior to seeking loans from outside sources unless depletion of reserves would put
the RWP at risk of having insufficient cash to satisfy debt obligations or address
unanticipated needs. Strategic use of internal borrowing from the equipment replacement
reserve will allow the commission more control over the timing and sizing of debt issuance
by providing temporary funds.
2019 MWMC Financial Plan Page 9
Loans from outside sources, such as SRF
loans are considered appropriate when it is not practical, in terms of timing, magnitude or
equity, for the Commission to finance large capital projects on a pay-as-you-go basis.
Revenue bonds also are considered appropriate when it is not practical, in
terms of timing, magnitude or equity, for the commission to finance large capital projects on
a pay-as-you-go basis.
Any incurrence of debt, whether a loan or a bond sale, should be timed and structured to ensure
optimal rates and terms, by timing, phasing, and/or combining capital projects as appropriate. In all cases where debt is incurred, the projected life of the asset financed must meet or exceed the
life of the debt instrument. Prior to issuing any debt, the Commission shall determine the
source(s) of repayment (i.e., user fees, system development charges, and/or other revenues).
2019 MWMC Financial Plan Page 10
MWMC may need to use some form of debt financing in the future, based on anticipated NPDES
permit requirements, to fund capital improvements. It is important for the utility to have ready
access to the capital financing markets in order to keep open various options for securing debt funding. Appendix I provides an overview and assessment of both qualitative and quantitative
credit worthiness indicators used in the wastewater industry.
The financial industry uses a variety of financial ratios to quantify a utility’s financial soundness.
Examples of these financial ratios are:
Debt service coverage;
All-in coverage;
Debt to operating revenues;
Days cash on hand;
Debt to capitalization; and/or
Asset condition.
Appendix I describes a number of the most common financial ratios used. It is clear from the
quantitative analysis in Appendix I that MWMC is positioned well financially. Both MWMC’s
current financial situation and the future debt-financing scenarios result in performance on the
quantitative measures that exceeds (in a good sense) the national medians and the financing industry’s guidelines. MWMC’s financial ratios perform very well under the scenarios analyzed.
The qualitative measures assessed in Appendix I also indicate that MWMC is in a strong position
with respect to its credit worthiness. MWMC’s sound financial management, long-term financial
forecasting and planning, stable operations and a host of other qualitative indicators all indicate
that MWMC has perform well in recent credit rating agency assessments (Aa2/AA by Moody’s and S&P, respectively).
2019 MWMC Financial Plan Page 11
The following policies are intended as guidance for the financial administration of the RWP.
These policies address all areas of the Government Finance Officers Association (GFOA) Recommended Financial Policies. When circumstances warrant, the Commission may waive one or more provisions as necessary. Such waivers shall not be considered a violation of the
MWMC Financial Plan.
MWMC Financial Policies are grouped into the following categories:
Financial Forecasting and Budgeting,
Investment of Liquid Assets, Capital Planning and Financing,
Sewer User Rates and SDC’s, and
Asset Management.
Financial forecasts and budget policies are intended to guide the Commission in prudent financial forecasting and budget planning, and are included to ensure the financial security and
bonding capacity of the RWP, as well as meeting minimum legal budget requirements. This set
of policies also addresses the Commission’s legal and contractual commitments regarding the
use of sewer revenues to pay for sewer expenses.
The purpose of the RWP is to protect public health and safety and the environment by providing high quality wastewater management services to the
Eugene/Springfield metropolitan area. The MWMC and the regional partners are committed to
providing these services in a manner that is effective, efficient, and meets customer service
expectations. In order to achieve its purpose, the Commission shall establish and maintain key outcomes upon which RWP work plans and budgets will be focused.
Indicators of performance and targets shall be identified for each key outcome.
Performance relative to identified targets shall be tracked over time, in order to determine
whether the desired results have been achieved.
The Commission shall maintain annual budgets that balance operating expenses and transfers with user fees and other current operating revenue.
Long -term financial stability can only be assured if each year’s budget is fully
funded and balanced. The budget is considered balanced when:
Expected annual operating revenues meet anticipated operation and maintenance
expenses,
Budgeted capital outlays are funded in full from a combination of operating revenues, capital reserves, accumulated SDCs, and debt proceeds,
Annual operating statements show a positive net income on a budgetary basis; and
The debt service coverage ratio is at or above that required by any applicable bond
covenants.
2019 MWMC Financial Plan Page 12
The Commission will monitor revenues and expenditures, and maintain a
balanced budget through an appropriate combination of cost-saving measures, budget transfers,
supplemental budgets and/or user rate adjustments as needed.
The Commission shall maintain a capital planning and financing system for use in preparing a multi-year CIP for consideration and adoption by MWMC and ratification by the
partner agencies’ governing bodies as a part of the Commission’s budget process. This system
shall include preparation of a rolling CIP (described in Policy C1) and a Capital Financing Plan
(CFP).
Each year, staff shall update its CFP based on the multi-year CIP and assumptions
and projections related to increased operational requirements, inflation, and other cost factors.
The CFP will support staff’s analysis and development of revenue requirements, budgeted
expenditures, and user charges. The CFP shall contain a ten-year projection of revenue
requirements from all revenue sources, and resulting user rates needed to fund operating budgets, capital budgets, and debt service.
The Commission shall establish and maintain prudent minimum cash reserves,
including, but not limited to Contingency Reserves and the reserves discussed below, as needed.
F5a) The Working Capital Reserve shall be sufficient to fulfill operating and capital cash flow needs. The Working Capital Reserve is set at a minimum of $200,000 for the
City of Springfield, and $700,000 for the City of Eugene. The reserves are sized to
provide the cities with cash to pay expenses until the sewer user fees are received. The
size of the reserve is reviewed annually and may be adjusted as needed to ensure that it is
sufficient and that neither city experiences negative cash flow.
F5b) The Operating Reserve shall be maintained to minimize the impact of
unanticipated revenue shortfalls. In the operating budget, the guideline for establishing
the Operating Reserve, when preparing annual budgets, is set at two months of the
operating expenditure budget.
F5c) The Capital Reserve accumulates revenue to help fund capital projects (including major rehabilitation). The Capital Reserve is funded by annual contributions from user
rates and is used to fund capital projects as determined through the annual budget
process. In no year shall the Capital Reserve be allowed to fall below $1 million in the
adopted budget.
F5d) The Equipment Replacement Reserve is intended to accumulate funds necessary to provide for the timely replacement or rehabilitation of equipment, and may also be
borrowed against to provide short-term financing of capital improvements. An annual
analysis is performed on the Equipment Replacement Reserve. The annual contribution
is set so that all projected replacements will be funded over the expected life of the assets,
the reserve will contain replacement funds for all equipment projected to be in use at that time. Estimates used in the analysis include interest earnings, inflation rates and useful
lives for the equipment.
F5e) A Rate Stability Reserve shall be maintained as necessary to protect ratepayers
from volatility in user rates and to enhance credit-worthiness. The intent of a Rate
Stability Reserve is to set aside funds to provide stable rates over a period of years.
2019 MWMC Financial Plan Page 13
Establishing user rates with an anticipated contribution to the Rate Stability Reserve
smooths out the financial impact of required rate increases on customers over time, and
hedges against potential rate spikes when assumptions about the future prove to be
incorrect. Revenue is allocated to the Rate Stability Reserve only after budgeted Operating Reserve and Capital Reserve transfer targets are met.
F5f) The Reimbursement SDC Reserve accumulates revenues derived from the
“reimbursement fee” component of SDCs charged to new development along with
accrued interest. Expenditures of these funds is limited to support capital projects and
debt service payments in accordance with ORS 223.311.
F5g) Improvement SDC Reserve accumulates revenues derived from the
“improvement fee” component of SDCs charged to new development along with accrued
interest. Expenditures of these funds are limited to support capacity-enhancement capital
projects and debt service payments in accordance with ORS 223.311.
F5h) A Bond Reserve if/when required by investors, shall be sufficient to provide assurances to bondholders that adequate revenue coverage will be provided for future
debt-service payments.
F5i) The Rate Stabilization Reserve contains funds to be used at any point in the future
when the net revenues are insufficient to meet the bond-covenant coverage requirement.
The Commission shall maintain the Rate Stabilization account as long as bonds are outstanding. Money in the Rate Stabilization account may be withdrawn at any time and
used for any purpose for which gross revenues may be used. Earnings on the Rate
Stabilization Account shall be credited to the sewer fund.
F5j) The Insurance Reserve is intended to accumulate funds necessary to provide for
payments of the self-insured amount and/or deductible of any insured loss and payments for losses that are either uninsured or uninsurable. The Insurance Reserve is set at a target
at $1,500,000 in the adopted budget.
Each reserve has specific sources and uses, and the order in which the reserves are
accessed to meet operating and capital needs follows:
In the operating budget, in the event of a revenue shortfall, funds will first be transferred from
the Rate Stability Reserve. If additional funds are necessary, the Operating Reserve will then be
used. If additional funds are still needed, the budgeted transfer from the Operating Fund to the
Capital Reserve will be reduced.
Funding for capital projects will come from a combination of SDC reserves, Capital reserves, and debt financing. During each year’s budget process, staff will consider reserve levels,
reporting requirements, arbitrage considerations, and debt issuance costs associated with
borrowed funds and cash flow needs to determine the specific funding source for each project in
the budget.
MWMC funds are dedicated for the exclusive benefit of the RWP including
operating expenses, debt service payments, and the associated capital program.
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The liquid assets of the Metropolitan Wastewater Management Commission (MWMC) are
managed by the City of Springfield, in the City’s capacity as the MWMC’s administrative
agency.
As part of its MWMC administration functions, the City of Springfield manages MWMC funds
in compliance with the (Appendix IV) as
updated and amended from time to time. These policies are consistent with the local government
investment requirements defined in Oregon Revised Statutes (ORS 294), and are substantially
similar to the public funds investment policies of Eugene and Lane County.
Cash on hand that is not invested is kept in a local bank. Because the balance is
usually in excess of the FDIC insured amount of $250,000, the bank must participate in the
Oregon Certificate of Participation Collateral Pool. This protects depositors from loss in the
event of bank failure.
MWMC funds are invested based on the following criteria: Safety, Legality, Liquidity, Diversity, and Yield. For purposes of investing, MWMC and Springfield funds are
co-mingled, but are tracked separately.
For day-to-day investing purposes, the City of Springfield uses the State of
Oregon Local Government Investment Pool (LGIP). The LGIP provides a modest rate of return
with nearly immediate liquidity. In addition to the LGIP, the City of Springfield can invest in U.S. Treasury Obligations, U.S. Government Securities, Bankers’ Acceptances, Corporate Bonds, Repurchase Agreements, Oregon and Local Government Obligations, Regional Debt
Obligations, and Time Certificate of Deposits. With the exception of the LGIP, no more than
25% of the portfolio can be invested with any one financial institution, and there are limits to the
amount that can be invested in any one type of instrument. For instance, a maximum of 25% of the portfolio can be invested in corporate bonds.
Guidelines were created to ensure adequate liquidity . For instance, at least 10% of
the short-term investments must be in instruments with a maturity of less than 30 days, 25%
must mature within 90 days and, with certain exceptions, all investments in this portfolio must
have a maturity date of 18 months or less. Longer maturities are allowed with approval of the Finance Director and when matched to a specific cash flow. The City of Springfield Finance
Director also serves as the MWMC Chief Financial Officer.
The investment policy requires that internal controls for cash and investment activity be
established and followed. The policy also requires that the financial condition of the
broker/dealers and financial institutions involved in the investment program be reviewed annually and that monthly cash and investment reports be issued and reviewed to demonstrate
compliance with the limits outlined in the policy (Appendix IV contains the full text of the City
of Springfield Investment Policy).
Capital planning and financing policies direct those necessary future capital improvements be
identified together with the financial resources needed to complete them. These policies also
direct that major capital costs be spread over time to stabilize user rates and to provide equity
among current and future ratepayers for long-lived capital improvements.
2019 MWMC Financial Plan Page 15
The Commission shall maintain a capital planning and financing system for use in
preparing a multi-year CIP for consideration and adoption by MWMC and ratification by the
partner agencies’ governing bodies as a part of the Commission’s budget process. This system
shall include preparation of a rolling CIP and a Capital Financing Plan (described in Policy F4).
Each year, staff will prepare a 5-year CIP made up of new capital projects, major
rehabilitation projects, and equipment replacement. The 2004 Facilities Planned 20-Year Project
List, as updated from time to time, shall be a primary tool for long-range capital planning, along
with the long-term list of major rehabilitation and equipment replacement needs, which are
updated annually.
The CIP shall contain a comprehensive description of the capital projects, sources of funds, the
timing of capital projects, and the amount expected to be expended in each year for future
operating and capital budgets.
The Commission shall establish and maintain a list of approved finance mechanisms.
Appendix II contains the listing and discussio n of approved financing mechanisms.
The Commission shall rely on the advice of its independent financial advisor and
bond counsel, as well as GFOA guidance, to structure bond covenants.
Commission debt should be structured to match the expected useful life of the assets to be funded, preferably not to exceed 20 years, however recognizing there may be some
instances where a longer period is warranted.
Long-term bonding shall be structured to maximize its cost effectiveness.
Before seeking to incur new debt, all available grant programs shall be evaluated
for their potential to offset targeted program costs.
Consideration shall be given to the overall level of debt financing that can be
sustained over the long-term given the size of the future capital programs, potential impacts on
credit ratings, and other relevant factors such as intergenerational rate equity, overlapping debt,
and the types of projects appropriately financed with long-term debt.
The Commission shall annually target at least 2% of the RWP asset value for capital reinvestment. This includes the amounts to be budgeted for major rehabilitation and
equipment replacement, and includes regular scheduled maintenance and CIP.
This will allow the target for annual infrastructure maintenance to increase as the
size of the asset base increases.
The maximum bonded debt burden shall be determined by comparing the debt service to the user rate revenues. Budgeted debt service shall not exceed 25% of budgeted user
rate revenue.
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User rate and SDC policies are intended to guide the Commission in establishing annual rate
structures and approving RWP capital improvement and operating budgets. User rate and SDC
policies shall be directed towards achieving the requirements of IGA Section 3.f.1. - .7.
Monthly sewer user rates, which are the primary source of revenue for the RWP,
are to be equitably allocated to all users based on a cost of service assessment that considers,
among other factors, the volume, strength, and flow rate characteristics of their discharges.
Existing and new sewer users shall equitably contribute to recovering all costs
associated with the RWP. To implement this policy, user rate and SDC methodologies will consider wastewater quantity, quality, and strength, consistent with State law.
: “New users” means users produced from
1. New connections to the existing collection system, including:
a. new single family and multiple unit residential connections; and
b. new commercial or industrial connections;
2. Expansions in activity from existing connections, including:
a. conversion of residential units (single or multiple) to include additional users or
equivalents, or both; and
b. expansions in commercial or industrial activity; and
3. Septic to sewer conversions.
MWMC rate structures shall be sufficient to fully fund reserves, comply with
bond covenants and cover the costs of constructing, operating, rehabilitating, maintaining, and
improving the MWMC assets, while maintaining an un-enhanced credit rating of A+ or higher
for the Commission’s bonds.
– A rate sufficiency covenant is a standard provision in municipal utility bond contracts. The covenant requires that rates and charges be set at a level that is high enough to
pay the costs of operating and maintaining the utility. The intent of this policy is to assure that
MWMC rates and charges will be maintained at a level consistent with maintaining an un-
enhanced credit rating of A+ for the Commission’s bonds.
MWMC should strive to maintain rates and charges that provide sufficient financial flexibility to accomplish strategic objectives for long-term water and biosolids quality, customer satisfaction,
and community support.
The Commission will attempt to adopt user rates that provide multi-year stability.
A multi-year rate schedule establishes user rates that are applicable over several
years. They may be the same each year, or change at some frequency. A Rate Stability Reserve shall be maintained to ensure that adequate funds are available to sustain the rate through
completion of the rate cycle.
2019 MWMC Financial Plan Page 17
The General Manager shall prepare and submit to the Commission a report in support of the
scheduled or proposed monthly sewer rates for the next year, including the following
information:
key financial assumptions such as inflation, bond interest rates,
investment income,
size and timing of bond issues,
the considerations underlying the projection of future growth in residential customer
equivalents, all key projections, including the annual projection of operating and capital costs, debt
service coverage, cash balances, revenue requirements, revenue projections and a
discussion of significant factors that impact the degree of uncertainty associated with the
projections, and
a discussion of the accuracy of the projections of costs and revenues from previous recent budgets.
Costs of existing and future capacity for new customers shall be recovered by
SDCs that are based on the cost of existing and required new capacity in conformance with the
Commission’s SDC methodology.
The Commission should periodically review the SDCs to ensure that equity is established between newly connected and previously connected users for their total contributions
toward the Regional Sewerage Facilities.
Costs of services (direct and indirect) provided to any public or private
organizations by the RWP shall be recovered through appropriate fees or charges.
C osts for administering the mobile waste hauler program are recovered through rates set on a cost of services basis, including a statewide market comparison.
2019 MWMC Financial Plan Page 18
Asset management policies are intended to guide the Commission in protecting and safeguarding
the investment in regional facilities and equipment. Capital assets shall be kept in sound
working condition. Replacement, maintenance, and rehabilitation shall be provided for, so that total system costs are minimized while reliable, high quality service and high water quality
standards are maintained.
MWMC assets shall be insured for replacement value so that, in the event of a
loss, plant and equipment could be restored to working condition.
The Commission shall maintain a fully funded Equipment Replacement Reserve so equipment may be replaced or rehabilitated when needed, without creating volatility in the
operating budget.
Equipment provided for by the Equipment Replacement Reserve shall include all
fleet equipment, and other equipment, with an original cost over $10,000, and with a useful life
expectancy greater than one year.
The equipment list shall be reviewed annually and estimates of replacement cost
and life expectancy adjusted. The analysis shall make use of other estimates, such as inflation
and available resources, such as interest earnings on the reserve balance.
Before equipment is replaced, an analysis shall be done to determine if it should be kept in use
longer, rehabilitated to extend its life, replaced with similar equipment, or replaced with different equipment. Equipment that outperforms projections in useful life expectancy may be replaced
with funds accumulated in the reserve.
Major Rehabilitation work shall be funded from the Capital Reserve and
appropriated annually into a budget line item called Major Rehabilitation.
The Major Rehabilitation work shall be capitalized if it extends the useful life of the asset beyond the original estimate. If the Major Rehabilitation work does not extend the life
of the asset, but enables the asset to reach its originally estimated useful life, then it will be
considered major maintenance work and not capitalized.
2019 MWMC Financial Plan Page 19
2019 MWMC Financial Plan - Appendix I Page 20
The wastewater utility industry in the United States is very capital intensive. In addition to
adding capacity necessary to accommodate population growth, sewer utilities must also reinvest
in capital assets to extend the life of the facilities, and to maintain compliance with environmental and other regulatory requirements. Even the smallest wastewater utilities must
spend millions to preserve, upgrade and expand their plant facilities. In order to meet new and
ongoing capital needs, it is essential for the wastewater utility industry (including MWMC) to
have ongoing access to capital financing markets.
In the 1970s and 1980s, Federal grants were available to build and upgrade facilities. For example, MWMC was awarded more than $80 million in Federal grants to construct the
Eugene/Springfield wastewater facilities. In the years since, a significant portion of the
wastewater industry’s capital needs have been met using current revenues (also known as pay-as-
you-go). However, among water and wastewater utilities, debt financing is becoming
increasingly necessary and common: Moody’s 2019 outlook for water and sewer utilities indicates that “capital needs are large relative to revenue, and the rate of reinvestment is expected
to remain low.” Debt financing – through state or Federal loan programs or public bond
offerings – is the likely mechanism to fill that gap.
Demonstrating and maintaining creditworthiness in the eyes of the capital financing markets is
critical to obtaining bond financing at the lowest possible interest rate. Establishing policies, practices and other terms of operation that confirm and enhance creditworthiness should be a
primary goal of the MWMC Financial Plan, and guide the management of the utility.
While capital debt may be structured in numerous ways, revenue bonds and general obligation
bonds are the most common instruments used by the public sewer industry in the United States. For example, MWMC matched the Federal grant funds with $29.5 million in general obligation
bonds to fully-finance construction of the regional wastewater facilities.
Public sewer utilities are generally viewed favorably by credit rating agencies and bond
investors, because they tend to be very stable with minimal risk of default. They are highly
regulated, essential to the public good, and often operate with a natural monopoly. The regulatory bodies for wastewater utilities typically have the authority to establish user fees and
charges necessary to cover debt obligations.
The wastewater industry, as a whole, has an extremely good credit history. However, individual
wastewater utilities are still subject to close scrutiny when issuing large amounts of debt. When
assessing the credit quality of a wastewater utility, a credit rating agency will generally examine several specific areas, including:
Financial ratios and other indicators of fiscal health,
Management quality and practices,
Non-financial system characteristics,
2019 MWMC Financial Plan - Appendix I Page 21
Size and diversity of the customer base and other customer characteristics, and
Local economic health and other community characteristics.
In January 2016, S&P Global Ratings (“S&P”) published its most recent U.S. Public Finance Waterworks, Sanitary Sewer, And Drainage Utility Systems: Rating Methodology and Assumptions. The rating methodology incorporates two components:
1) The Enterprise Risk Profile, including:
a. Economic fundamentals
b. Industry risk
c. Market position
d. Operational management assessment
2) The Financial Risk Profile, including:
a. All-in coverage (coverage of both debt service and ongoing operational expenses)
b. Liquidity and reserves (days cash on hand)
c. Debt and liabilities (debt to capitalization)
d. Financial risk management
Moody’s Investors Service (“Moody’s”) published its most recent rating methodology for US
Municipal Utility Revenue Debt in October 2017. This methodology utilizes a “scorecard”
approach, focused on the following key factors:
1) System characteristics, including:
a. Asset condition (remaining useful life)
b. Service area wealth (median family income)
c. System size (O&M budget)
2) Financial strength, including:
a. Annual debt service coverage
b. Days cash on hand
c. Debt to operating revenues
3) Management, including:
a. Rate management
b. Regulatory compliance and capital planning
4) Legal provisions of the debt being issued, including:
a. Rate covenant
b. Debt service reserve requirement (if any)
2019 MWMC Financial Plan - Appendix I Page 22
Many of the factors listed in the analytical frameworks outlined above are qualitative indicators;
that is, they are not objectively measurable. While credit rating agencies cannot readily compare
qualitative measures against national benchmarks or averages, these indicators can and do provide general information about the characteristics credit agencies prefer to see in the utilities
they rate highly, including:
The presence of long-term financial forecasting and planning by the utility – MWMC
typically projects revenues and expenses 10 years into the future during the annual
budget process. Strength and diversity in the local economy and customer base, and other local
socioeconomic characteristics – MWMC is the sole provider for wastewater services in
the Eugene/Springfield Metropolitan area. The local economy has diversified in recent
years.
Regular financial reporting – Budget compliance reports are presented to the Commission monthly and audited financial statements are presented to the Commission annually.
Attention to customer relations, including an open rate-setting process – MWMC always
conducts a public hearing prior to budget adoption.
An independent Board of Directors with seasoned management - The Commission is
independent (not paid by or stockholders of the utility). Commission members are a combination of experienced, knowledgeable elected officials and citizen representatives.
Commission members have staggered terms to protect the utility against periods of
unseasoned leadership.
Political will to increase rates when needed – The Commission has repeatedly
demonstrated their will to increase rates when the need was demonstrated. Anticipation of capital requirements due to new regulations – MWMC staff work
proactively with Federal and State personnel to keep well informed on upcoming new
regulations. MWMC maintains a 20-year list of capital improvements that is reflective of
anticipated new regulations.
A comprehensive financial policy structure, including:
Established debt policies and practices
Established budgetary policies and practices
Established reserve policies and practices
A CIP and other asset management tools that address system maintenance, upgrades and
capacity enhancement – MWMC maintains 5-year, 10-year, and 20-year CIPs. Intergovernmental cooperation and coordination – The Commission has a goal of
intergovernmental cooperation and has worked hard to maximize the benefits of that
cooperation. MWMC is generally thought of as an example of successful
intergovernmental cooperation.
Healthy employee relations and sound staffing practices – Staff turnover is low. Staffing levels are reviewed annually. High qualification standards are required of all new
personnel.
Successful litigation history (or a history of little litigation) – MWMC has little in the
way of litigation history but what there is has been successful.
2019 MWMC Financial Plan - Appendix I Page 23
Exposure to growth-sensitive revenue sources – MWMC’s major revenue source, user
fees, is somewhat sensitive to conservation efforts, but is not growth sensitive. SDC
revenue is growth sensitive. This revenue plays an important role in MWMC capital
financing. Long-term operational capacity planning and creation – The Intergovernmental
Agreement (IGA) under which MWMC was formed requires planning for new capacity
to begin at the point 85 percent of present capacity is being used.
Compliance with environmental laws and regulations – MWMC has an outstanding
record of environmental compliance.
The common element of many of these qualitative factors is the capability of management and
their practices and policies. S&P states, “The ability of a utility’s management team to
implement measures on a timely basis that will in our opinion proactively shape the utility’s
financial and operating condition can be crucial to maintaining credit stability.”
Quantitative measures are performance factors that can be expressed in numbers or ratios. They
are useful for comparing an agency with other agencies or with an objective standard. When
assessing a sewer utility’s creditworthiness, the quantitative measures focus primarily, but not
exclusively, on financial indicators. Among the key quantitative factors are the following:
Income statement and balance sheet components and ratios (see additional detail below),
Current bond ratings,
Reserve levels,
Rate structure, including rate competitiveness,
Account and collections history, Outstanding capital needs and asset condition,
Affordability (i.e., sewer service rates no more than 2 to 4 percent of local household
income), and
Non-debt equity in total plant assets and in capital projects to be financed
Perhaps the most significant quantitative factors are the income statement and balance sheet
components and ratios. These financial measures provide a uniform basis by which the credit
rating agencies may assess the fiscal strength of a utility.
As alluded to above, the most significant income statement and balance sheet ratios include the following:
Moody’s Investors Service:
Asset condition: net fixed assets divided by annual depreciation
Annual debt service coverage
Days cash on hand
Debt to operating revenues
2019 MWMC Financial Plan - Appendix I Page 24
S&P Global Ratings:
All-in coverage: net revenues divided by debt service and other fixed costs
Days cash on hand
Debt to capitalization: total debt divided by debt plus net position (the closest approximation of “equity” for a municipal utility)
The MWMC was most recently reviewed by both Moody’s and S&P in March 2016, in
connection with the issuance of its Wastewater Revenue Refunding Bonds, Series 2016. The
resulting credit rating reports provide the best indicators of how MWMC fares when judged by
the criteria described above.
Moody’s assigned the MWMC a rating of “Aa2,” the third-highest rating available. Credit strengths included the Commission’s very healthy cash reserves, strong debt service coverage,
and low levels of outstanding debt. Credit challenges included a relatively small system size,
limited remaining useful life of assets, and modest wealth levels of the customer base.
S&P assigned the MWMC a rating of “AA” (equivalent to a Moody’s “Aa2”), with a rating outlook of “stable.” S&P noted the following characteristics of the MWMC’s “strong enterprise risk profile”:
Stable and primarily residential customer base, part of the broader Eugene metropolitan
statistical area
Moderately high rates given the service area’s income levels
Overall good operational management with sufficient treatment capacity and long-term
planning
S&P noted the following characteristics of the MWMC’s “very strong financial risk profile”:
Very strong coverage metrics
Very strong liquidity levels
Moderate debt-to-capitalization ratio
Good overall financial management
MWMC currently enjoys a very favorable position based on the identified quantitative and
qualitative measures, and as affirmed by the rating agencies directly as recently as 2016. Prudent
planning and financial management are large contributors to the creditworthiness of the utility.
This report is intended to summarize the more significant qualitative and quantitative measures a credit agency uses to assess the utility’s creditworthiness, as applied in connection with the 2016 MWMC revenue bonds and which would be applied in connection with any new issuance of
revenue bonds. This report is not meant to present a comprehensive assessment of the scrutiny
MWMC would incur when issuing revenue debt, but can act as a valuable tool in identifying
policies and practices where MWMC could bolster its standing in the eyes of potential creditors.
2019 MWMC Financial Plan – Appendix II Page 25
This summary of capital financing options available to the Metropolitan Wastewater Management Commission (MWMC) has been prepared as part of this update to the 2005 MWMC Financial Plan. This summary includes the following:
1. Identification of capital financing options available to MWMC,
2. Summary of the prevailing capital financing options use in the industry, and
3. A general description of the advantages and disadvantages of each capital financing option.
There are two major categories of capital financing mechanisms:
1.) Debt Financing – Bonds/Loans
a. Bonds
A bond is a legally enforceable contract to repay borrowed money on a definite schedule at a specified rate of interest for the life of the bond--usually 15 to 30
years. State and local governments can repay this debt with taxes, fees, or other
sources of governmental revenue. It is the source of repayment, or the type of
collateral used, that defines the type of bond (e.g., general obligation bonds or revenue bonds). General obligation (“GO”) bonds require voter approval and are payable from a new, excess property tax levy outside typical constitutional and
statutory limitations. They are not commonly used by municipal utilities.
Revenue bonds, as described further below, are payable from net revenues of an
enterprise such as a wastewater utility, and are much more common among municipal utilities in Oregon and nationwide.
The tax-exempt nature of many government bonds attracts bondholders who are
generally willing to accept a correspondingly lower rate of return on their
investment than they would expect on a comparable commercial bond. As a
result, bond financing can often provide state and local governments with low-interest capital.
Some State and local governments are required by statute to seek voter approval
for certain types of bond issues (e.g. general obligation bonds). If achieving
voter approval is difficult or time-consuming, state and local governments may
consider issuing other types of bonds that do not require voter approval, or exploring other options for capital financing, even though interest costs may be higher. Some State and local governments have statutory limitations on the
dollar amount and/or number of bonds that can be issued. Issuing bonds is a
costly and time-consuming process, and requires sound legal and financial
advice.
2019 MWMC Financial Plan – Appendix II Page 26
b. Loans
A loan is similar to a bond issue, and loans are generally treated as “bonds”
under Oregon Revised Statutes. A “loan” typically refers to credit extended by a
commercial or governmental lender, whereas “bonds” are sold to a variety of investors in the public capital markets.
Commercial loans are typically made by banks and other financial institutions.
Commercial loans generally will have higher interest costs than tax-exempt
bonds, but may provide more flexibility and/or lower up-front costs.
Like grants, government loans are made with very specific goals in mind, often are accompanied by specific mandates, may be less than 100% of total project
costs, and depend on legislative appropriation. Government loans often are made
available at subsidized (lower than market) interest rates for projects that meet
eligibility criteria, or may be interest-free (e.g., some state revolving fund, or
SRF, loans). Many government loan programs are targeted to small, economically distressed, and/or rural areas, which need the most assistance in
acquiring project capital.
The SRF program is the largest government environmental infrastructure loan
program available today, far surpassing other state loan programs. While the
SRF program is funded by a Federal capitalization grant (like a block grant), it effectively operates as a state loan program.
Loans involve fewer and lower transaction costs than bonds, and may be
acquired without voter approval. In addition, grants and loans from different
sources may be commingled. Government loans are subject to the availability of
funds, and competition among borrowers can impact project timing. Such loans may carry governmental requirements, such as the prevailing wage provisions
from the Davis-Bacon Act. Most Federal loans have complicated application
procedures and deadlines.
2.) Non-Debt Financing
Other than grant funding, the primary non-debt financing mechanisms applicable to MWMC are user rate revenue and SDC revenue. Non-debt financing can come from
current revenues or revenues that have been accumulated over time in reserves.
Historically, wastewater agencies have utilized a variety of mechanisms to finance capital
improvements. During the late 1970s and 1980s, significant Federal grant funds were available
to support wastewater capital projects. Since then, grant funding has been dramatically reduced and currently is not generally a viable option for capital financing. The Federal grant program
has been replaced by the State Revolving Fund (SRF) loans.
The current MWMC facilities were primarily constructed with $80 million in Federal grants and
$29.5 million in voter approved general obligation bonds. The last significant Federal grants
were received in the late 1980s. In recent years, the Commission has funded capital improvements using “pay-as-you-go” sources, such as user rates and SDCs.
Each form of capital financing serves distinct purposes and has certain limitations. The sections
below provide a general overview of various financing tools. It should be noted that this review
2019 MWMC Financial Plan – Appendix II Page 27
is not meant to eliminate other mechanisms (e.g., general obligation bonds) from consideration
for specific uses.
1. Revenue Bonds and Variations 2. State Revolving Funds - Clean Water Loans
3. Short-Term Financing
4. Internal Borrowing
5. Systems Development Charges
6. User Fees (aka pay-as-you-go)
7. Grants
Arevenue bond is issued by a government to finance a specific project (or projects) and is supported (repaid) by the revenue generated by the project (or the utility system as a whole), or from other non-property tax sources. Revenue bonds are secured by the net
revenues of an enterprise system, a debt service reserve funds, and additional covenants. Net
revenues are generally defined as gross revenues of the system less operating expenses.
In Oregon, issuers, upon adoption of a resolution or a non-emergency ordinance authorizing the issuance of bonds in accordance with ORS 287A.150, may issue revenue bonds. While revenue
bonds do not require voter approval, they are subject to referendum.
Revenue bonds can be issued fairly rapidly, and debt can be specifically structured
to meet project needs. Level annual debt payments ensure that future as well as present users of
the new facilities will pay, thus enhancing equity. Revenue bonds are commonly used by utilities, as they are free from the requirements of general obligation bonds, which must be
approved by voters.
Revenue bonds generally require covenants and ongoing reporting requirements
associated with those covenants, including debt service coverage. Revenue bonds may also
require a reserve fund, increasing the size of the bond issue.
: This is the most appropriate financing tool for MWMC. With the exception of
“pay-as-you-go” financing, general obligation bonds or subsidized state/Federal loans, revenue
bonds generally offer the lowest interest rate. If the project being funded is popular and/or
necessary, the risk of a referendum is low. Staff is also familiar and experienced with the
administrative tasks common to revenue bonds. MWMC’s only outstanding debt consists of revenue bonds, originally issued in 2006/2008 and refinanced in 2016.
Variation: Revenue “Obligations.” Borrowers may instead choose to rely on ORS 271.390,
which authorizes Oregon governmental units to enter into contracts for the financing of real or
personal property. These contracts may be called various names such as full faith and credit
obligations, certificates of participation, financing agreements, revenue obligations, or other names that would describe the security provided. Unlike revenue bonds, such “obligations” are
not subject to a referendum. However, they require more complex documentation, and certain
2019 MWMC Financial Plan – Appendix II Page 28
investors are unwilling to purchase “obligations” in lieu of “bonds,” even with a similar (or
identical) revenue pledge.
Variation: Revenue-secured Loans/Leases. Under either ORS 287A.150 or 271.390, the
MWMC may choose to work directly with a single lender (i.e., a commercial bank or equipment vendor). Although commercial loans are not a separate type of debt in terms of security or
treatment under state law, they may provide greater flexibility than publicly-offered revenue
bonds or obligations. Commercial loans or equipment leases may also offer less onerous
ongoing disclosure requirements than would be required under the securities laws applicable to
public bond issues.
Variation: WIFIA Program. In 2014, Congress passed the Water Infrastructure Finance and
Innovation Act, authorizing the US Environmental Protection Agency (EPA) to provide long-
term, low-interest loans to water and wastewater projects throughout the country. The program
was first funded in 2017. Borrowers are selected through a competitive application process. The
WIFIA loan program is currently being utilized by several borrowers in Oregon; such loans are similar to revenue bonds, albeit with a single investor (the EPA). If funding continues to be
appropriated, MWMC may consider such a program as a means of reducing interest costs for a
project that would otherwise utilize revenue bonds sold on the public bond market.
Short-term municipal notes are generally considered “bridge financing,” providing short-term cash until a larger source of committed funds is received. They are often known by their acronyms, such as Bond Anticipation Notes (BANs), Grant Anticipation Notes (GANs),
and Revenue Anticipation Notes (RANs.)T hese instruments generally have maturities ranging
from a few months to a few years, may have fixed or variable interest rates, and are issued in
anticipation of a bond issue, grant proceeds, or revenue/tax collections.
State and local governments issue billions of dollars a year in short-term notes of all types, to meet immediate capital needs for design and initial construction while waiting for
long-term funding revenues. Short-term financing may be used for housing and urban renewal,
water and wastewater project startups, transportation projects, school district operations, and
temporary agency operating deficits caused by seasonal variations in tax collections.
Short-term notes can be used to meet short-term gaps in project finance and operations when they occur, and until the final sources of funds become available.
Short-term notes provide issuers with immediate funds for capital and operating
needs.
Short-term notes generally require a take-out financing which results in higher financing costs and funding is temporary.
Short term notes could be an appropriate tool for MWMC under certain
circumstances; however internal borrowing would generally be a preferable method for short-
term financing. As with long-term revenue bonds, MWMC could structure short-term notes as a
public offering or work directly with a single investor (financial institution such as a bank).
2019 MWMC Financial Plan – Appendix II Page 29
(General program descriptions are followed by italicized descriptions of the specific State of
Oregon CWSRF program. Substantial additional detailed information on the Oregon program is
available upon request. Although SRF loans are similar in some respects to revenue bonds/loans described above, they are unique enough to warrant additional discussion.)
Under Title 6 of the 1987 Clean Water Act, states receive Federal monies to
capitalize Clean Water State Revolving Loan Fund (CWSRF) programs. States must provide a
20 percent match to the Federal funds. CWSRFs are authorized to make loans to localities to
finance wastewater treatment facilities, nonpoint source pollution control activities and estuary program activities. Loans are made at low interest rates (zero percent to market rate) for up to 20
years. States can use loan funds to refinance previously executed debt obligations, guarantee
local debt obligations, buy bond insurance for local debt obligations, or guarantee bonds issued
by municipal and inter-municipal revolving funds. States may use up to four percent of the
Federal funds for administrative costs. States may set the criteria for determining which municipalities can access the loans and other fund uses each year.
The CWSRF Loan Program offers below market interest rate loans to public agencies for
planning, design, and construction of three kinds of water-pollution abatement projects:
1. Wastewater collection, treatment, water reuse and disposal systems,
2. Nonpoint source water pollution control projects, and
3. Development and implementation of management plans for federally designated
estuaries.
Specific project types that may be eligible for CWSRF funds include:
Wastewater system facility plans and studies
Secondary treatment facilities
Advanced wastewater treatment facilities
Sludge disposal and management
Interceptors, force mains and pumping stations
Infiltration and inflow correction
Major sewer replacement and rehabilitation
Combined sewer overflow correction
Collector sewers
Stormwater control
Estuary management
Nonpoint source control
Loans are available at rates based on the municipal bond rate with an annual fee of 0.5% paid
during a repayment period of up to twenty years. Interest rates charged on specific loans depend
on the repayment term, and range from 25% of the average bond rate for a five year loan to 65%
of the bond rate for a twenty year loan. To assist communities through the planning stages of a
project, planning loans are offered at the lowest interest rate, with a five-year repayment period, and are not charged the annual fee. Communities must pledge loan security adequate to satisfy
the CWSRF Loan Program, such as general obligation bonds, other general obligation pledges,
or user charges.
2019 MWMC Financial Plan – Appendix II Page 30
Goal #1: To protect public health and the waters of the state by offering financial assistance
for water pollution control projects.
Goal #2: To provide financial support for water quality improvements to all waters of the State.
Goal #3: To administer the CWSRF to ensure its financial integrity, viability, and perpetuity
as a source of financial assistance.
Goal #1: To continue to maintain the revolving nature of the Fund and to maintain an active pace of disbursements in conjunction with the receipt of new funds and
loan repayments.
Goal #2: To provide funding to local communities to the maximum extent possible within
the constraints of sound financial management, law and regulation.
Goal #3: To increase the number of loans for both non-point source and estuary management projects.
Goal #4: To make the CWSRF loan program more accessible to a wider range of water
quality projects statewide.
Goal #5: To continue our participation with other State and Federal programs in providing
financial assistance to Oregon communities.
Projects that are ready to proceed are funded in priority order. Although allocating funds only to
projects that are ready to proceed does result in some projects being funded ahead of higher
priority projects, the high level of demand has continued to make the process competitive. All
funded projects have been critical to the protection or restoration of water quality in Oregon.
All states have CWSRFs, and they increasingly are making loans for non-traditional wastewater projects. By mid-1997, fifteen states were funding nonpoint source pollution projects
(including direct loans to farmers), six were funding stormwater projects, nine were funding
landfill projects, five were funding septic system rehabilitation and replacement, six were
funding estuary wetlands, stream restoration, and wellhead protection, many were funding sludge
projects, and over half were funding combined sewer overflow projects. Some states have already used their own funds to finance revolving programs to assist localities with various
capital projects. At least two states have made loans to acquire land or conservation easements to
protect source water.
States are starting to apply the revolving loan fund concept to other needs, such
as biosolids reuse.
Th e CWSRFs are able to provide localities with extremely low-interest loans at
favorable terms. They can be considerably more flexible than commercial banks, as states can
adjust interest rates and other loan terms to suit localities' ability to pay.
The competition among applicants for access to revolving loan funds is intense in
some states. Project costs can be increased, due to Federal “cross-cutting” requirements that apply in using CWSRF monies. Some small communities may not be able to afford any loan.
Loan terms are currently limited to 20 years, although there have been legislative proposals to
extend them to 30 years.
2019 MWMC Financial Plan – Appendix II Page 31
This could be an appropriate financing tool for MWMC because it would be
simpler to administer than a revenue bond and there would not be the requirements of a bond
indenture to monitor. Availability of funds on a timely basis would be the biggest concern.
Internal borrowing occurs when funds are borrowed from a reserve account in
another fund, department, or agency of the local utility or government.
Internal fund borrowing is a viable option only if an analysis of the affected fund
indicates sufficient funds are available and the use of these funds will not impact the fund’s
operations in the short term. Given those conditions, internal fund borrowing may be implemented for a variety of purposes.
1. Better financing rates are often obtained through internal borrowing, compared to
borrowing from outside the organization or having third parties borrow on behalf of the
utility. 2. Internal funds can be made available at low or no interest. They involve fewer
transaction costs.
3. Funds are usually available when needed.
4. All savings are returned to the entity.
5. The entity can choose to do as much or as little external financing as required. 6. Riskier projects, or those that have lower rates of return, can still be funded from capital
budgets.
7. With internal support and recognition for the work that needs to be done, it can be much
easier to secure commitment, resources and support for internally funded work.
1. Using internal funds may delay or defer implementation of other projects.
2. Internal funds could be invested in financial vehicles that may provide a better rate of
return.
3. Monitoring and verification of the savings and repayment schedule are needed.
4. Bond rating agencies may downgrade an entity’s bond rating due to the presence of an “internal deficit.”
MWMC will make use of internal borrowing to provide interim financing for
projects and allow the Commission to sell bonds at the optimum time, considering the current
economic environment, interest rate and issue size.
SDCs, also known as Impact Fees, are fees collected by local governments to offset
the costs of public improvements associated with new development. SDCs are not a tax. They are one-time fees collected for a specific purpose and, in Oregon, may only be used for capital
improvements.
2019 MWMC Financial Plan – Appendix II Page 32
Under Oregon law, SDCs can be charged for capital improvements associated with
a) water supply, treatment and distribution; b) wastewater collection, transmission, treatment and
disposal; c) drainage and flood control; d) transportation; e) parks and recreation. Certain SDC
revenues may only be expended on capacity-increasing capital improvements, while other SDC revenues may be used for capital improvements in general. An administrative fee may also be
collected with SDCs and expended on the administration and accounting of the SDC program.
New users of services purchase an increment of existing and new capacity . This
results in enhanced equity between current and new users. It also reduces the cost burden on
current users.
SDCs do not provide capital much in advance of development. Capital
improvements often add capacity that will be consumed over an extended period of years. SDC
revenue is dependent on the rate of development which can be highly dependent on many factors
and tends to fluctuate from year to year. SDCs are criticized for deterring development and
increasing new housing costs, and resulting in interjurisdictional competition. Developers may pass on SDCs to residents. Communities may change their policy preferences depending on
economic and political conditions, for example, implementing or discontinuing SDC
exemptions/credits to stimulate or discourage development.
SDC revenue is an important financing tool. Reimbursement SDC revenues may
be expended for capital improvements in general. Improvement SDC revenues may be used on capacity-increasing capital improvements only.
User Fee Financing is also known as “pay-as-you-go” financing. As the name
implies, current revenues and reserves are used to fund the capital program, either in whole or in part.
This method has been the preferred mechanism for funding MWMC capital projects
in the past 10 years.
User fee revenue can be used for virtually any legitimate MWMC purpose,
including funding of operating expenses, capital expenses, and debt service as allowed by law.
Funding capital projects from user fee revenue avoids the cost, risk, and
administrative complexity of debt financing. Current users directly support required
infrastructure, creating no impact on future users or Commissions.
Capital projects funded from user fee revenue must either be relatively small, or
staged in small increments to avoid large spikes in user rates. Alternatively, reserves can be accumulated to fund a large project in the future.
User fee financing will continue to be an important financing tool for MWMC ;
however, to be most effective, it must be one of several options available to the Commission and
used strategically.
Grants are financial resources made available to utilities (or others) to fund
specific desired activities or outcomes. Depending on the program, grants can be created to
2019 MWMC Financial Plan – Appendix II Page 33
support operating or capital programs, or both. Wastewater grants are usually generated by State
or Federal programs. Most require an application process, and some require a level of matching
local funding.
MWMC relied heavily on Federal grants to build the current treatment plant and other facilities.
When funding is available, grants can be powerful tools in the hands of the
granting agency. Grants can be used to provide incentives to local utilities to meet governmental
standards or goals.
Grants often provide the opportunity to leverage substantial capital resources with minimal local investment. When available, grants enable utilities to complete specific capital
projects earlier than would otherwise be possible, leaving reserves and local funds for other
ventures.
Grants for wastewater-related projects have become appreciably less common in
recent years. Grant funding can be unpredictable and requires significant administrative and reporting coordination. There can be strong competition among agencies for limited grant funds.
Grant opportunities will be accessed whenever feasible. Grants are an important
mechanism for MWMC to finance specific projects.
As discussed above, there are a variety of options available in the market to finance capital
projects. The type of financing a utility would use in a given set of circumstances depends on
the type of project, the size of the project, any statutory requirements and the financial health of
the utility. MWMC will work with its advisors to determine the most appropriate financing
mechanisms for a given project in light of the project timeline, purpose, and goals, and in the broader context of MWMC’s overall financial policies and health.
2019 MWMC Financial Plan - Appendix III Page 34
(2012)
Financial policies are central to a strategic, long-term approach to financial management. Some of the most powerful arguments in favor of adopting formal, written financial policies include
their ability to help governments:
1. . Formal policies usually outlive their creators, and, thus, promote stability and continuity. They also prevent the need to re-invent responses to recurring issues.
2. Financial policies
define a shared understanding of how the organization will develop its financial practices
and manage its resources to provide the best value to the community.
3. Financial policies define limits on the actions staff may take. The policy framework provides the boundaries within which staff can innovate in order to
realize the organization's strategic intent.
4. .
5. . The strategic intent articulated by many financial policies necessarily demands a long-term perspective from the organization.
6. . A key component of governance accountability is
not to incur excessive risk in the pursuit of public goals. Financial policies identify
important risks to financial condition.
7. The Government Finance Officers Association (GFOA), through its officially adopted Best Practices endorsement of National Advisory Council on State and Local Budgeting (NACSLB) budget practices
and the GFOA Distinguished Budget Presentation Award Program, has recognized
financial policies as an essential part of public financial management.
GFOA recommends that governments formally adopt financial policies. Steps to consider when
making effective financial policies include (1) scope, (2) development, (3) design, (4)
presentation, and (5) review.
: There are some basic financial policy categories (but not limited to) that all governments should consider adopting.
1. General fund reserves. Policies governing the amount of resources to be held in reserve
and conditions under which reserves can be used.
2019 MWMC Financial Plan - Appendix III Page 35
2. Reserves in other funds. Policies for other funds (especially enterprise funds) that serve a
similar purpose to general fund reserve policies.
3. Grants. Policies that deal with the administration and grants process.
4. Debt. Policies that govern the use of government debt, including permissible debt instruments, conditions under which debt may be used, allowable levels of debt, and
compliance with continuing disclosure requirements.
5. Investment. Policies that provide guidance on the investment of public funds, including
permissible investment instruments, standards of care for invested funds, and the role of
staff and professional advisors in the investment program.
6. Economic development. Policies that address a local government’s use of subsidies or
other incentives to encourage private development.
7. Accounting and financial reporting. Policies that establish and guide the use of an audit
committee, endorse key accounting principles, and that ensure external audits are
properly performed.
8. Risk management and internal controls. Policies that address traditional views of risk
management and internal control, as well as more modern concepts of "enterprise risk
management."
9. Procurement. Policies that are most essential for adoption by the governing board in order
to encourage efficient, effective and fair public procurement.
10. Long-term financial planning. A policy that commits the organization to taking a long-
term approach to financial health.
11. Structurally balanced budget. Policies that offer a distinction between satisfying the
statutory definition and achieving a true structurally balanced budget.
12. Capital. Policies that cover the lifecycle of capital assets, including capital improvement planning, capital budgeting, project management, and asset maintenance.
13. Revenues. Policy guidance through the designing of efficient and effective revenue
systems that guarantee the generation of adequate public resources to meet expenditure
obligations.
14. Expenditures. Policies addressing a range of issues around how the money is expended, including personnel, outsourcing, and funding long-term liabilities.
15. Operating budget. Policies that describe essential features of the budget development
process and form, as well as principles that guide budgetary decision making.
: The following steps should be considered in the development of effective policies.
1. Define the problem the policy will address.
2. Draft the policy. Be aware of legal requirements and consider public comments. Look at
the experience of peer governments. 3. Review and present the policy to government officials.
4. Formally consider and adopt policy.
5. Implement policy making sure that staff and government officials are aware of policies.
2019 MWMC Financial Plan - Appendix III Page 36
Effective polices have a number of design features in common.
1. Policies must exist in written form.
2. Policies should be expressed in a manner that is understandable to the intended audiences.
3. Policies should be made available to all stakeholders, and be published in more than one
medium with multiple means of access.
4. Policies should address all relevant issues and risks for that specific policy in a concise
fashion.
Effective financial policies share some of the following traits.
1. All of the financial policies are placed in the same section of the budget document.
2. The original and revision dates are shown on the individual policies.
Financial policies are most successful when they are reviewed after being enacted.
1. Policies should be monitored, reviewed, and updated as needed in a systematic way.
2. Analyze the reasons if specific policies are not being followed.
GFOA Best Practice, “Recommended Budget Practices from the National Advisory Council on State and Local Budgeting,” 1998.
GFOA Publication, “Financial Policies,” 2012 (Shayne Kavanagh).
Approved by GFOA's Executive Board: September 2015
2019 MWMC Financial Plan - Appendix IV Page 37
Date of Last Adoption: 12/01/1997
This investment policy applies to all cash-related assets included within the scope of the City of
Springfield’s audited financial statements and held directly by the City. The City’s portfolio,
excluding bond proceeds, is currently $41 million. The average monthly balance of funds
invested, excluding bond proceeds, is about $42.5 million.
Funds held in trust for the Pension Portfolios and deferred compensation funds for the Employees of the City of Springfield, which have separate rules, are excluded from these
policies. In addition, funds held by trustees or fiscal agents are excluded from these rules;
however, all funds are subject to regulations established by the State of Oregon.
Funds will be invested in compliance with the provisions of, but not necessarily limited to the Oregon Revised Statutes (ORS), Chapter 294, other applicable statutes and this policy. Investment of any tax exempt borrowing proceeds and any related debt service funds will
comply with the arbitrage restrictions in all applicable Internal Revenue Codes.
The City will limit investment activities in order to ensure safety, legality, liquidity, diversity, and yield:
Preservation of capital and the protection of principal.
Conformance with federal, state, and other legal requirements.
Maintenance of sufficient liquidity to meet operating requirements.
Avoidance of imprudent credit, market, and speculative risk.
Attainment of a market rate of return throughout all economic and fiscal cycles.
The City will not assume unreasonable investment risk to obtain investment income.
The Deputy Treasurer is the designated investment officer of the City of Springfield and is responsible for investment decisions, under review of the City of Springfield’s Council. The
day-to-day operation of the investment process program is handled by the Budget/Treasury
section.
The investment officer is responsible for setting investment policy and guidelines subject to review and adoption by the City Council and, if required, review and comment by the Oregon Short-Term Fund Board. Further, the Deputy Treasurer is the portfolio manager and makes
2019 MWMC Financial Plan - Appendix IV Page 38
investments, under the general direction of the Finance Director, and is responsible for the day-
to-day operations of the investment process which includes, but is not limited to, choosing what
to buy or sell, from whom investments will be purchased, executing the buy/sell orders,
producing necessary reports, and supervising staff. In addition to the active management of the investment portfolio, the Deputy Treasurer is responsible for the maintenance of other written
administrative procedures consistent with this policy and the requisite compliance. To further
optimize the total return of the investment portfolio, the Deputy Treasurer will administer an
active cash management program, the goal of which will be to maintain historical cash flow
information, i.e. debt service; payroll; revenue receipts; and extraordinary expenditures.
In order to optimize total return through active portfolio management, resources will be allocated
to the Budget/Treasury’s cash management program. This commitment of resources will include
financial and staffing considerations.
The standard of prudence used by the investment officer and staff in the context of managing the
overall portfolio shall be the prudent investor rule, which states: “Investments shall be made
with judgment and care, under circumstances then prevailing, which persons of prudence,
discretion and intelligence exercise in the management of their own affairs, not for speculation,
but for investment, considering the probable safety of their capital as well as the probable income to be derived.”
The Deputy Treasurer will routinely monitor the contents of the portfolio, the available markets,
and the relative values of competing instruments and will adjust the portfolio accordingly.
If, due to unanticipated cash needs, the investment in any security type or financial institution
exceeds the limitations in this policy, or if the credit rating of a security type or financial
institution is lowered after an investment is purchased, the Deputy Treasurer is responsible for
bringing the investment portfolio back into compliance as soon as practicable.
The Deputy Treasurer will maintain a system of written internal controls which will be reviewed
annually by the independent auditor or upon any extraordinary event, i.e. turn-over of key
personnel, the discovery of any inappropriate activity. The controls will be designed to prevent
loss of public funds due to fraud, error, misrepresentation, or imprudent actions.
The City will diversify investments across maturities, security type, and institution to avoid
incurring unreasonable risks.
Except for the Local Government Investment Pool, no more than 25 percent of the City’s total investment portfolio will be invested with a single financial institution.
2019 MWMC Financial Plan - Appendix IV Page 39
Maximum Percentage
of Portfolio
100%
(Bills, notes, bonds, strips) 100%
50% 50%
25%
Issued by a qualified financial institution whose short-term letter of credit rating is rated in the highest category by one or more nationally recognized rating organizations.
A1 or AA or better by S & P; or P1 or Aa or better
by Moody’s, or an equivalent rating by any nationally recognized rating agency. 25%
A1 or A or better by S & P; or P1 or Aa or better by
Moody’s, or an equivalent rating by any nationally recognized rating
agency.
25%
25%
Obligations of the agencies and instrumentality’s of the State
of Oregon and its political subdivisions that have a long-term
rating of A or better, or rated in the highest category for short-term municipal debt.
25%
Obligations of California, Idaho and Washington and political sub-divisions of
those states if obligations carry a long-term rating of AA or better or are rated in the highest category for short-term municipal debt.
25%
10%
2019 MWMC Financial Plan - Appendix IV Page 40
No more than 20 percent of the total portfolio with any one security.
Issued by a qualified financial institution located and licensed to do business in Oregon; or a financial institution located in Washington, California or Idaho that is wholly owned by a bank
holding company that owns a financial institution licensed to do business in Oregon. No more
than 10 percent of the total portfolio with only one financial institution.
Subject to a valid registration statement on file with the SEC or must be issued under section 3(a)(2) or 3(a)(3) of the Securities Act of 1933 (ORS 294.035(9)(a)). Must be issued by a
commercial, industrial, or utility business enterprise, or by a financial institution or bank holding
company owning a majority interest in a qualified financial institution.
: Business enterprise or holding company headquartered in Oregon having more than 50 percent of its permanent work force, or tangible assets, in Oregon; or is issued by a holding company owning not less than a majority interest in a qualified financial
institution as defined for bankers’ acceptances.
No more than 5 percent of the total portfolio with any one corporate entity.
FDIC or FSLIC insured to $100,000, and in accordance with ORS Chapter 295, the financial institution must hold with the Oregon Certification of Participation Collateral Pool eligible
securities pledged to secure not less than 25% of the aggregate amount of the City’s funds held
in deposit, less the insured $100,000.
Commercial Banks: No more than 15 percent of the total portfolio with any one financial institution.
Savings & Loan Associations: No more than 10 percent of the total portfolio with any one
institution.
A signed master repurchase agreement is required. Only treasury securities described in ORS 295.035 (1) shall be used in conjunction with the repurchase agreement. No more than 10 percent of the total portfolio with any one institution.
No more than 20% of the total portfolio.
No more than 20% of the total portfolio.
2019 MWMC Financial Plan - Appendix IV Page 41
FDIC or FSLIC insured to $100,000, and in accordance with ORS Chapter 295, the financial
institution must hold with the Oregon Certification of Participation Collateral Pool eligible
securities pledged to secure not less than 25% of the aggregate amount of the City’s funds held in deposit, less the insured $100,000.
With the exception of pass-through funds (in and out within 10 days), no more than the state
annual maximum amount invested as detailed in ORS 294.810(2).
Maturity limitations will depend upon whether the funds being invested are considered short-term or long-term funds. All funds will be considered short-term except those reserved for
capital projects. Except for special situations, as directed by the Finance Director, investments
will be limited to maturities not exceeding 18 months (ORS 294.135).
Funds considered short-term will be invested to coincide with projected cash needs, taking into
account large routine expenditures (bond payments, payroll) as well as blocks of anticipated revenues. The primary objective is to avoid incurring the market risk associated with the forced
liquidation of a security prior to its maturity date. Maturities in this category will be timed to
comply with the following guidelines:
Under 30 days 10% minimum
Under 90 days 25% minimum
Under 270 days 50% minimum
Under One year 80% minimum
Under 18 months 100% minimum
Commercial paper will have a maximum maturity of 270 days (ORS 294.035)
Instruments and diversification for the long-term portfolio shall be as for the short-term portfolio.
Maturities of over 18 months must be invested to coincide with a specific anticipated need
(capital project funds, contractor payments, bond payment dates) and may be utilized with the
approval of the Finance Director.
Unless matched to a specific cash flow (ORS 294.135), the City will not invest in securities maturing more than three years from the date of purchase. Investment of capital project funds will be timed to meet projected contractor payments.
2019 MWMC Financial Plan - Appendix IV Page 42
Before the City invests funds or sells securities prior to their maturity, competitive offers or bids
need to be obtained. Ideally, bids or offers from three different sources should be obtained.
Records will be kept of the investment transactions by completing the Security Quote Form -
Exhibit One. If a specific maturity date is required, either for cash flow purposes or for conformance to maturity guidelines, offers or bids will be requested for instruments which meet the maturity requirement.
The City will accept the offer or bid which provides the best price within the maturity required
and within the parameters of this policy.
The investment officer will maintain a list of all security brokers/dealers and financial institutions which are approved for investment purposes or investment dealings. The City will
limit all investment activities to the institutions on this list.
Written procedures and criteria for selection of financial institutions and securities dealers will
be maintained by the investment officer. Securities dealers not affiliated with a bank are
required to have an office in Oregon. Any firm is eligible to make application to provide investment services to the City, and will be added to the list if the selection criteria are met.
Additions or deletions to the list will be made at the City’s discretion.
At the request of the City, the firms performing investment services will provide their most
recent financial statements or Consolidated Report of Conditions (call report) for review. The
City will conduct an annual evaluation of each firm’s credit worthiness to determine if it should remain on the list. Further, there should be in place, proof as to all the necessary credentials and
licenses held by employees of the broker/dealers who will have contact with the City of
Springfield as specified by but not necessarily limited to the National Association of Securities
Dealers (NASD), Securities and Exchange Commission (SEC, etc.)
Purchased investment securities will be delivered by either Fed book entry, DTC, or physical delivery, and held in third party safekeeping - registered to the City of Springfield - with a
designated custodian. The trust department of a bank may be designated as custodian for
safekeeping securities purchased from that bank. The purchase and sale of securities will be on a
delivery versus payment basis. The custodian shall issue a safekeeping receipt to the City listing the specific instrument, selling broker/dealer, issuer, coupon, maturity, cusip number, purchase or sale price, transaction date, and other pertinent information.
Demand and time deposits shall be collateralized through the state collateral pool as required by
statute for any excess over the amount insured by an agency of the United States government.
The Deputy Treasurer is responsible for maintaining sufficient collateral with each financial institution.
Delivery versus payment will be required for all repurchase transactions and with the collateral
priced and limited in maturity in compliance with ORS 294.035 (1). ORS 294.035 (11) requires
repurchase agreement collateral to be limited in maturity to three years and priced according to
2019 MWMC Financial Plan - Appendix IV Page 43
percentages prescribed by written policy of the Oregon Investment Council or the Oregon Short-
Term Fund Board. On March 12, 1996, the OSTF Board adopted the following margins:
US Treasury Securities 102%
US Agency Discount and Coupon Securities 102%
Mortgage Backed and Other 103%
The City of Springfield shall comply with all required legal provisions and Generally Accepted
Accounting Principles (GAAP) as applicable to governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
The Deputy Treasurer will generate monthly reports for management purposes which will
include an analysis of investments by financial institution, type of security, rate of interest and
maturities. Any deviation from the Investment Guidelines must be authorized by the Finance
Director.
The City will indemnify the investment officer, staff and city officials, from personal liability for
losses that might occur pursuant to administering and while acting in accordance with this
investment policy.
Staff acting in accordance with this policy and exercising due diligence, will not be held personally responsible for a specific security’s credit risk, market price changes, or loss of principal if securities are liquidated prior to maturity, provided that these deviations and losses
are reported as soon as practical and action is taken to control adverse developments.
The performance of the City’s portfolio will be measured against the performance of the “S & P
Rated LGIP Index” as reported monthly in the Public Investor, a monthly subscription newsletter of the Government Finance Officers Association. The index is comprised of local government
investment pools that are rated AAA or AA by Standard & Poor’s and represents pools that
strive to maintain a stable net asset value.
The investment policy will be reviewed by the Finance Committee and the Oregon Short-Term Fund Board, prior to being submitted to the City Council for adoption on an annual basis, in
accordance with ORS 294.135a.
Adoption of this policy supersedes any other previous Council action or policy regarding the
City’s investment management practices.
2019 MWMC Financial Plan - Appendix V Page 46
AMSA Association of Metropolitan Sewerage Agencies
BANs Bond Anticipation Notes
CIP Capital Improvement Program
COP Certificates of Participation
CSD County Service District
CWSRF Clean Water State Revolving Fund
EPA Environmental Protection Agency
ER Equipment Replacement
GANs Grant Anticipation Notes
GO General Obligation (bonds)
IGA Intergovernmental Agreement
I/I Infiltration and Inflow
LCOG Lane Council of Governments
MR Major Rehabilitation
MWMC Metropolitan Wastewater Management Commission
RWF Regional Wastewater Facilities
RWP Regional Wastewater Program
SDC Systems Development Charge
SEC Securities and Exchange Commission
SRF State Revolving Fund
TANs Tax Anticipation Notes
TIF Tax Increment Financing URBA Unified Revenue Bond Act
______________________________________________________________________
M E M O R A N D U M
DATE: May 2, 2019
TO: Metropolitan Wastewater Management Commission (MWMC)
FROM: Meg Allocco, MWMC Accountant
SUBJECT: State Revolving Fund Loan Discussion
ACTION
REQUESTED: Provide comments and direction on early retirement of debt
BACKGROUND
The Commission has had numerous discussions with staff regarding existing Clean Water State
Revolving Fund Loans and Bond issuances over the past 5 years. These past discussions resulted in
the early payoff of debt and a combined savings of $16.5 million as follows:
Revenue Bonds - The 2006 Revenue Bond ($31.4 million) payoff and the refinancing of the 2008
bond (replacing it with the 2016 Revenue Bond in May of 2016). These bond actions resulted in a
savings to MWMC of approximately $15.3 million dollars over the life of those bonds. Additionally,
as a result of the MWMC’s good credit history, the MWMC is no longer required to maintain a
separate bond reserve. This reserve was then applied toward the principal balance in both the
payoff of the 2006 bond ($4.1 million) and the refinancing of the 2008 bond ($4.0 million), resulting
in the current 2016 Revenue Bond in the amount of $32.7 million.
State Revolving Fund (SRF) Loans - The Commission decided to retire two of the SRF loans with the
highest interest rates on December 1, 2018. This required $5.1 million dollars in FY 2018-19, and
was included in supplemental budget #1. This action saved the MWMC another $1.2 million in
future interest expense over the life of those two loans (R64842 and R64843) which would have
otherwise run through 2030 and 2032 respectively.
DISCUSSION
When the previous debt actions were taken, the Commission asked staff to bring the active SRF
loans back for further review after the budget for FY 2019-20 was completed. This would enable
the Commission to consider whether or not another SRF loan should be retired in the context of the
new budget. The remaining SRF loans that the MWMC is obligated to are shown in Attachment 1.
Memo: SRF Loan Discussion
May 2, 2019
Page 2 of 2
The next SRF Loan to be considered is R64840, which has an interest rate of 2.94% and a balance of
$5,314,777 as of June 30, 2019. The current term of this SRF loan results in a payoff date of April 1,
2031. Retiring this loan early would require an additional budget appropriation of $4.9 million in
order to pay it in full October 1, 2019. A funding request could be brought to the Commission
along with supplemental Budget #1 in September 2019.
While the interest remaining to be paid on this loan is $1,017,250, it is worth noting that the MWMC
is currently earning 2.75% interest on the cash it is holding. Assuming the state pool interest rate
does not change over the life of the loan, the savings realized would be $86,000. However, if the
interest rate decreases on the MWMC’s holdings, the savings would increase on the retirement of
the loan. It is also for this reason, that staff is not recommending the early retirement of the other
two SRF loans (R64841 and R00648) that have interest rates of 1.25% and 0.50%, respectively.
ACTION REQUESTED
The Commission is requested to provide comments and direction relating to any early retirement of
debt.
ATTACHMENTS
1. State Revolving Fund Loan Table
SRF Loans – as of 6/30/19SRF LOAN BALANCESLoansBalance 6/30/19Interest RateRemaining Interest Payoff DateSRF - R64842 - 3.27% - 5/1/2030SRF - R64843 - 3.15% - 12/1/2032SRF - R64840 5,314,777 2.94% 1,017,250 4/1/2031SRF - R64841 434,565 1.25% 5,443 12/1/2020SRF - R00648 1,100,000 0.50% 30,250 5/1/2030Total 6,849,342$ 1,052,943$ *** First two loans were paid off early on 12/1/2018