At this time, the city council has not sent out an RFQ to American Water. The council is acting in a prudent manner by entering into negotiations with American Water in an attempt to reduce maintenance and operational costs for the water treatment plant. Contracts are often negotiable, and considering the financial status of the city, the council is being proactive. The American Water contract was awarded in 2006, two years before the incumbents took office. Although incumbents Gayle Washburn and Jamey Brooks adamantly opposed the water treatment plant contract, they are now bearing the brunt of criticism for decisions made before they were elected, and the impact of those devastating decisions to the community. Four out of the five sitting council members favor negotiating the American Water contract, and if necessary, are open to RFQ’s from other vendors if an agreement can not be made.
The negotiations with American Water should be conducted in a respectful and business-like manner. It is proper business etiquette to allow the company holding a contract to make a proposal. American Water has serviced the city as agreed, and the action to negotiate is not a reflection on the company’s performance. They have also generously contributed chemicals to the community pool, and deserve to be commended for assisting the city with the cost of operating the pool. In its dealings with American Water, the council must be concise in communicating what amount of contract reduction is necessary, and allow sufficient time (perhaps 30 days), for American Water to either approve or disapprove the terms before considering other possible RFQ’s to competitive vendors.
For clarification, there has not been any RFQ sent out at this time. The council has entered talks with American Water to re-negotiate our existing contract to try to reduce the operating costs of the sewer plant. Our existing base contract is for 1.3 million gallons per day of treatment. However, we are only producing about 1 million gallons per day. There is no provision in the existing contract for lower costs when flow rates are lower. We are essentially paying for 25% more flow rate than we produce. This is unacceptable to me. We began negotiations during the summer, which were helpful, since American Water agreed to provide pool chemicals and some other benefits to the city. However, I believe that we can do better in reducing costs so we have asked American Water to provide further cost savings. If there is not a significant savings we will consider an RFQ/RFI as the next step. While they are doing a good job of operating the plant, the costs of the operations and debt for the sewer plant are not sustainable. I will do everything I can to renegotiate a better contract to reduce costs.
As a candidate and rate payer who is suffering through the same rate increases as everyone else, I feel that the city should explore all options in an effort to make our sewer rates more affordable. However, I strongly believe that any changes have to make sense in the short and long term. The contract is written in a manner that encourages American Water to take extra steps to ensure that the plant is maintained and they must turn over the plant back to the city in 20 years in good working condition. This is an aspect of the contract that more than likely will be lost if the contract is changed. If the operator has no guarantees to uphold; the incentive is not to save us money but rather to spend it.
Switching to a new contract will do a couple of things;
1. Cost us to pay off the old contract, approximately $500,000.00
2. Cost us even more to enter to a new contract.
Estimates are that the contract switch will likely cost us $750,000.00 to 1,000,000.00 dollars. Common sense would dictate that in order for another company to enter the picture they would have to cancel all warrantees and guarantees, which in the long term would cost us all far more then we are paying now.
Some of my ideas include the following;
1. Look at revenue generating ideas that are already available; and
2. Collect outstanding balances owed the city.
3. Look at a cost savings program for low income residents;
4. Discuss flow versus flat rate sewer service fees.
We cannot afford to make rash emotional decisions that are based on personal agendas instead of what is in the best interest of the city. We need to focus on solving our problems and uniting our community. Together we can get it done.
I’m unaware of a RFQ being sent out regarding the operations of Fillmore’s sewage treatment plant.
I pay the same high water and sewer bills as everyone else in town and I don’t like it. I’m hearing a lot from incumbents about renegotiating the operation costs of the treatment plant and / or finding another provider to operate the plant for less money. I’m not against renegotiations or finding another operator. However, if renegotiations of operations are pursued I am not willing to sacrifice long term benefits for temporary savings. I’m wondering why the incumbents aren’t using this as an example of accomplishments instead of another hopeful promise. They’ve had 4 years. Bottom line is we have to constantly look for reducing the cost of ownership, not just when it’s time to get re-elected.
I want to explore creating some revenue from the sewage treatment plant. The benefits of creating revenue outweigh the odds of lowering operational costs.
Not including the debt or depreciation, expenditures which aren’t negotiable, our 2013 adopted expenditures are $2,361,730 about $47.30 a household per month. How much can be saved by renegotiating the operations cost? 5% or 10%, $2-$5 a month?
The current council has not considered allowing the plant to start accepting septic waste. The plant can treat 30k gallons of septic waste a day. The going rate for treating this waste is about $0.10 a gallon. That could add up to $3000 daily, $90,000 monthly, or up to $1,080,000 annually. With 4156 households in Town, that’s a potential for $21.65 savings a month.
Their statements remind me of the old saying “stepping over dollars to pick up dimes”.
Having had to pay the bill like the rest of the community, I too support seeking out every single possible way to reduce our sewer rates. What concerns me about the RFQ process proposed by the Council was the fact they were getting ready to go this route without first having serious negotiations with our current operator. It has created the perception that the council majority never wanted to engage our current operator in the first place and simply wants to replace them without disclosing to the public what the potential consequences could be by making such a rushed decision. Based on conversations I’ve had with many residents while precinct walking, it is my understanding that our residents are not aware of the important components of our current contract with American Water and how losing those components can potentially lead to greater costs that will be shouldered by the citizens of Fillmore.
Potential consequences include:
Loss of guarantees and warranties provided by our current contract that another contractor will likely not honor because they did not build the plant.
Additional cost related to creating a new contract; and
Additional cost related to paying off the first contract.
I am not a fan of the fact that the State forced us to build the sewer plant we have before us today, but I know that the operator has done a very good job running our sewer plant and has made improvements in its efficiency that go above and beyond the existing contract in some areas. I believe there are some key components that should be renegotiated with American Water, but it is foolishness to say that there aren’t many provisions within the contract that are a great advantage to the City. We cannot allow our leadership to allow personal agendas to cloud the reality of this situation. We need leadership that is going to look at the American Water contract without personal bias and negotiate the best possible contract for the City. Vote for Manuel Minjares, Douglas Tucker and Rick Neal to see to it that City does not make rash decisions to save a little money in the short term that ends up costing a fortune in the long term.
To the best of my knowledge, there was discussion by the current city council as to sending out for a RFQ. However, I believe it was decided to be in the best interest of the city to first have discussion with American Water as to the possibility of renegotiating our contract with them in order to cut our operating costs.
In proceeding with American Water, we would need to meet and discuss with American Water to determine if they are able and willing to lower our operating costs on our treatment facility.
If the city decides to purse a RFQ, we would first need to determine the legality of doing so. Secondly, we will need to consider the costs and ramifications associated with the breaking of this contract and the consequences of voiding any or all warranties with the water treatment plant that are currently in place.
Bottom line, we first need to see what American Water has to say.