Consent Decree Program

City Council Update

City of Shreveport

December 19, 2019

Today’s Presentation

► Consent Decree
► Risk Exposure to the City
► Status of Phases 1, 2 and 3
► Hydraulic Model
► Financial Model, Rates and Affordability
Consent Decree Overview

Federal mandate to eliminate sanitary sewer overflows (SSOs).

1) Analyze your entire collection system and repair all sewer defects under 5 Phases
of work in first 9 Years.

2) Reassess Phases 1, 2, and 3 again in Years 8-12 and address any new defects.

3) Analyze your system and construct additional conveyance capacity improvements

where necessary to eliminate SSOs and treatment plant overloading by Year 12.

4) Implement a Capacity Management Operations and Maintenance (CMOM)

Program within Year 1.
Stipulated Penalties Overview

► Apply for failure to submit deliverables, meet construction deadlines, if SSOs occur,
and complete reporting requirements

► For failure to meet construction deadlines:

• 1 to 30 days late: $750 per day
• 31 to 60 days late: $1,500 per day
• 61 to 180 days late: $2,500 per day
• More than 180 days late: $4,000 per day
Initial and Current Cost Projections for the Program
Status of Phase 1

► Number of Projects: 30 projects

► Status at Transition: 30 were functionally complete; 24 had reached final completion
► Current Status: 30 are functionally complete; 28 have reached final completion
► Construction Cost Forecast: $185 million
► Consent Decree Deadline: November 12, 2017
► City’s Risk Exposure: Based on functional completion date, projects were 12
months late exposing the City to potential stipulated penalties.
► Time Extension Request to EPA
► Post Construction Flow Monitoring Results: Fall 2019
Status of Phase 2

► Number of Projects: 17 projects

► Status at Transition: 3 were functionally complete; 0 had reached final completion
► Current Status: 12 are functionally complete; 4 have reached final completion
► Construction Cost Forecast: $114 million
► Consent Decree Deadline: May 12, 2019
► City’s Risk Exposure: Based on functional completion date, projects will be
approximately 9 months late exposing the City to potential stipulated penalties.
► Time Extension Request to EPA
Resolution of Citizen Issues

► Status at Transition:
451 open issues
► Current Status:
163 open issues
Status of Phase 3

► Number of Projects: 14 projects

► Status at Transition: 1 had reached final design; 1 project under construction
► Current Status: 14 projects have reached final design; 1 project under construction
► Construction Cost Forecast: $140 million
► Consent Decree Deadline: November 13, 2020

Over 450 Recommendations Made to City’s

Standard Specifications and Front-End Documents
Phase 3 Proposed Schedule Modifications
Contractor Outreach
Importance of the City’s Hydraulic Model

1. Establish Existing Conditions of Collection System Performance

► Account for wet weather flow throughout the collection system

► Validate known SSO locations and hydraulic restrictions

2. Predict how I/I reduction can be optimized (Where and how much to manage risk)

3. Use as design tool to evaluate alternative control measures to minimize cost

4. Validate actual I/I reduction achieved and effectiveness of investment

Phase 1 Flow Data and Hydraulic Model Results
Go Forward Strategy for Hydraulic Model

► Incorporate findings from sewer condition assessments into model

► Recalibrate model to make it more accurate in representing system performance
► Define targeted I/I Reduction Goals prior to constructing rehabilitation projects
► Integrate collaborative hydraulic modeling between Program & design community
► Re-evaluate capacity project scopes based on I/I reduction performance
► Optimize system performance through cost effective I/I reduction and capacity
improvements
Assessing Affordability of the Program

► Long-Term Financial Plan to Sustain Infrastructure Investments for Consent Decree

and Non-Consent Decree Wastewater Utility Improvements

► Financial Burden of Clean Water Act Compliance Using EPA Financial Capability
Assessment Worksheets

► Cost per Household as Percent of Median Household Income for Wastewater

Service

► Cost per Household as Percent of Mean Household income for lower income
quintiles for Wastewater Service
Utility Rate Increases Since 2013

► Impact for Shreveport residential customers will vary due to changes in rate
structure – for a 6,000-gallon per month customer – estimated increase 7% to 8%
per year combined water and sewer.
► Industry surveys indicate the national average is in the 5-6% range.
Among a variety of communities with consent decrees,
Shreveport’s current residential sewer bill is about average

$44/month average
Cost per household as a % of MHI today
Shreveport’s Current Sewer Bill As % of MHI
 Shreveport’s Combined Debt Service Coverage

[a] Based on Current B&V Rate Modeling

Unfunded Consent Decree Capital Improvements
$150M
Available in 2020
Cost per household as a % of MHI with full CD compliance
Go Forward Strategies

Strategy #1: Raise rates immediately to fund Consent Decree projects while
developing a regulatory strategy to renegotiate the Consent Decree.

This approach would introduce a significant rate burden on the community which will
likely lead to rate fatigue. Additional work will still create challenges meeting Consent
Decree schedules and will likely expose the City to potential stipulated penalties.
Go Forward Strategies

Strategy #2: Continue with approved rate increases and complete priority projects for
the utility in 2020 and 2021 (Consent Decree or Non-Consent Decree) utilizing
available funding while developing a regulatory strategy to renegotiate the Consent
Decree.

This approach will not meet the Consent Decree schedule deadlines proposed and will
expose the City to potential stipulated penalties. However, the City will be addressing
its most needed infrastructure repairs and making some progress towards meeting the
obligations of the Consent Decree. It is also likely that you will have future rate
increases to fund improvements as defined in the renegotiation.
Next Steps

► Develop contracting mechanisms to manage emergency projects

► Engage EPA / DOJ / DEQ to pursue Consent Decree modification

► Update hydraulic model to validate planned improvements

► Prioritize Consent Decree and non-Consent Decree projects

► Develop strategy for financing future capital requirements

► Develop a communications strategy for stakeholder/community engagement