The council voted unanimously to support option number three, which involves an emergency management contract. But several of the possible upsides of this approach would still have to be negotiated, and it is neither clear nor certain what the product of those negotiations might ultimately look like.
Specifically, the council voted to “contract operation on an emergency basis: Hire a professional operation firm to manage the system on behalf of the city in the interim.”
Under pros and cons listed in Stampfler’s report, this approach “allows for qualification based selection and the flexibility of negotiating objectives and goals. (It) provides a timely solution to the needs of the city, allows for an immediate infusion of third party capital funds, which would prevent future rate increases (and) will allow the sharing of liability and contractually ensure performance and compliance. (This approach) also provides expertise needed to address existing issues.”
When asked what specifically the “interim” in the first paragraph referred to, Stampfler said, “It’s whenever they (the council) decide what else to do. It could take three years, or five or 10 years. We’ll have to see what’s in the final proposal, right now we just don’t know yet.”
He said the use of “emergency basis” was not an attempt to avoid the state bid law, since management of the system falls under the professional services category.
As for the “infusion of third party capital funds,” Stampfler said this will also be part of the negotiations, as will “the sharing of liability.”
“We’ll just have to see how they want to structure the proposal. Those things might not be in there, and we may end up getting nothing at all,” he said.
One of the reasons cited in Stampfler’s recommendation is that just such an influx would “alleviate the financial deficiencies that plague the current system. The system is in need of a minimum of $15 million to $25 million in capital to establish a water distribution and collection system that is efficient, sustainable and safe.”
Projects included in this category include anaerobic digester repair ($100,000 to $200,000), Stone Hill booster station ($100,000 to $150,000), Shocco Springs lift station ($100,000 to $150,000), Harmon Park Well ($500,000), infiltration and inflow repair ($3 million to $5 million), fire hydrant repair ($500,000 to $700,000), decommission and cleanup of the Niki Lu facility ($2 million to $2.5 million), general upgrades at the water treatment and wastewater plants ($4 million to $5 million), miscellaneous system improvements ($2.5 million to $3 million) and SCADA (Supervisory Control and Data Acquisition) installation for both water and sewer.”
The 8 percent rate increases already approved by the council over the next 10 years would raise only a little over $4 million, but the new capital would “allow for the necessary improvements to take place without increasing water and sewer rates” while “guaranteeing compliance with (U.S. Environmental Protection Agency compliance and Alabama Department of Environmental Management) consent order.”
Again, however, Stampfler said there was no guarantee that the private investments would come. He also could not point to any reason a management company would willingly accept joint liability for any of the board’s current problems, although any joint liability for future issues would be fairly common.
The recommendation approved by the council Monday night also states that “during the time frame involved with the discussion with vendors, the city council members will undoubtedly be contacted by many vendors as to this matter; city council members are advised to avoid discussing this matter with individual vendors and to allow this matter to be coordinated and attended to by the city manager until such time as a full recommendation is made to the council for consideration.”
Stampfler said this language was included because “the manager as chief executive has the authority to negotiate with vendors, but that’s as much for the vendors as it is for the council. (The vendors) are going to be involved in the process of lobbying us for this.”
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