|Plot Thickens On Wastewater
Treatment Plant Options
November 18, 2001
The newspaper article that is copied at the
end of this e-forum appeared in today's edition of the West County
Times. Reporter Peter Felsenfeld points out that what should be a
business decision by City Council members acting as fiduciaries of the
ratepayers of the Richmond Municipal Sewer District No. 1 has
deteriorated into an extended failure to act decisively, almost entirely
dominated by politics.
A little history may be appropriate for those who have forgotten how we got here.
It all started in the spring of 1997, when I began a personal investigation of the wastewater plant because of concern over mosquitoes and odor. Incidentally, my yard is within a few hundred feet of the plant. These symptoms, however, were only indications of what turned out to be much greater trouble.
What I found was a facility that was suffering from millions of dollars of deferred maintenance and being operated in a negligent manner. Contrary to recommendations by the State Water Resources Control Board, the Richmond Municipal Sewer District No. 1 had almost no operating reserves and an inadequate capital improvement fund of only $500,000 a year. Not one person in the chain of command, from the plant manager, Don Austin, to the city manager, Floyd Johnson, had brought this crisis to the attention of the City Council. Even Local 790 that operates the plant and now points to their years of dedicated service as qualifications for continuing that job, failed to formally alert either the City Council or the citizens of Richmond of the neglect from which the plant was suffering.
I have to acknowledge, however, that an individual member of Local 790 played a role in indirectly tipping me off to the cause of some of the odor and mosquito problems. It was also the Contra Costa Mosquito and Vector Control District inspector who diagnosed and eventually solved the mosquito problem; not City staff, who continued for years to deny it existed.
Contrary to claims made by Local 790 representative Larry Hendel, my letter dated September 28, 1997, to Floyd Johnson and copied to the mayor and City Council, was the first documented account of the nature and magnitude of the wastewater crisis that is now widely accepted but still unresolved over four years later. In late 1997 and early 1998, the city manager and city council grasped the seriousness of the wastewater problem and set in motion the series of activities that defined the problem and mapped various solutions.
The first controversy erupted over the need to raise sewer service fees to provide an adequate operating reserve and capital improvement fund. Incidentally, much of that fund was earmarked and is being used for collection system repairs, not plant improvements. The decision to raise fees became a campaign issue in 1999, as two City Council members maintained there was no demonstrated need. A citizen's Blue Ribbon Advisory Committee was formed, and they unanimously affirmed the need for the fee increase while urging the City to explore all possible methods for future operation of the plant to achieve maximum efficiency and lowest cost. This resulted in a competitive process that has taken over two years and yielded four viable options for the future. Two options involve private operators, and one involves continued operation by City staff. A fourth option is to abandon the plant and pipe the wastewater to the EBMUD plant in Oakland for treatment.
We now have advocates for the four potential operators jockeying for advantage. A decision that could have already been made was postponed because each proponent believed its favorite candidate would fare better under the new city council, which will meet the first time on November 27.
Currently, there are basically three competing factions among current and future City Council members.
One faction has already declared its commitment or is tilting toward keeping the plant under City operation. These consist of some of the recent candidates supported by SEIU Local 790 and the Contra Costa Central Labor Council. Led by mayor-elect Irma Anderson, they intend to repay their campaign debts on the backs of ratepayers based on vague justifications such as protecting jobs, keeping a public asset under public control, and investing in the people who have already dedicated their careers to operating the treatment plant. What this would translate into, however, would be potential operating costs 32% higher than the low bidder.
The second faction appears to believe, for philosophical reasons, that public operation is preferable to private operation, but also believes that EBMUD is better equipped to provide the necessary service than the City of Richmond. The operation would continue to be unionized, although with a different union than currently operates the plant. Since the treatment would be moved to Oakland, the concerns about liability and contingencies for plant deterioration, permitting, violations and odor would significantly diminish. Although the cost would be only marginally lower than City operation, a lot of potential problems would presumably disappear, and politicians could still maintain their conceptual support of public employee unions.
The third faction believes, simply, that awarding the contract to the lowest bidder makes the most sense and provides what the average ratepayer is looking for - the most bang for the buck. Many allegations about the potential pitfalls of private operation have been raised. These include price gouging when permit requirements are tightened, intentional low-balling of bids and ultimate City liability when multi-national corporations run amuck or become bankrupt. Detractors point to the possibility of later sweetheart deals similar to those some ascribe to garbage franchisee Richmond Sanitary Service, the recent public utility debacle or the allegations made by John Marquez involving Penny and Isiah Turner.
There has been discussion on what effect the various options would have on sewer rates. The answer is - probably none. Each of the four proposals promises operating costs over 20 years lower than current projections. However, neither EBMUD nor the City proposal offer decreases over the next two years. In fact, the City proposal projects increases, rater than decreases, over the next two years. Alternatively, the two private operators project immediate operational savings ranging from $600,000 to $1 million annually.
The annual revenue from sewer fees is around $8 million, and the 2001-2202 budget is about $7.1 million. This includes both the wastewater plant and the collection system. The current wastewater plant operating budget is around $3.5 million, with the remainder going to maintaining the collection system, servicing bonds for capital improvements and establishing a reserve. Depending on the method of future operation chosen, the wastewater plant operating cost (or EBMUD equivalent) is projected to range from $2.5 million (USFilter) to $3.7 million (City) in 2002. If, for example, USFilter were chosen, the wastewater plant operating cost could be reduced by approximately 30% ($1 million) the first year. Since the wastewater plant operation is only about half the total division budget, the total reduction, with all other expenditures remaining the same, would be only about 14%.
Prior to 1999, both single and multi-family dwellings were paying sewer fees of $166.00 per year. This amount was approximately in the lower 2/3 of some 16 comparable sanitary districts. Starting is fiscal year 1999-2000, the Richmond annual rates were increased over a five-year period from $195 to $303 for single-family dwellings and from $199 (no change for the first four years) to $244 for multiple dwellings. These increases still placed Richmond in the middle among comparable districts. A 14% reduction in sewer fees (for the USFilter option) could result in an annual fee of $303 dropping to $260, or about $3.50 per month. Conversely, an increase in the operating cost with the City proposal would require a fee increase from $303 to $312 annually.
The reason that a decrease in plant operating cost is not likely to result in a fee decrease is that the savings will probably be reallocated to collection system improvements, which remain underfunded in any case. The least expensive future wastewater treatment option will, therefore, result in the largest allocation of resources to collection system maintenance and replacement, a responsibility that will remain with the City in any case.
So what does this all mean? I believe that the City's consultant, Paul Eisenhardt, has done an outstanding job of designing the RFP and evaluating the proposals objectively. He has continued to provide full and detailed answers to the many questions raised by the City Council and to respond to criticisms leveled by the various proposers and their advocates at each other. Unfortunately, the City has done a lousy job of sharing this information in a timely manner with the public, and that failure has contributed to the continuing delay of the ultimate decision. For myself, I am ready to vote and move on. I do not want a serious plant upset and sewage release into the bay, with its attendant fines, to be on my hands.
Published Sunday, November 18, 2001
RICHMOND -- Over the summer, as candidates clamored and jockeyed for position, the city's waste water treatment plant aged. Entering the holiday season, prospective operators squabble and denounce a city bid evaluation committee, and the neglected plant continues to age.
And as the plant ages and the rainy season draws near, the city runs the risk of polluting the Bay and incurring massive fines.
The outgoing City Council hoped to select a partner to upgrade and manage the Richmond Water Pollution Control Plant before the Nov. 6 election. But the issue encountered delays and, after two study sessions, no date has been set for a vote.
Meanwhile, the relationship between City Hall and plant management has deteriorated, with city leaders distressed about out-of-control plant phone bills and reports that facility employees are sabotaging the plant. Elected officials, shell-shocked from election-year rhetoric, are still reluctant to spend any of the $18 million approved and earmarked for improvements.
USFilter, Earth Tech, the East Bay Municipal Utility District and the plant employees, affiliated with Service Employees International Union Local 790, submitted proposals to manage the plant, which serves about 60,000 residents. Most observers agree none of the groups can claim support of a council majority, though a city review team pointed to USFilter as the least expensive and most effective alternative.
Last month, Richmond Public Works Superintendent Don Austin sent a letter to the California Regional Water Quality Control Board warning the agency of imminent water permit violations due to equipment failure at the Richmond facility.
The water control board can fine the city $10 per gallon for each day a violation occurs, according to Lila Tang, a senior water resources engineer. Richmond's plant processes seven million gallons of sewage on an average day.
The notice infuriated city leaders, who said Austin should have notified superiors of his concerns and requested emergency parts instead of alarming the water board.
"It was inappropriate behavior," said City Manager Isiah Turner. "He did not adhere to organizational protocol and give us a chance to address whatever problems he noticed."
Austin, who is not a member of SEIU, did not return phone calls left Thursday or Friday. Public Services Agency director Rich McCoy said the city is ready to spend money on emergency repairs and that the plant staff members play a critical role in pointing out problems.
"The plant is at risk, and, if we have some severe storms, a violation is a potential," McCoy said. "But we're doing whatever we can to mitigate that risk, and we've been fixing things that need to be fixed for some time."
SEIU staff director Larry Hendel said city officials should put politics aside and do what's best for the residents.
"Everyone who works at the plant has said for years it suffers from great neglect," Hendel said. "The city should start the repair process now. It's the responsible thing to do regardless of who gets the plant."
But spending money on the plant became taboo during the election, starting with mayoral candidate John Marquez's stance that upgrades would amount to corporate welfare for USFilter. To avoid any appearance of conflict of interest, McCoy decided not to present the council with any nonemergency improvement bids until after the City Council chose an operator.
"If it was necessary to make repairs, we would have done it," Turner said. "But the whole world was watching and the administration's credibility was being questioned. We used our better judgment to be cautious."
Councilman-elect Jim Rogers also jumped on the treatment plant bandwagon, announcing he saved Richmond $7 million by suggesting the city take advantage of an existing pipeline instead of upgrading a plant digester, which processes sludge.
At last week's City Council meeting, Mayor Rosemary Corbin called Rogers' claim of saving the city money "absolute baloney." McCoy told the Times nobody knowledgeable about the plant took Rogers' pipeline idea seriously, because each proposer included plans to process the sludge during the transition process.
In addition, the original digester bid actually came to $5.1 million, McCoy said, and the project could wind up costing significantly less.
Postponing repairs could bolster EBMUD's proposal; that agency seeks to close the plant, build a pipeline and process the waste at its facility near the Bay Bridge. Rogers has indicated an early preference for EBMUD.
Disturbing discoveries have heightened city frustrations toward plant management.
McCoy recently terminated plant employees' cell phone account after reviewing Nextel billing statements for about $2,500 a month during the past six months. The statements itemize lengthy calls to locations around the country, including Texas, Florida, Las Vegas and Alabama.
McCoy said the phones were intended to facilitate communication at the plant. The Times called several long distance numbers on the statements and found they corresponded to hotels and residences.
Plant-generated requests for parts also came into question this month when a manager sent a written request for a new pump, indicating it would cost "in the $20,000/$25,000 range." City records show the plant installed a similar pump in April for $5,703.11.
McCoy also said a member of his staff found evidence plant employees were throwing away important parts.
Last month, McCoy told the City Council there were spare parts at the plant that could be utilized for improvements. The next day, McCoy said, a Capital Improvement Program staffer visited the plant and found those items in the dumpster.
Hendel dismissed McCoy's allegations, saying they were unfounded and needlessly divisive at a sensitive time.
"If McCoy has any evidence of malfeasance, it would be his responsibility to recommend the appropriate people for discipline," Hendel said. "If he hasn't done so, it's irresponsible to spread rumors."
Peter Felsenfeld covers Richmond. Reach him at 510-262-2725 or firstname.lastname@example.org.