A meeting of the Board of Directors of the Massachusetts Water Resources Authority was held on June 27, 2001 at the Authority Headquarters in Charlestown. Present: Chairman Robert Durand, Lucile Hicks and Donald Mitchell, Gubernatorial Representatives; John Carroll and Norman Jacques Advisory Board Representatives; Vincent Mannering, Antonia Pollak and Robert Spinney, City of Boston Representatives; Joseph MacRitchie, City of Quincy Representative; Marie Turner, Town of Winthrop Representative. Absent: [Note: Andrew Pappastergion, Advisory Board Representative, did not attend the Board meeting but did attend the Committee meetings held prior to the Board meeting. Comments by Mr. Pappastergion within this Board summary were made during the Committee discussions.]

AGENDA

Report of the Chair

Chairman Durand thanked retiring Board member Norman Jacques for his efforts on behalf of the ratepayers over the past sixteen years, nine years on the MWRA Board of Directors, and seven years as a member and Chairman of the MWRA Advisory Board. The Chairman presented Mr. Jacques with a proclamation from Acting Governor Jane Swift, which declared June 27^th Norman Jacques Day. Additionally, Mr. Jacques was presented with a framed photograph of the Boston skyline.

Joseph Foti and Joseph Favaloro, Chairman and Executive Director of the Advisory Board respectively, presented Mr. Jacques with two resolutions, one signed by the members of the MWRA Legislative Caucus, and the other signed by Advisory Board members. Mr. Jacques expressed his thanks.

Upon conferring with Board members, Chairman Durand canceled the July Board of Directors meeting and rolled the July agenda items into the August meeting.

Report of the Executive Director

Fred Laskey reported that the Supreme Judicial Court ruled in favor of the MWRA in a case brought by the Town of Boylston involving the Payment in Lieu of Taxes (PILOT) Program. [The MWRA reimburses the MDC for PILOT to municipalities whose land was taken to create the Wachusett Reservoir and surrounding watersheds. Boylston claimed that for the 1990 and 1995 valuation cycles, the Commissioner undervalued the watershed land and further contended that the reservoir land, which is submerged, should be valued as if it was not.]

APPROVALS

Final FY02 Current Expense Budget and Planning Estimates

The Board voted to: (1) adopt the fiscal year 2002 Current Expense Budget set forth in Attachment 1 and Attachment 2 with current revenue and expenses of $453.6 million (net of $52.9 million in anticipated debt service assistance from the Commonwealth to be used to offset capital financing costs); and (2) adopt the FY02 Operating Budget (Trustee's Budget), as set forth in Attachment 3.

Mr. Spinney asked the status of debt service assistance. Mr. Laskey responded that both the House and Senate have approved funding for debt service assistance. The House budget requires a study on the pros and cons of privatization, while the Senate does not. It is subject to Conference Committee.

Mr. Pappastergion noted that staff is using differing data in their calculations related to household use. Some data uses 90,000 gallons (the standard previously used), other data uses 63,000 gallons (based on DEP numbers). Mr. Pappastergion stated that the use of different data could result in wrong comparisons being made, causing confusion. He stated that further discussion is needed.

Final FY02 Water and Sewer Assessment

The Board voted to adopt the following, effective July 1, 2001:

1. Water assessments of $102,347,359 and sewer assessments of $287,171,110 for fiscal year 2002 allocated to communities in accordance with Attachment 1 (Final FY02 Water and Sewer Assessments).

2. FY02 sewer assessments of $500,000.00 for the Town of Clinton and $97,888.00 for the Lancaster Sewer District;

3. FY02 water assessments of $2,380,760.00 for Chicopee, $476,345.00 for South Hadley Fire District #1, and $376,944.00 for Wilbraham;

4. A wholesale water rate of $1,395.64 per million gallons;

5. An O & M water rate of $746.89 per million gallons.

Extension of One Contract Employee in the Operations Division

The Board voted to approve a one-year contract extension for Tara Phillips, Engineering Information Technician, Operations Division, from July 1, 2001 to June 30, 2002, increasing the hourly rate from $18.00 to $18.50, annual compensation not to exceed $38,480.00.

Ms. Phillips was initially hired as a contract employee to address a backlog of approximately 50,000 water and wastewater drawings requiring inventory, scanning, microfilming and data base entry for control, which was estimated to take three to five years to complete. However, the work will be evaluated over the next year to determine whether a full time position should be established to complete the initial work and maintain the system.

Appointment of Senior Program Manager - Plant Engineer, Deer Island Maintenance

The Board voted to approve the Executive Director's recommendation to appoint John Lardner to the position of Senior Program Manager - Plant Engineer in the Deer Island Maintenance Department, at an annual salary of $75,077.05 to be effective on the date designated by the Executive Director.

The current vacancy was created when the Board approved the promotion of the previous Plant Engineer, John Colbert, to the position of Asset Manager at its February 14, 2001 meeting. A total of 44 applications were received, 43 external and one internal. Only four candidates possessed a Professional Engineering License, which was a specific and necessary requirement for this position. Only two candidates, both external, met the required qualifications.

Mr. Jacques expressed dismay that a structure is not in place that would allow someone in secondary command to move up to the command position, noting that there should be more emphasis on training. Mr. Mitchell agreed stating that it is very important to set a precedent to look out for the best interests of the employees. Leroy Walker responded that the structure looks first to current employees to meet the vacancy needs, noting that 77% of the previous year's positions were filled by promotion or transfer within the MWRA. In this instance, specialized skills were needed.

Mr. Mitchell suggested that positions be implemented at a "junior" level with the intent of bringing the employee up-to-speed within six months. Mr. Walker noted that would cause some collective bargaining issues.

CONTRACT AMENDMENTS/CHANGE ORDERS

Replacement of Chestnut Hill Pump Station: P. Gioioso & Sons, Contract 6501, Change Order 7

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order No. 7 to increase the amount of Contract No. 6501 with P. Gioioso & Sons, Inc., Replacement of Chestnut Hill Pump Station, in the amount of $44,103.87 and to extend the contract term for 30 calendar days to May 23, 2001.

Contract 6501 is for the construction of an underground water pumping station adjacent to the low service station at Chestnut Hill. The pumping station will have four pumps with a total capacity of approximately 90 million gallons per day and will replace the existing Low and High Service Stations when completed.

The cumulative value of all change orders to this contract total $280,355.42, added to the original contract amount of $6,240,200, for an adjusted contract amount of $6,520,555.42, resulting in a $177,555.42 budget deficit. Staff states in its summary that if this amount causes the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be taken elsewhere to offset the increase. Change orders now total 4.49% of the original contract price with the work approximately 99.5% complete.

Chestnut Hill High Service Pump Station Masonry Repairs: Chapman Waterproofing Company, Contract 6151L, Change Order 2

The Board voted (with Mr. Mannering and Ms. Pollak opposed) to authorize the Executive Director, on behalf of the Authority, to approve Change Order No. 2 to increase the amount of Contract No. 6151L with Chapman Waterproofing Company, Chestnut Hill High Service Pump Station Masonry Repairs, in an amount not to exceed $449,173.19 and to extend the contract term for 90 days to October 7, 2001. Furthermore, the Executive Director shall make sure that under no circumstances shall this contract be allowed to exceed the amount of $1,250,000.

Mr. Carroll referred the Board to a vote taken at the August 16, 2000 Board of Directors meeting at which the Board received a bid of $698,000 for Contract 6151L. The Board received assurances from Douglas MacDonald, former MWRA Executive Director, that "MWRA is off the hook for good" for the Chestnut Hill Waterworks Facility repairs. Mr. Carroll proposed that the Board send a clear message that $1,250,000 will be the maximum amount that the Board will approve for this contract.

The cumulative value of all change orders total $449,173.19 or 64.5% of the original contract amount of $698,000.00. The adjusted contract amount now totals $1,147,173.19. The FY01-03 CIP includes a budget of $9,622,000 for the Facilities Maintenance Program, including $2,500,000 for Contract 6151L.

Red Water Control Strategy Study: Black & Veatch Corporation, Contract 6182, Amendment 3

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment No. 3 to increase the amount of Contract No. 6182 with Black & Veatch Corporation, Red Water Control Strategy Study, in the amount of $374,881.00 and to extend the contract term by 27 months to September 30, 2003.

Construction of the Walnut Hill Water Treatment Plant (WHTP) is well underway and remains on schedule. As part of the start-up planning already underway, staff is evaluating means to implement treatment plant optimization strategies and to commence operator training. As designed, the WHTP treatment process consists of four major components: ozonation, chloramination, pH and alkalinity adjustment and fluoridation. Through a limited bench scale study, staff has learned that one major difference between the proposed and current treatment processes is chloramine and pH decay much more rapidly in ozonated water than in chlorinated water. Further studies beyond the laboratory setting are necessary to confirm and better assess the potential impact of these results.

Mr. Mannering questioned that two years ago staff advocated for the ozonation option during filtration/ozonation discussions, and now requires further studies to determine the impact. Mike Hornbrook, Chief Operating Officer, stated that the studies are to optimize the operation of the facility and to train the operators before the system actually goes on line.

The cumulative change orders for this contract total $492,341, added to the original contract amount of $200,000, for an adjusted contract amount of $692,341, resulting in a $374,341 budget deficit. Staff states in its summary that if this amount causes the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be taken elsewhere to offset the increase.

INFORMATION REPORTS

Monthly Update on Competitiveness Study

Staff reported that Black and Veatch recently completed data collection from comparable water and wastewater utilities. MWRA anticipates a draft report in late July/early August and the internal Project Advisory Group will then meet for discussion and preparation of a final report for distribution in August.

Update on Elimination of Vacant Positions

The reduction of vacant (authorized) and filled positions has been an important element of the MWRA budgeting strategy for the last four years. Specifically, the decline in both authorized and filled positions is outlined below:

* Year-to-date (including recent elimination of 42 positions).

MWRA's strategy for controlling labor costs has been achieved by requiring manager accountability. To continue the incremental and parallel process of reducing vacant and filled positions, staff proposes the elimination of 50 additional PCR numbers (positions) in September 2001 and another 40 by the end of FY02.

MWRA Municipal Enforcement Response Plan

Kevin McManus, Director, TRAC, stated that the Municipal Enforcement Response Plan, effective July 1, 2001, establishes a framework for responding to violations of municipal permits issued annually by MWRA to its 45 sewer communities. [Permits are issued to each of the 43 communities discharging into the Deer Island Wastewater Treatment Plant and to the Town of Clinton and the Lancaster Sewer District, which discharge into the Clinton Treatment Plant.]

MWRA regulations establish enforcement remedies for violations of MWRA permits. To date, enforcement for violations of Municipal Permits has been informal. Under the Plan, MWRA will respond to instances of noncompliance using escalating enforcement. MWRA staff will respond to first time violations with telephone calls and/or letters. Staff will escalate enforcement for continuing or repeat violations.

Update on Framingham Extension Sewer Odor/Corrosion Program

Pursuant to the CY2001 municipal permits for the communities of Ashland, Framingham and Natick, municipal and MWRA sampling began in April to determine compliance with the 0.3 mg/l limit. At present, a total of three sample results at three locations have exceeded the limit, and staff have informed communities of the results of this testing. Follow-up discussions on these non-compliant locations will proceed based upon the guidance provided in the Municipal Enforcement Response Plan.

Wastewater samples are also being collected and analyzed for sulfide, sulfate and BOD from several of the connections from Wellesley, Needham, Newton and Brookline into the Wellesley Extension Replacement Sewer and West Roxbury Tunnel to determine the extent these communities may be contributing to the corrosion and odor problem. Because there have been exceedances of the 0.3 mg/l limit for sulfides in the discharges from Wellesley and Needham connections in previous sampling, sulfide limits for these communities may be needed for these connections.

Staff has also prepared and distributed the proposed industrial limits for BOD and sulfate to area industries. A meeting was held on June 6^th in Framingham to discuss the methodology used to develop the limits and obtain initial industry comments/questions. As a result of comments received by industry and the Associated Industries of Massachusetts (AIM) requesting more time to assess the impacts of the limits, the staff summary for implementation of these limits will be submitted for Board consideration at the next board meeting.

Construction of the interim potassium permanganate feed facility at MWRA's Arthur Street Pump Station has been completed. The chemical feed equipment installed by MWRA has been in operation since March 21, 2001. Potassium permanganate has been added continuously since July 28, 2000. The chemical addition rate was increased from 330 pounds per day to 990 pounds per day on May 9, 2001 in anticipation of higher H2S levels in the warmer summer months.

Ms. Hicks asked if there has been recognition from any of the parties acknowledging that they are part of the problem. Mr. McManus stated that some of the industries and communities have hired consultants to look at the systems and Ashland has begun to add chemicals. They do now understand the seriousness of the problem and understand that they must be part of the solution.

Prior to the adjournment of the Wastewater Policy and Oversight Committee Meeting, Mr. Pappastergion stated that it came to his attention that 25% of the wastewater meters are out of service. He requested a staff summary for the next Board meeting to discuss this problem and what steps have been taken to correct it. Mr. Hornbrook stated that there is a 90% system-wide reliability and staff is taking steps to bring this figure back to 95%.

Mr. Carroll noted that it is important to make the communities aware of non-functioning meters and suggested a monthly report be issued.

Emergency Connection for the Town of Wilmington

The Town of Wilmington has requested an emergency connection to the MWRA water system as part of a Town/DEP contingency planning process to deal with a contaminated aquifer and wells. The connection will only be used on an emergency basis, if approved by DEP, MWRA and the Advisory Board. The Town plans to design the pipeline and connection over the next year followed immediately by construction.

No Board or Advisory Board approval is needed for the construction of the emergency interconnection. However, any use of the connection would require that DEP declare a water supply emergency in the Town, and approval by MWRA's Board and the Advisory Board. Use of the connection for more than six months in any one-year period would require MEPA review. Use of the connection would be regulated by MWRA's Emergency Water Supply Withdrawals Policy (#: OP.05).

Mr. Carroll expressed dismay that the Town of Wilmington must spend a large amount of money for a connection that they do not have explicit permission to use. He suggested that a review of the policy should be undertaken so that in the future communities can receive an indication that approval for a temporary connection will be supported by the Board, as long as all other parties approve, prior to a community spending funds. Mr. Carroll suggested that conditional approval for the Town of Wilmington be included for a vote at the next Board meeting.

This summary does not include every item discussed by the Board, nor the full extent of the discussions. Please contact Mary Ann McClellan at the Advisory Board Office with questions, comments and requests for additional information.