Water Pollution Control Authority Regionalization Bridgeport Monroe Trumbull Glenn A' Santoro, Esq'

1
Water Pollution Control Authority
Regionalization Bridgeport
Monroe Trumbull Glenn A. Santoro,
Esq. Robinson Cole LLP280 Trumbull Street
Hartford, CT 06103 [phone]gsantoro_at_rc.co
m
2
Todays Topics

• What is a Regionalization Transaction
• Benefits of Regionalization
• Challenges of Regionalization
• Case Study Greater New Haven Water Pollution
  Control Authority

3
What is a Regionalization Transaction?

• Statutory basis to create a regional water
  pollution control authority (the Authority)
• Sections 22a-500 to 22a-519, inclusive, of the
  Connecticut General Statutes (the Act)
• How is the Authority formed?
• The legislative bodies of two or more
  municipalities adopt a concurrent ordinance to
  create a regional water pollution control
  authority
• The municipalities do not need to be contiguous

4
What is a Regionalization Transaction?

• Requirements for the concurrent ordinance
• Name of the Authority
• Address of the Authoritys principal office
• A statement that the Authority is created
  pursuant to the Act

5
What is a Regionalization Transaction?

• Requirements for the concurrent ordinance
  (contd)
• Information regarding the Authoritys directors
• The number, names, addresses, and terms of office
  of the first directors
• Provisions for director compensation, if any
• Number of votes to be cast by each director
• Method for appointment and removal of directors

6
What is a Regionalization Transaction?

• Approval by the State of Connecticut
• The constituent municipalities must prepare and
  submit a preliminary plan of operation for the
  Authority to the Commissioner of Environmental
  Protection and the State Treasurer for review and
  approval
• The Commissioner of Environmental Protection will
  review the preliminary plan of operation, and
  after consultation with the Secretary of the
  Office of Policy and Management, may approve such
  plan if it is in the furtherance of the
  environmental protection laws of the State.

7
What is a Regionalization Transaction?

• What is typically included in the preliminary
  plan of operation submitted for State approval?
• Description of wastewater system assets to be
  transferred
• Description of the Authoritys organization and
  management
• Financing plan and bonding requirements
• Estimated budget and rates

8
What is a Regionalization Transaction?

• The Authority is officially formed once
• All of the constituent municipalities have
  adopted the concurrent ordinance and
• The State has approved the Authoritys
  preliminary plan of operation.

9
Benefits of Regionalization

• The Authority is a separate legal entity
• Governed by its own board of directors and
  officers
• Has the ability to
• Issue bonds
• Purchase wastewater system assets
• Impose fees, rates, charges and penalties and
  levy assessments on property benefited by the
  wastewater system

10
Benefits of Regionalization

• Governance of the Authority
• Board of Directors each constituent
  municipality will have the right to elect one or
  more directors to the board
• The Authority will also have a chairman of the
  board, to preside over board meetings
• The initial chairman should be identified in the
  concurrent ordinance

11
Benefits of Regionalization

• Governance of the Authority (contd)
• Board of Directors will elect officers of the
  Authority, which typically includes an Executive
  Director, Secretary and Treasurer
• Board of Directors will adopt bylaws
• The bylaws will govern the administration of the
  Authoritys property and the conduct of its
  affairs.

12
Benefits of Regionalization

• Purchase Wastewater System Assets
• The Authority can use the proceeds from the bond
  issuance to purchase the wastewater system assets
  of each constituent municipality
• The bonds can be secured by a pledge of the
  Authoritys revenue
• Each constituent municipality can deposit the
  proceeds of the purchase price received from the
  Authority in
• The general fund of the municipality, to be used
  for any lawful municipal purpose
• A rate stabilization fund for the benefit of that
  municipalitys users of the regional wastewater
  system

13
Benefits of Regionalization

• Additional Benefits
• The Authority can assume all sewer-related
  obligations and sewer-related debt of the
  constituent municipalities
• Improves the balance sheets of the constituent
  municipalities by decreasing liabilities
• Authority considered a municipality for
  purposes of receiving grants and loans under the
  Clean Water Fund Program (Conn. Gen. Stat.
  Section 22a-517(b))
• The Authority may be provided higher priority
  for receipt of funding under the Clean Water Fund
  Program
• Reduced administrative costs for constituent
  municipalities and economies of scale
• More effective and broad based protection of the
  environment

14
Benefits of Regionalization

• Additional Benefits (contd)
• Strategic planning on a regional basis
• Possible arrangements for PILOT payments
  (payments in lieu of taxes) by the Authority to
  the constituent municipalities
• Sewer expansion must first be approved at the
  local level, so the Authority cannot expand
  without local approval
• Possible State budget proposal for Fiscal Year
  2010-2011 that could provide up to 40 million in
  grants to encourage regionalization among
  municipalities and 10 million for purchases of
  heavy equipment

15
Benefits of Regionalization

• Details of the Potential Jewish Home for the
  Elderly Project
• Monroe constructs the Jewish Home, receives
  economic stimulus, and has access to the sewerage
  system
• Bridgeport and Trumbull share revenues on
  access to the sewerage system

16
Challenges of Regionalization

• General Timeline of Action Items (9 to 12
  months)
• Adoption of concurrent ordinances
• State approval of preliminary plan of operation
• Appointment of directors and officers and
  adoption of bylaws
• Adoption of a budget, rates and sewer ordinance,
  and holding of requisite public hearings
• Initial budget must be approved by the Secretary
  of the Office of Policy and Management

17
Challenges of Regionalization

• General Timeline of Action Items (9 to 12 months)
  contd
• Draft and negotiate asset purchase agreement and
  ancillary documents
• Draft and negotiate bond issuance documents
• Meet with rating agencies to obtain a rating for
  the Authority (Standard Poors, Moodys and
  Fitch)
• Current economic environment will be a challenge

18
Challenges of Regionalization

• Establishing User Rates
• Prior to commencing operations, the Authority
  will need to establish user rates
• No changes may be made to the user rates without
  at least 60 days prior notice to the users and a
  public hearing

19
Challenges of Regionalization

• Establishing User Rates (contd)
• The user rates must be established so that the
  Authority has sufficient funds each year, with
  other revenues (if any), to do the following
• Pay the cost of maintaining, repairing and
  operating its wastewater system
• Pay the principal and interest on outstanding
  bonds
• Meet any requirements of any resolutions
  authorizing, or trust indenture securing,
  outstanding bonds or notes of the Authority
• Make any agreed upon payments in lieu of taxes to
  municipalities in which the Authority has
  property and
• Pay all other reasonable and necessary expenses
  of the Authority.

20
Challenges of Regionalization

• Additional Considerations
• Each municipality will not have the same control
  over the wastewater system as before
  regionalization
• The Authority will be governed by a separate
  board of directors, and each town may have only
  one or two appointees on the board
• Rates adopted by the Authority may be different
  than the rates currently charged by each
  municipality
• Municipal revenue sharing proposals can be
  included as part of the regionalization
  transaction by including specific covenants in
  the asset purchase agreement

21
Case Study GNHWPCA

• Gabriel Varca Treasurer
• Greater New Haven Water Pollution Control
  Authority (GNHWPCA)
• Formed in July 2005 pursuant to the Act
• Constituent Municipalities New Haven, East
  Haven, Hamden and Woodbridge
• GNHWPCA was created to operate the wastewater
  systems of the constituent municipalities,
  including the treatment plant located at 345 East
  Shore Parkway, New Haven

22
Case Study GNHWPCA

• Governing Body of the GNHWPCA
• Nine member board of directors
• Four directors appointed by New Haven
• Two directors appointed by East Haven
• Two directors appointed by Hamden
• One director appointed by Woodbridge
• Directors serve for three year terms, which are
  staggered
• Directors are divided into three groups of three
• Board elects a chairman, who serves for a one
  year term
• No individual may serve more than two consecutive
  terms as chairman

23
Case Study GNHWPCA

• User Rates (user fee per ccf) GNHWPCA
• User rates of each municipality prior to
  regionalization -fiscal year ending June 30,
  2006
• New Haven 1.36
• Hamden 2.20
• East Haven 1.95
• Woodbridge 2.70
• User rates of the GNHWPCA following
  regionalization
• FY2006 1.84
• FY2007 2.14
• FY2008 2.31
• FY2009 2.45

24
Wrap-Up

• Topics we discussed today
• What is a Regionalization Transaction
• Benefits of Regionalization
• Challenges of Regionalization
• Case Study Greater New Haven Water Pollution
  Control Authority

25
Questions Answers

• For additional information, please contact