Metropolitan Water Reclamation District Special Study Session – February 23, 2017

Three Items were on the Agenda for Discussion – Presentation by David St. Pierre, Executive Director

1. Background and rationale for purchase of farm land and Nutrient Trading.
2. Extension of Survivor Pension Benefits for MWRD retired employees that married after it became legal for LGBT community to marry.
3. Presentation on proposed investment vehicle to maximize income from leased MWRD properties.

Purchase of Farm Land/Nutrient Trading

• By 2025 the national and Illinois EPA(s) require a 25% reduction in Phosphorus [fresh water] and a 15% reduction in Nitrogen [salt water] effluent in the waters leading to the Mississippi River and Gulf of Mexico.  
• Most of the phosphorus comes from point sources such as the MWRD [83%].  
• A huge reduction has already been achieved, but to get to the last percentage needed to reach the target goal of .1 discharge requires as much as $211 million additional expenditure per year by the MWRD without the guarantee that .1 can be reached.    
• Currently the discharge acceptable by the EPA is 1.0 with a targeted reduction to .072 by the end of 2018.  
• Since 17% of the runoff comes from agriculture which is not regulated, and MWRD's Ex.Dir, St. Pierre, does not expect it to be regulated in the foreseeable future, a pilot program is being undertaken to see if by purchasing agriculture land and eliminating the use of phosphorus on the land, enough reduction can occur to get to the required target.  
• Another discussed approach is called Nutrient Trading.  If the regulations and parameters can be worked out, this could be the most affordable way of getting to the target.  Farmers would be encouraged to use Best Practices to reduce runoff and could sell Nutrient Trades to utilities such as the MWRD.  St. Pierre estimates the cost could be $20 million per year which is a 10 times reduction.  
• Mr. St. Pierre posits that this plan needs to be adopted state wide for it to be effective and several entities including the state's Pollution Control Board support nutrient trading including "downstream" trading.

Survivor Pension Benefits Extension

• Several board members want the extension to happen yet this year.  
• St. Pierre would like the opportunity to research the number and ramifications involved, if any, and implement in 2018.  
• One problem is that the MWRD currently does not know how many retired employees entered into a marriage after 2011 when gay marriage became legal.  Stay tuned as this likely will come up in future board meetings.

Proposed Investment Vehicle to maximize income from Leased MWRD Properties

• Mr. St. Pierre said he was not prepared to make a presentation on this proposal for this  study session.  Further analysis is necessary by the legal teams to ensure that this type of investment is possible for a public body.​
  

Post Meeting on-line Observation by Diane Edmundson​

Public Hearing on 2017 MWRD Budget - December 1, 2016

The Civic Federation was the only speaker at this Public Hearing.  However, Commissioner Avila at the end of the hearing raised concerns about the process being followed for selecting people for Deputy Director positions.

Laurence Msall, President of the Civic Federation, a non-partisan government research organization, expressed support for the proposed $1.13 billion proposed budget, stating that:

• it reflects a sensible and pro-active approach to meeting the MWRD’s financial challenges
• it maintains substantial reserves and liquidity which bodes well if there are any emergencies or unexpected financial needs, as opposed to having to resort to short-term borrowing
• it includes additional contributions to the pension funds
• it reflects an exemplary capital planning process that the Civic Federation wishes other governments would emulate
• it is being considered under a process that allows for sufficient time for review and consideration.

However, Mr. Msall also expressed the concern over the size of the unfunded liabilities under the pension fund, despite the strides that the MWRD has taken and is taking.  The Civic Federation’s report on the budget can be found HERE. 

While not pertinent to the budget, Commissioner Avila expressed concern that only one person (presumably the Executive Director) was making decisions about who would be hired for Deputy Director positions.  Executive Director St. Pierre stated that Deputy Directors are only hired when an existing Director states an intention to retire.  When that happens and the Board approves a deputy position, there is a 3-person team who interviews candidates and makes a recommendation as to whom should be hired.  President Spyropoulos suggested that the process be circulated for review by the Commissioners.  Commissioner Shore pointed out that if any employee feels the process has been unfair, there are procedures in place to deal with any complaints.

Observer - Priscilla Mims

Metropolitan Water Reclamation Board Meeting - June 2, 2016

Topics Discussed:

• The MWRD received the best possible results from the audit of the 2015 Comprehensive Annual Financial Reports of the MWRD and the MWRD Retiree Health Care Trust.  Both audit letters contained no recommendations for any changes to the controls in place or in the numbers on these financial reports.  In the words of the auditor, both letters reflect “unmodified opinions.”  
• One contact for up to $13 million was not awarded to the low bidder for failure to comply with the Minority Business Enterprise (MBE) requirement of 2%.  Instead, the contract was awarded to the second lowest bidder who did comply with the MBE, Women Business Enterprise, and Small Business Enterprise requirements, at an additional cost of about $700,000 (agenda item 17, 16-0587). 
• Commissioner Santos requested deferral on an item so she could discuss it with staff. The item concerned an intergovernmental agreement with the Cook County Sheriff’s office for up to $100,000 for drug collection receptacles and collection and safe disposal of the drugs collected.

Study Session on Pension Funding

• As of December 31, 2015, the Pension Plan is deemed funded at 55%, and is expected to be fully funded by the end of 2049. 
• The Retiree Health Care Benefits program is deemed funded at 52%, and is expected to be fully funded by the end of 2026. 
• Finance Chair Avila expressed concern about the current funding percentages.  However, the MWRD is capped by statute as to how much it can contribute to fund the plans each year.
• While employees are vested in the Pension Plan at 10 years (which is fairly standard), vesting in the Retiree Health Care Plan occurs after only 6 years.  Commissioner McGowan said she remembered the time for vesting was reduced to 6 years in 2008 when Commissioner Horton was leaving the Board, the inference being that it was done to cover her.  Executive Director St. Pierre said that the staff should be able to find out more about the circumstances of the change in vesting.

Study Session on Rain Barrel Program
Executive Director St. Pierre presented an overview of the MWRD free rain barrel program.  

• Under a consent decree entered into in January 2014, the MWRD was required to distribute 10,000 rain barrels by January 6, 2017 and 15,000 rain barrels by January 6, 2019. 
• To date, the MWRD has already exceeded those requirements by distributing 52,000 rain barrels.  In addition, 17,000 have been ordered. 
• From January 2014 thru May 2016, the cost has been $2.7 million, with the cost thru 2016 to jump by an additional $3.4 million to $6.1 million. 
• Should the program continue through 2017, the additional cost is estimated to be $4.8 million.  

Given these costs and the fact that the consent decree has been complied with, Mr. St. Pierre is recommending that the program be discontinued at the end of 2016, but that the MWRD continue to offer rain barrels at cost to municipalities and non-governmental organizations.  The Committee members all agreed, with the emphasis on the need to have a good plan in place for publicizing this change.  During the public comments at the end, George Blakemore noted that the MWRD had failed to require municipalities to report on how many rain barrels had actually been connected to downspouts, and he urged that accountability be included in any “at cost” distribution so the success of the program could be properly evaluated after 2016.

Items to watch for in the future:: 

• More Information on why vesting for the Health Care Plan is only 6 years.
• Will the full board discontinue the free rain barrel program?

Observer:  Priscilla Mims