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Gresham City Council considers operations of wastewater plant

Officials recommend Gresham take over when private contract expires -

FILE PHOTO - A sewage plant in Gresham.The Gresham City Council is mulling a proposal on whether the city should take over operation of its wastewater treatment plant, which would increase responsibility but also provide more cost savings over a renewed contract with Veolia, the current operators.

The contract with Veolia will expire on June 30, 2017, and any new deal brokered would have an eight-year maximum. A third option of issuing a request for proposals (RFP) was rejected because the lack of competitive companies in the area made it a costly and unnecessary option, the presenters told council during the Tuesday night, Sept. 13, meeting.

“This is a council decision. Whichever way you tell us to go, I think it’s great for the city either way,” said Steve Fancher, director of environmental services. “Regardless, we are saving the city ratepayers money.”

The wastewater treatment plant was constructed in 1954 and treats an average of 13 million gallons of sewage every day.

It was the first net-zero-energy plant in the northwest, meaning it produces about the same amount of electricity as it consumes. Veolia has been the contractual operator of the plant since 2005.

An earlier council meeting rejected Veolia’s first option for renegotiating with the city.

Their new offer that the city is debating whether to accept will reduce the service fee by $425,000 per year over the current contract.

It also adds a condition that will cap Veolia’s cost of minor maintenance at $250,000 a year — which is around what the plant has averaged.

“It’s a tougher decision, because the margins are closer with this new offer,” Councilor Jerry Hinton said.

After accounting for all of the fees and expenses related to both options, accepting the Veolia offer would cost $3.9 million while city operation would be $3.5 million.

Both are less than the $4.3 million that the current contract costs. Even using a worst-case scenario when looking at future cost projections, city operation would still be the cheaper route.

“I am pretty adamant towards city operation,” said Alan Johnston, senior engineer. “We have studied for the last year and a half, and we have given some conservative numbers to make sure we don’t over-promise.”

If council elects to have the city take over operation of the plant, the next steps will be to hire a management team around the start of 2017 that would be comparable to what Veolia has.

Currently there are 17 Veolia and three city employees working at the plant, and the plan is to retain many of the same workers if the city takes over.

One of the concerns raised by the council about city operation included whether future technological advances would cause the plant to fall behind and accrue more costs without the expertise and knowledge Veolia brings to the table.

According to Fancher, part of the cost estimates for city operation includes a $100,000 budget for consultation fees, where advice and support could be given if needed. There is also the option of going back to the table and renegotiating with Veolia.

Whichever option council decides, the option will provide immediate and long-term cost benefits for Gresham customers.

“If this is savings to rate payers and the community, with the same level of service, then the decision has been made for me,” Councilor David Widmark said.

The council will make its final vote on the matter at its Oct. 4 meeting.