Water Pollution Control Authority
Regionalization
Bridgeport
Monroe
Trumbull
Glenn A. Santoro, Esq.
Robinson & Cole LLP
280 Trumbull Street
Hartford, CT 06103
(860) 275-8322
gsantoro@rc.com
Today’s Topics
• What is a Regionalization Transaction
• Benefits of Regionalization
• Challenges of Regionalization
• Case Study – Greater New Haven Water Pollution
Control Authority
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
What is a Regionalization Transaction?
•
Requirements for the concurrent ordinance:
–
Name of the Authority
–
Address of the Authority’s principal office
–
A statement that the Authority is created pursuant to
the Act
What is a Regionalization Transaction?
• Requirements for the concurrent ordinance
(cont’d):
– Information regarding the Authority’s 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
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.
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 Authority’s organization and
management
– Financing plan and bonding requirements
– Estimated budget and rates
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 Authority’s preliminary
plan of operation.
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
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
Benefits of Regionalization
• Governance of the Authority (cont’d):
– 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 Authority’s
property and the conduct of its affairs.
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 Authority’s
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 municipality’s users of
the regional wastewater system
Benefits of Regionalization
•
Additional Benefits:
– The Authority can assume all sewer-related obligations and sewerrelated 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
Benefits of Regionalization
• Additional Benefits (cont’d):
– 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
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
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
Challenges of Regionalization
• General Timeline of Action Items (9 to 12 months)
cont’d:
– 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 & Poor’s, Moody’s and Fitch)
• Current economic environment will be a challenge
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
Challenges of Regionalization
•
Establishing User Rates (cont’d):
–
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.
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
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
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
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
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
Questions & Answers
For additional information, please contact:
Glenn A. Santoro, Esq.
Gabriel Varca, Treasurer
Robinson & Cole LLP
GNHWPCA
280 Trumbull Street
345 East Shore Parkway
Hartford, CT 06103
New Haven, CT 06510
(860) 275-8322
(203) 466-5265
gsantoro@rc.com
gvarca@gnhwpca.com