Omro and Algoma Sanitary District A format for a Successful Consolidation

Omro and Algoma Sanitary District A format for a Successful Consolidation Kevin Mraz Utility Director Algoma Sanitary District

A format for Successful ConsolidationBackground information • Algoma Sanitary District • 9,000 Population • 2600 Sewer connection • 870 Water connections • $672 million Equalized Value (E.V.) • 1.3% Debt Ratio to E.V. • Omro Sanitary District • 1000 Population • 330 Sewer connection • 65 Water connections • $71 million Equalized Value(E.V.) • 3.1% Debt Ratio to E.V.

Algoma Sanitary District #1 • We are a municipal entity duly established by Wisconsin Statute 66.71. • Our District currently is a municipal Drinking water utility and operates our own sanitary sewer collection system. • We do contract out for WWTP sewage treatment services with Oshkosh WI. (generally the economy of scale with a larger combined municipal system reduces the cost below constructing our own WWTP)

Facts identified to reinforced a need to consolidate • Expense reduction (Redundant expenses) • Market share (Larger territory) • Improved financial strength (increase retail customers and overall return on investment) • Bonding improvements (AA- from S and P will allow for reduced interest expense from notes and bonds on Omro side) • Reduce future rate spikes (smooth expense occurrences across a larger market) • Create a bigger economy scale (buy in bulk)

Legislation 60.785 Changes in district boundaries. (2) CONSOLIDATION. (a) Any town sanitary district may be consolidated with a contiguous town sanitary district by resolution passed by a two−thirds vote of all of the commissioners of each district, fixing the terms of the consolidation and ratified by the qualified electors of each district at a referendum held in each district. The resolution shall be filed as provided in s. 8.37. The ballots shall contain the words “for consolidation”, and “against consolidation”. If a majority of the votes cast on the referendum in each town sanitary district are for consolidation, the resolutions are effective and have the force of a contract. Certified copies of the resolutions and the results of the referendum shall be filed with the secretary of natural resources and the original documents shall be recorded with the register of deeds in each county in which the consolidated district is situated.

How to consolidate • Leadership • Vision • Identify Opportunities • Mission Statement • Ability to act

Behind the scenes • Based on our visionary Commissioners of our District it was as far back as 2003 that I was reading statutes with our commissioners to determine the process and the potential of a consolidation or joint water authority. • We continually reviewed the possibility and about 3 years ago we set up the first formal meeting with the Town of Omro SD. The discussion also included the formal recommendations of multiple enforcement and authoritative agencies including the PSC and ECRPC. (I had researched and prepared details of benefits and identified $70,000 of cost savings that were used as discussion items). • Following this meeting we had several joint meetings to discuss the process and review the possible outcomes review the potential consolidation. I did pull in the PSC, an accounting firm, and financial planner to reinforce the benefits from third party view points. • Pros and cons were identified as well as everyone was encouraged to list there goals of the consolidation. • We then drafted the terms of consolidation incorporating both Districts goals.

Cash flow decisionFinancials in a nut shell • Cash flow needs to include (we project out to life of bonds) • Debt Schedule • Revenue • Expenses • Inflation and growth estimates stay conservative • Costs of consolidation • Referendum • legal attorneys • Accounting merge(staff) • Ordinances, handbooks, policies • Infrastructure upgrades (SCADA) machinery, hardware, software • Moving expenses • Savings • Redundant positions staff, board members, legal attorneys • Audits • Insurance • Statutory reporting compliance reduction

Elected officials: This is a political decision • Impact on Constituents • This will affect the local electorate • Local economy • This will affect the local employees ( who are the constituents you serve) Jobs are critical point of information. • Terms of board to complete the consolidation • Strong foundation for future boards to continue process • Sometimes the right decision is the hard decision • Are you ready to reduce work staff in exchange for reduce costs/taxes • The commissioners voted to remove themselves from office. • We eliminated 3 commissioner positions. • Are you willing to do the right thing? • Base your decision on doing what is right.

Customer service • Office locations distance to customers. • Level of proposed services better or worse. • Streamline process or permits. • Upgrade communications website, cable, etc.

Public RelationsAdvertisement • Annual and quarterly reports that are. • This was an inexpensive method to inform the public postage already paid. • Space was available in statutorily required reports • Public meetings • Time consuming • Difficult to obtain audience based on schedules • Good for Q and A • Good face to face credibility • Bill stuffers • Assured to be delivered to each constituent • Small size little space for details • Not always read or reviewed • Newspaper • Limited readers not everyone gets paper and may not be headline on website • Risk creating controversy based on reporters opinion • Cable Channel • Free • available at all hours • Website/ social media • We used and advertised on our website • Directed to website from mailing • Did not use social media for our situation • Available 24-7 • Local postings • We used the local gas station to display highlights • Yard signs • We placed 50 informational signs throughout towns

Factors of a successful consolidation • Mission/ Vision statement • Identify the goals • Savings/ economy of scale/ Duplicated services/ Redundant costs ( insurance, Audits, etc.)/ streamline • Identify markets that can be consolidated • Pros and cons • Most importantly it starts with quality leadership. The Leader entity needs the ability to envision the future and to identify opportunities that can be explored and plan for them accordingly to be in position to act. • I owe my successful consolidation to many foresightfull leaders that encouraged me and gave me enough latitude to explore these concepts. • Good leadership will foster these conceptual ideas to fruition • Employees • Chain of command current and proposed • Where do the current staff fit • Terminations

Outcome potential • We anticipate a savings of $70,000 annually, in which most is already being recognized. • Greater negotiation ability for WWTP services. • Growth potential is multiplied by at least 3X’s • Tax levy savings • Water rate reduction • Sewer user fee reduction

Challenges remaining • Waiting for confirmation from DNR. • Many annual reports are required and these need to be removed. • Water sampling requirements need to be reduced • Waiting on PCS to approve consolidation and set new rates for Omro residents. • Methods for successful recording of parcel identifications. • Final audit and financial incorporations • *** legislation is not well defined as to town that oversees the petition for addition of new properties when multiple towns are involved. We will be working with the A.G. for an opinion on this.

Referendum results • The final election results came in at 84% in favor of consolidation. • This has been a smooth transition but has some major challenges that required much planning. • Questions and answers Kevin Mraz Utility Director Algoma Sanitary District 920-426-0335

Omro and Algoma Sanitary District A format for a Successful Consolidation