Sewer Contract...

Anonymous: 4:53 asked about the vote for the sewer plant.

This is so important that I wanted put the answer as a separate topic...here is my response.

Well, you have asked the million dollar question. Or should I say the $82,000,000 dollar question. What can we do? I have a few ideas, but ultimately I don’t think that I can do anything about it by myself.

I feel discouraged that Bert Rapp didn’t ask the Council to postpone entering into the contract until after the public had voted on the rate increases. Talk about a potential lawsuit! An $82,000,000 contract and they couldn’t wait a few weeks!

We had recently learned about a few alternative technologies that would have been much less expensive to operate and maintain. I mentioned the Vertreat in a separate topic.

When Bert Rapp and I discussed it he said he would research it and called Dr. Eugenio Giraldo, resident engineering expert at American Water. Dr. Giraldo threw out some weak objections. OF COURSE, he’s not going to endorse a COMPETITOR’S product! There’s $82,000,000 at stake! Why would he give an objective opinion?

When the engineer at the council meeting talked about Vertreat, he said that it wasn’t considered because it was only for industrial applications. That is untrue. The Vertreat is being used in Seattle, WA. and Homer, Alaska, for municipal wastewater treatment here in the US and extensively in Japan and Europe. Again, they have $82,000,000 reasons to steer us away from Vertreat.

Their well coordinated comments worked on the Council members and probably most of the public. The horror stories about Los Osos were also very effective.

When they were approving the additional $30,000 to Hawkins, Delafield and Wood do you remember hearing Roger Myers’ remark about lawsuits in Stockton(approving sewer plant contract before public vote)? It probably went over a lot of people’s heads but the fact that the City Attorney mentioned it and the City went ahead and approved the contract anyway is unbelievable. Was this what the Executive Session “anticipated litigation” was for? Just wondering. Maybe it was for the eminent domain.

I’m not sure what the totals are that we have spent for HDW to write up a treatment plant contract for us. Its $100’s of thousands. And, it may be close to a million before we’re through - to write a contract. Come on - HDW has been doing this for years! They have written this same contract for municipalities in California and other states. You would think that there would be an economy of scale or some boilerplate by now that just would need a little amending. But, no, they need that $235 per hour to come out from New York and pick up their checks. I’m also disappointed in Cecilia Cuevas’s gratuitous sympathy for how hard they are working. Producing a big pile of documents to make it look so is an old trick.

Check out this report by the Massachusetts Inspector General on this DBO process and using HDW.

Here’s another interesting document I found. It’s a lawsuit in Connecticut that HDW was involved in. You’ll have to read it yourself but basically they were sued by Connecticut for negligence. They were involved with illegal Enron transactions… “It failed to advise CRRA that the Enron Transaction was illegal, unauthorized, and exceeded CRRA’s statutory authority;”

Okay, so what are my ideas to save money for the ratepayers?

1. Use SRF (State Revolving Fund) loans. The interest rate for the bonds we just authorized is xxx(sorry, I have to make a correction here. I don't know what the bond interest is). Why aren’t we using the SRF (State Revolving Fund) loans for 2.5%? In my opinion and research it appears that the State requires competitive bidding rather than the DBO process that we had to get special legislation for. Who knows if we can even get the bond financing though. A “value engineering study” needs to be done before we can get loans. The type of loan we’re getting is a “COP” or Certificate of Participation. "This form of financing can be used by the municipal or government entity to circumvent restrictions that might exist on the amount of debt they might be able to take on." Also, the revenue stream from our sewer bills will be going to pay the bond holders. I think another reason that they wanted to have special counsel involved was to make sure they could get through the Prop 218 requirements.

2. What about the grants? There is a lot of grant money available. Does the state withhold grants for cause?

3. Stop approving the addendums to contracts for additional sums. Addendum #22 and #23 to Boyle Engineering were approved Tuesday night. Is there a limit to addendums? Not sure which Addendum # this was for Hawkins Delafield and Wood. These are like open ended streams of cash to these companies. And it’s not going to stop now just because we have a contract. HDW has already started a new invoice. Before this is all over the taxpayers of this town will be fleeced down to the bone…with no end in sight.

For that reason, maybe we should vote against the rates. And don’t forget we still have the chloride issue. The new plant that we will be paying $82,000,000 for will not treat chlorides. That’s why we have to put the recycled water in the parks and playgrounds, if the FUSD agrees to let the City do that. And get this…the City expects to charge the FUSD the same rate for recycled water that we are charging for potable water. I think that may be part of the formula for rates. Not sure though. An additional $35,000,000 will be required to soften the water. I want to talk about chloride reduction at a later date.

I’m not saying that Vertreat or the Micromedia that Bert mentioned are better than Membrane Reactor Technology. I am just saying it has not been investigated properly.

We did not need to award the contract before the vote by ratepayers. Oh, just one more thing. This DBO process is known as Privatization of municipal water systems. That means that American Water will literally own our plant.