Tony Reed
Del Norte Triplicate

Following an extensive report from City Manager Eric Wier and staff, along with a three-hour workshop days before, Crescent City Council unanimously directed staff to draft a contract with Jacobs Engineering for operations, maintenance, and management of the wastewater treatment facility.

Wier explained staff looked at three options: running the plant status quo, allowing Jacobs to run the plant and running it using Jacobs’ business plan.

In the end, staff recommended going with Jacobs’ and the council agreed.

By phone the following Day, Wier explained in the treatment plant and wastewater treatment industry, increasing regulatory requirements are making it less cost effective for city staff to operate the plant. He said that in the 20 years since the plant was built, the city has been in a state of catching up with costs, regulations and staffing.

Meanwhile, the job of a treatment plant operator is very specialized, placing them in high demand. Wier said the city has been losing treatment plant operators to other areas, including Pelican Bay State Prison.

He said when the city loses such specialized personnel, that lack of institutional knowledge keeps the city from keeping up.

That market rate also means the city would need to raise wastewater treatment rates to the residents in order to pay for an operator at a pay rate that would retain them.

To hire a chief operator at a competitive rate would come to about $30,000 more annually than the current city salary. Adding the debt service on the plant leaves the city struggling with potential rate increases, he said.

“The city has had difficulty in planning and accomplishing needed capital improvement projects, and the Sewer Enterprise Fund is suffering from a financial structural deficit as shown in the 10-year financial plan completed last year.

“The city has been committed to looking at every possible way to operate the plant the way we need to without making increases,” he said, noting the city has received more than $4 million in grants to keep costs down but also has to compete with inflation. He said rates haven’t gone up since an approximately 2 percent increase in 2014, but the inflation rate has gone up about 8 percent.

Wier noted a trend in cities has been to contract out the operation of treatment plants. The idea was floated to the City Council last year. Jacobs also runs the treatment plant in Brookings.

“Council directed staff on Sept. 17, 2018 to prepare a request for proposals for contract operations, maintenance, and management of the WWTP,” a staff report states. “The purpose of the RFP was to answer the question, ‘Is contract management a more efficient and better way of operating the WWTP?”

A request for proposals was approved in December, and two firms were interviewed in April.


Wier said the estimated savings to the city over the five-year contract would be about $1.5 million to have Jacobs Engineering run the facility.

As part of the contract, all current employees would be hired by Jacobs. Wier said since plant operations were among other duties of city personnel, the contract would also free up people to do other things. Wier and Public Works Director Jon Olson stressed the decision in no way reflects badly on those employees.

Wier said the contract will put the city in the position to maximize its abilities and keep costs down while preserving the treatment plant.

Dennis Burrell, of Jacobs Engineering, said the contract is a good fit for the company. He said the company has support offices in Redding and Corvallis. He said the company also has 15 responders who can make it to Crescent City within a few hours to deal with emergencies at the plant, such as flooding or other issues.

Wier added while the city gives up no control of the plant, Jacobs assumes all the risks of running it.

“Through a contracting relationship, we take on a lot of the risk that is within our scope,” he said, mentioning the possibility of budget overruns, “We give you a price and if we don’t manage that well, that’s on us, not on you.” Equipment failures, warrantee protections, and human resource risks are also assumed, Wier said.

Burrell said Jacobs will bring resources beyond operation and management of the plant, including funding, construction management, rate studies, permitting and design expertise.

He said the company will work to protect the city’s assets in the best preventative and predictive way possible.

Costs, impacts

City Finance Director Linda Leaver said switching to Jacobs would result in a savings of almost $90,000 in the first year and $117,000 the following year, compared to the status quo budget.

“If we switch to contract operations, there are impacts on the rest of the city funds,” she said. “A lot of this has to do with how we allocate labor for administrative personnel and internal services like IT, building maintenance and those kind of things.”

Leaver predicted a switch to contracted operations would create a $128,000 impact to the city’s general fund.

“Basically, what that represents is people and internal services that, right now, are budgeted to the sewer fund which would then be covered by Jacobs,” she said. “So those people would come back into the rest of City operations, and they... instead of working at the treatment plant, would be doing things like working on street lights, maintenance at the pool, doing street maintenance, working in the parks, things like that.”

She said the benefit of the contract is that the city would receive an additional $128,000 worth of time and resources dedicated to other city needs. With some shifting of positions in plant and city maintenance, another $47,000 could be saved, leaving an $82,000 impact on the general fund. She said that further savings can be realized whenever staff leave the city, by reallocating positions to other areas. The city also expects to see some income from special events, grants and other plans, thereby reducing the impact further.

Temporary help

As a matter of immediate need, the city also entered into a temporary contract with Jacobs while the five-year contract is being drafted.

As stated in the previous action, turnover at the plant is making it difficult recruiting qualified personnel, leaving a the plant operating with a tiny crew. The chief operator has resigned, his last day to be in the first week of July.

“In order to ensure that the city can meet plant staffing needs, staff recommends entering into a professional services agreement with Operations Management International, Inc. (Jacobs Engineering) to provide temporary staffing,” said staff reports. “The agreement is for on-call as-needed plant operations or for other professional services that the City may require. The City intends to utilize Jacobs immediately.”

Since Jacobs has the staff to fill vacancies quickly, staff recommended the immediate contract.

“The expense of hiring contract operators will be approximately $26,000 per month to $34,400 per month per operator or maintenance worker. This is significantly higher than the cost of a regular operator but is not outside the range of typical fees for contract operators,” said staff reports. “Due to the unfilled positions at the WWTP, the current fiscal year’s budget is more than sufficient to cover this cost for June.”

The council unanimously approved the temporary contract. The five-year contract will soon return to the council for consideration.