AGENDA

Report of the Chair

No report.

Report of the Executive Director

Frederick Laskey, MWRA Executive Director, informed the Board that of the 112 employees expected to opt into the Early Retirement Plan (out of the 370 eligible employees) being offered by the Commonwealth, only ninety-eight have filed for participation thus far. However, this number may fluctuate because the (non-binding) filing deadlines for former Metropolitan District Commission (MDC) employees and MWRA employees are not until March 15^th and February 15^th, respectively. Mr. Laskey promised a further update at the next meeting of the Board and noted that by May or June there would be more information for the final FY03 Current Expense Budget (CEB).

Mr. Laskey cautioned that due to the Drought Advisory issued for many areas of Massachusetts, staff is monitoring communities such as Danvers, which may need to tap into MWRA water sources in the near future.

Mr. Laskey informed the Board that, under delegated authority, he has authorized the direct funding of three MDC Watershed Division (DWM) projects: gages in watershed rivers and streams ($60,000); containment booms at Wachusett Reservoir ($220,000); and a program to stop the infestation of milfoil at Quabbin Reservoir ($240,000). [Milfoil is an exotic, invasive plant that grows and spreads in water bodies when leaf fragments are introduced, often by boats (and engine propellers) trailed from foreign water bodies].

Mr. Laskey explained his position that the DWM does not have the budget to fund these initiatives, which took on particular importance after September 11th. "Aren’t we entering new territory here?" asked Mr. Carroll. Mr. Laskey responded that the benefits of completing these projects outweigh the risks of setting a precedent of MWRA funding DWM responsibilities.

"Who at the [DWM] decided not to undertake the three projects?" asked Mr. Foti. Mr. Laskey responded that MWRA is not privy to the DWM's decision-making process. Mark Smith of the Executive Office of Environmental Affairs (EOEA), stated that the specific structure in which the Legislature now requires the DWM to manage its accounts limits its flexibility to move funds around. Mr. MacRitchie stated that there ought to be an in-depth discussion by the Board before this precedent is set. Mr. Carroll suggested Mr. Laskey write to the MDC Commissioner and explain that no precedent is being set by MWRA directly funding these particular projects. "What if another emergency [project] arises and the [DWM] can't fund it?" asked Mr. MacRitchie, echoing the concern about setting a precedent, and further adding, "[w]e need an in-depth discussion."

Mr. Pappastergion asked Chairman Durand what efforts he has made to move the DWM under the EOEA. Chairman Durand responded that he is meeting today (February 13th) with the Governor to discuss the proposal. Joseph Favaloro, Executive Director of the MWRA Advisory Board, stated that $500,000 is a dangerous precedent that gets the DWM off the hook. The only solution to the DWM's problems is to move it under MWRA.

Chairman Durand stated that the DWM should not have to fund the milfoil project because it is affecting MWRA's water supply. Mr. MacRitchie responded that it is the DWM's responsibility to care for the watersheds. "There is no ambiguity as to who is in charge of the watersheds. Milfoil has been present since 1999; it didn't just arrive after September 11th. Eight months into FY02 how do we find $500,000 for the DWM? They get their money in the state budget [which is fully reimbursed by MWRA and is spent without any accountability] and another $500,000 from MWRA, thereby charging ratepayers twice", stated Mr. Favaloro.

Mr. Laskey stated that too much time would be lost in fighting back and forth with the DWM about funding these projects. Chairman Durand suggested postponing the milfoil project until there is a clear interpretation of whose responsibility it is to eradicate the problem. Mr. Carroll asked why the DWM is being asked to address the milfoil project. Mr. MacRitchie stated that it’s a question of protection [DWM's responsibility] versus treatment [MWRA's responsibility].

"I was on the original committee to determine who is responsible for what [between MWRA and the DWM]. Milfoil is a problem throughout the state. It is self-defensive [to address the problem] but there are still issues of management [to be addressed at the DWM]", stated Eileen Simonson of the Water Supply Citizens Advisory Committee. Mr. Pappastergion added that "[t]he issue is accountability. When these things continue to happen we should be putting forward initiatives to move the DWM to MWRA." Mr. Mannering stated his agreement.

APPROVALS

Transmittal of Proposed FY03 Current Expense Budget and Planning Estimates

The Board voted to approve transmittal of the Proposed FY03 Current Expense Budget (CEB) to the MWRA Advisory Board for its review and comment and to the cities and towns, with the stipulation that the rate revenue increase this year could range from 3.5% to 8.8%, depending on the level of debt service assistance and application of rate stabilization funds. Each February MWRA distributes preliminary cost estimates of community assessments for water and sewer services for the upcoming fiscal year. Past practice of staff has been to base the assessments on the amount appropriated within the Governor's annual state budget recommendation (House 1). This approach is based on the limited information available to staff each February, as the House and Senate do not release their versions of the state budget until the spring.

Governor Swift's FY03 recommendation for the appropriation to the Commonwealth Sewer Rate Relief Fund is $38.6 million. This amount, which represents a $20 million reduction from the appropriation in the final FY02 state budget, translates into an 8.8% wholesale rate increase for communities in the MWRA service area.

Mr. Laskey proposed that the Board "come right out of the box with the same rate increase as last year, which was 3.5%." Chairman Durand recommended that the preliminary assessments that communities receive make no mention of House 1 as the basis for potential 8.8% rate increases.

Mr. Favaloro stated that it is not our job to protect the Governor, who took the action and its consequence, which is an 8.8% wholesale rate increase, with the decision to reduce debt service assistance in House 1. Mr. Pappastergion questioned changing the ongoing practice of presenting the Advisory Board with a CEB and communities with preliminary assessments based on House 1. Mr. MacRitchie expressed his agreement that the approach is inconsistent with how MWRA has handled debt service assistance in the past.

Thirty-Eighth Supplemental Resolution: Authorization to Borrow $180 Million

The Board voted to adopt the thirty-eighth Supplemental Resolution authorizing the issuance of up to $180,000,000 of MWRA General Revenue Bonds (2002 Series B) and the supporting Issuance Resolution. MWRA currently has an approximate balance of $50 million in its construction fund, which it anticipates spending by the end of this March. Funds from this borrowing authorization will be used to finance the MetroWest Water Supply Tunnel, other water and wastewater capital projects and to retire $30 million of commercial paper.

Approximately 67% of the acquired debt will be eligible for debt service assistance from the Commonwealth. However, the actual amount of assistance received will not be determined until the final FY03 state budget is approved. The FY02 CEB includes $4.6 million for four and one half months of debt service. The Proposed FY03 CEB includes $10.5 million in debt service for this issuance.

Appointment of Proxy for Fore River Railroad Corporation

The Board voted to appoint Kate Murray with the power of substitution to vote as proxy at the next annual meeting and any special meeting of the stockholders of the Fore River Railroad Corporation (FRRC). In addition, the Board directed the proxy to elect the following individuals as Directors of the FRRC Board:

Frederick Laskey

Joseph MacRitchie

Kenneth Wissman

Michael Hornbrook

Maggie Debbie

Elizabeth Murray

John Vetere

The primary purpose of the proxy power is to elect the members of the FRRC Board of Directors. Each Director's term extends until the next annual meeting.

Grant of Division of Capital Asset Management Easement to MWRA in Wellesley, Massachusetts

The Board voted to authorize the Executive Director, on behalf of the Authority, to accept a grant of an easement to MWRA from the Commonwealth of Massachusetts, acting by and through its Division of Capital Asset Management (DCAM), for an existing water line located on state property in Wellesley. In 1998 DCAM leased a parcel of the property to a developer for the construction of office space. Because the Commonwealth no longer occupies the property (former district headquarters of the Massachusetts Highway Department), MWRA requested a twenty-foot permanent easement at the location of the water line in order to limit future construction and excavation around it. The easement is being granted for nominal consideration.

Approval of Signage Program for Deer Island and Nut Island

The Board voted to authorize staff to proceed with MWRA's signage program for Nut Island and Deer Island for an amount not to exceed $197,000. Associated costs will be charged to the Final Site Completion line item of the Boston Harbor Project. The Board's vote followed a short presentation on public access and occurred absent any discussion or debate. Staff states in its summary that sufficient funds are available for this program.

Assignment of Contract 6421, Facilities Asset Management Program: Spearhead System Consultants to New Dimension Solutions, Inc.

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve the assignment of Contract 6421, Facilities Asset Management Program, from Spearhead System Consultants to New Dimension Solutions, Inc., with no change in the contract amount or term. MWRA was notified by Spearhead on November 1, 2001 that New Dimension Solutions, Inc. acquired the former's business, which includes its contract with the Authority. This assignment will not result in any change in key personnel nor will it impact the level of service provided.

Framingham Water Supply Continuation Agreement

The Board voted to authorize the Executive Director, on behalf of the Authority, to execute a ten-year Water Supply Continuation Agreement with the Town of Framingham. The Town will continue to pay the prevailing rate for its water.

FY02 Position Control Register (PCR) Amendments - February

The Board voted to approve amendments to the PCR. The following amendment will have a financial impact:

Extension of Contract Employee, Operations Division

The Board voted to approve the extension of an employment contract for Paul DiLuca, Hazardous Materials Specialist, Deer Island Safety Department, Operations Division, from February 8, 2002 to February 8, 2003, increasing the hourly rate from $35.00 to $35.70, for a total annual compensation not to exceed $74,256.

Approval of Affirmative Action Plan

Postponed.

CONTRACT AWARDS

Hauling and Disposal of MWRA Minor Residuals: Charter Environmental, Inc., Contract S369

The Board voted to approve the award of Contract S369, Hauling and Disposal of MWRA Minor Residuals, to the lowest responsive and eligible bidder, Charter Environmental, Inc. The Board further voted to authorize the Executive Director, on behalf of the Authority, to execute said Contract in the bid amount of $2,205,620, for a term of 730 days from the Notice to Proceed, with the option to extend the Contract for up to two additional six-month terms.

The FY02 CEB includes $1,206,354 for hauling and disposal services. The amount in the Proposed FY03 CEB is $1,241,882.

Electrical Equipment Maintenance, Deer Island: American Electrical Testing Company, Contract S370

The Board voted to approve the award of Contract S370, Electrical Equipment Maintenance - Deer Island Treatment Plant, to the lowest responsive and eligible bidder, American Electrical Testing Company, and to authorize the Executive Director, on behalf of the Authority, to execute said Contract in the bid amount of $844,600, for a term of 730 calendar days from the Notice to Proceed.

Contract S370 has a two-year duration for service that includes annual maintenance for forty-three electrical substations located on Deer Island. The scope of the work includes scheduled service checks and maintenance, testing of equipment, direct replacement of failed equipment components, and technical assistance as required by Deer Island's electrical engineer. There are sufficient funds available in the FY02 and Proposed FY03 CEB's for Contract S370.

CONTRACT AMENDMENTS/CHANGE ORDERS

Telecommunications/Network Service Engineer: Whitridge Associates, Purchase Order 1019724, Amendment 3

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment 3 to Purchase Order 1019724 for a Telecommunications/Network Service Engineer from Whitridge Associates under Massachusetts State Contract #BT9H03D, increasing the total purchase order amount by $28,800. Amendment 3 increases the cumulative change order total to $42,075, added to the original purchase order amount of $53,100, for a revised purchase order total of $95,175. The MIS Department FY02 CEB contains sufficient funds for Amendment 3.

Staff attributes the need for Amendment 3 to extended network coverage required by an increase in the number of sites and the range of systems.

Braintree-Weymouth Relief Facilities Project - Appraisal Services: Byrne, McKinney & Associates, Contract 5314A, Amendment 3

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment 3 to Contract 5314A, Braintree-Weymouth Relief Facilities Project - Appraisal Services, with Byrne, McKinney & Associates. Amendment 3 increases Contract 5314A in an amount not to exceed $1,000 and extends the term by two years, from February 25, 2002 to February 25, 2004.

This Amendment increases the cumulative amendment total to $24,610, added to the original contract amount of $9,900, for a revised contract total of $34,510. The FY02-04 Capital Improvement Program (CIP) includes $3,324,000 for Braintree-Weymouth Relief Facilities Land Acquisition, including appraisal services for Contract 5314A. Staff attributes Amendment 3 to changes in project scheduling and the scope of appraisal work.

Walnut Hill Water Treatment Plant Facility/Wachusett & Cosgrove Intakes: J.F. White Contracting Company, Contract 6207, Change Order 21

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order 21 to increase the amount of Contract 6207 with J.F. White Contracting Company, Walnut Hill Water Treatment Plant/Wachusett & Cosgrove Intakes, in the amount of $247,000 and to extend the time for completion by eighty-nine calendar days to December 30, 2002. The Board further voted to authorize the Executive Director to approve additional change orders as may be needed to Contract 6207 in amounts not to exceed the aggregate of $250,000 and 180 calendar days.

Change Order 21 increases the cumulative change order total to $2,299,543, added to the original contract amount of $10,930,100, for a revised contract total of $13,229,643. The FY02-04 CIP includes $12,160,000 for Contract 6207, resulting in a $1,069,643 shortfall. Staff states in its summary that if this additional amount causes the CIP to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be made elsewhere to offset the increase.

The purposes of Change Order 21 are to delete sluice gate stems and guides, rehabilitate Lines 1-4 of the Wachusett Intake, and rehabilitate the bypass of Lines 1-4.

Walnut Hill Water Treatment Plant Facility/Ozonation Construction: Barletta-Shea, A Joint Venture, Contract 6489, Change Order 9

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order 9 to increase the amount of Contract 6489 with Barletta-Shea, A Joint Venture, Walnut Hill Water Treatment Plant/Ozonation Facilities, in the amount of $365,246. The Board further voted to authorize the Executive Director to approve additional change orders as may be needed to Contract 6489 in amounts not to exceed the aggregate of $250,000 and 180 calendar days.

Change Order 9 increases the cumulative change order total to $1,724,008, added to the original contract amount of $116,844,000, for a revised contract total of $118,568,008. The FY02-04 CIP contains $117,176,000 for Contract 6489, resulting in a $1,392,008 shortfall. Staff states in its summary that if this additional amount causes the CIP to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be made elsewhere to offset the increase.

The purpose of Change Order 9 is to provide funds for electrical modifications, including additional metering equipment and surge protection devices.

Walnut Hill Water Treatment Plant/Site Work & Storage Tank Facility: Barletta Heavy Division, Contract 6488, Change Order 25

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order 25 to increase the amount of Contract 6488 with Barletta Heavy Division, Inc., Walnut Hill Water Treatment Plant/Site Work and Storage Tank Facility, in an amount not to exceed $264,659 with no time extension. The Board further voted to authorize the Executive Director to approve additional change orders as may be needed to Contract 6488 in amounts not to exceed the aggregate of $250,000.

Change Order 25 increases the cumulative change order total to $4,752,366.40, added to the original contract amount of $62,344,400, for a revised contract total of $67,096,766.40. The FY02-04 CIP contains $67,150,000 for Contract 6488.

The purposes of Change Order 25 are to fund an additional sheet pile wall and the grouting and setting of a base wall.

Walnut Hill Water Treatment Plant - Wachusett Aqueduct Rehabilitation: United Gunite, Contract 5522, Change Order 6

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order 6 to increase the amount of Contract 5522 with United Gunite Construction Company, Inc., Walnut Hill Water Treatment Plant - Wachusett Aqueduct Rehabilitation, in the amount of $101,450 with no time extension. The Board further voted to authorize the Executive Director to approve additional change orders as may be needed to Contract 5522 in amounts not to exceed the aggregate of $250,000.

Change Order 6 increases the cumulative change order total to $1,252,328, added to the original contract amount of $21,435,807, for a revised contract total of $22,688,135. The FY02-04 CIP contains $21,436,000 for Contract 5522, resulting in a $1,252,135 shortfall. Staff states in its summary that if this additional amount should cause the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be made elsewhere to offset the increase.

Change Order 6 addresses weir restoration as well as penalty and incentive fees related to the Safety Incentive Program, which promotes safety awareness by the Contractor through monetary rewards and fines.

Section 91 - Northern High Connecting Mains: Dow Company, Inc., Contract 6332, Change Order 2

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order 2 to increase the amount of Contract 6332 with Dow Company, Inc., Water Transmission Mains - Section 91, in the amount of $297,931.89 and to extend the contract term by 160 calendar days, from January 3, 2002 to June 12, 2002.

Change Order 2 increases the cumulative change order total to $320,136.89, added to the original contract amount of $1,244,078.50, for a revised contract total of $1,564,215.39. The FY02-04 CIP includes $1,244,000 for Contract 6332, resulting in a $320,215.39 budget shortfall. Staff states in its summary that if this additional 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 made elsewhere to offset the increase.

Change Order 2 addresses cost overruns of various unit price items, installation of a hydrant provided by the Town of Saugus, an increase in soil disposal costs, relocation of a vent pipe, excavation and support of additional gas mains, installation of two new water services, and a contract extension of 160 days. Because many of these issues are due to design error, Mr. Pappastergion asked what steps could be taken in response. Staff stated that following completion of Contract 6332, a poor design grade could be given to the Designer, SEA Consultants, which would impact its future bids.

INFORMATION REPORTS

Monthly Update on Competitiveness Program

Staff offered the Board a verbal update on the Competitiveness Program. The impact of the Commonwealth's Early Retirement Program cannot be ascertained until the two deadlines have passed (February 15^th and March 15^th) for former MDC employees and MWRA employees to elect to participate. However, regardless of the impact, FY03 staffing levels recommended by Black & Veatch will be met by the beginning of the new fiscal year.

Staff cautioned that the FY04 recommended staffing levels could be more difficult to meet. Because the Early Retirement Program will likely draw a pool of employees away from MWRA at one time, combined with adhering to the Commonwealth's policy of "backfilling" only twenty-percent of vacated positions, it could prove difficult to gradually meet Black & Veatch's recommendation for FY04.

Mr. MacRitchie asked staff to comment on its commitment to the twenty-percent backfill policy. Mr. Laskey stated that the Authority is committed to the policy and added that "[w]e're not getting the number of employees opting for retirement as we'd hoped."

Integrated Water Supply Improvement Program Update

The three main objectives of the Integrated Water Supply Improvement Program are: 1) complete a reliable alternate transmission system from the Wachusett Reservoir in Clinton to the City Tunnel in Weston; 2) shut down the Cosgrove Tunnel-Hultman System, demolish the top of Shaft C and provide revised connections to the Walnut Hill Water Treatment Plant (WHWTP), the MetroWest Water Supply Tunnel (MWWST) and the Hultman Aqueduct; and 3) start-up the WHWTP. Staff updated the Board on the status of these objectives and shared concerns about system start-up of the MWWST, WHWTP and Norumbega Covered Storage (NCS).

Currently MWRA has $1 billion worth of construction underway. Although the work is slightly ahead of schedule, staff is struggling to stay there. The month of January brought many change orders that limited construction progress.

Issues that have arisen around the MWWST include construction delays in grouting and concrete lining, as well as significant changes in insurance policies. Due to a tightening insurance market and the impacts of the September 11^th attacks, the provider of "Builder's Risk" insurance went out of business. Though new policies are in place, they require large deductibles.

Issues that have arisen around the WHWTP include construction delays and cost increases due to an extended period of diver time, which was necessary to inspect and repair the sluice gates at the Wachusett Gatehouse and Cosgrove Intake. Additionally, rehabilitation of two hydro-turbine generators and relining of existing piping resulted in unanticipated cost increases.

Staff stated that the NCS project is progressing well, with minor change orders arising over the course of the contract. However, the scope of the project recently changed to include a communication tower and a pressure relief facility.

The FY02-04 CIP contains $1,065,437,000 for the three major components of the Integrated Water Supply Improvement Program. The Proposed FY03-05 CIP includes $1,083,822,000 for the same components, which represents a 1.7% increase.

Framingham Extension Sewer - Program Goals and Schedule

Staff presented a summary in response to the Board's request for a report on the fundamental goals and schedules of the various components of the Odor and Corrosion Control Program (Program) for the Framingham Extension Sewer (FES), the Framingham Extension Relief Sewer (FERS) and downstream interceptors. The overall goals of the Program are to minimize odor and corrosion in the sewers' existing infrastructures and promote worker and public health and safety.

Staff has determined that three factors have caused the odor and corrosion: 1) industrial discharges; 2) configuration of the area municipal systems; and 3) configuration of the FES and FERS. Three solutions to the odor and corrosion have been identified: 1) source reduction; 2) asset protection; and 3) treatment.

Mr. Carroll asked whether the Towns of Framingham, Ashland and Natick have submitted their compliance schedules, which MWRA staff requested from them in January, with a thirty-day response period. Staff responded that thus far only Framingham had complied with the request. The Town has also hired a consultant that will meet with Authority staff in the near future.

Although the response deadline was February 8^th, staff intends to give Ashland and Natick an additional couple of weeks to comply, after such time the Towns will be found in official violation of their permits. Mr. Carroll asked whether communities could be fined by MWRA for permit violations. Staff responded that fines are imposed at the discretion of the Board.

Braintree-Weymouth Related Facilities Projects Update

The Board was informed on January 25, 2002 of problems encountered with the tunnel-boring machine in the tunnel at Nut Island. It appears that the machine is through the worst of the rock conditions. However, progress continues to be slower than anticipated for a variety of reasons, including rock conditions and manufacturer delays in fixing the machine due to the holiday season. Schedule and cost impacts associated with this issue have yet to be determined.

Mr. Laskey stated that he has met with Duke Energy representatives to discuss the company's plans to construct a twenty-four to thirty inch high pressure gas pipeline from Salem to the Fore River Energy Plant in North Weymouth. MWRA and Duke Energy staffs are coordinating the Braintree-Weymouth construction schedule and that of the pipeline to ensure no conflicts arise.

The FY02-04 CIP budget includes $214.6 million for the entire Braintree-Weymouth Relief Facilities Project. Staff believes there are sufficient funds for completion; however, as indicated above, construction delays may give rise to cost increases.

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