Crescent City is set to contract with a private company for sewer plant operations beginning in early September.
Meeting July 15, the City Council approved a resolution for a $110,000 budget amendment, bringing the budget cap for three months of contracted wastewater treatment plant operations to $165,000.
The council initially had approved up to $50,000 for a month-long contract with Operations Management International (Jacobs Engineering).
Needing immediate management services, city officials on June 17 temporarily contracted with Jacobs while a five-year contract is hammered out. The short-term agreement was for on-call, as-needed sewer plant operations and other professional services.
The council unanimously approved the temporary contract.
“This is a big contract with a lot of different nuances in it, so we didn’t want to rush anything,” City Manager Eric Wier said. “We do anticipate bringing it back to the council Aug. 5.”
Mayor Blake Inscore said the $165,000 has less impact because the city currently isn’t paying a salary for a chief operator at the sewer plant. He said the additional cost is an investment, securing the smooth transition of wastewater treatment operations from public to private services.
“Even if we spend it all, it’s not having that level of an impact on our budget because we’re not paying that salary and those benefits during this period of time,” Inscore said.
Wier added that five unfilled positions at the plant equate to $20,000-$25,000 a month that’s unused from the wastewater treatment budget.
In July, The Triplicate reported a unanimous Crescent City Council decision directing staff to draft a contract with Jacobs Engineering for operations, maintenance and management of the wastewater treatment facility.
The move followed an extensive report from the city manager and staff, as well as a three-hour council workshop.
City officials were presented with three options by their staff:
1. Running the plant as it stood
2. Hiring Jacobs to run it
3. Or running it using Jacobs’s business plan.
The staff’s recommendation was to go with Jacobs; the council agreed.
Jacobs also runs the treatment plant in Brookings.
Wier told The Triplicate that increasing wastewater treatment regulations are making the plant less cost-effective for city staff to operate. He said that 20 years after the plant was built, the city has been chasing after costs, regulations and staffing.
The city manager added that wastewater treatment plant operators are in high demand due to their specialized work, noting that Crescent City had been losing operators to other employers such as Pelican Bay State Prison.
He said losing specialized personnel leads to a lack of institutional knowledge, hobbling the city’s effectiveness.
Hiring a chief operator for the plant at a competitive salary level would have led to a rate hike for residents to cover the projected additional $30,000 annually above the current salary standard, according to previous Triplicate reporting.
Without a properly certified chief operator at the sewer plant, there would be the risk of public health hazards and fines from the Regional Water Quality Control Board.
Wier said the city has struggled with planning and executing capital improvement projects, and the sewer enterprise budget is suffering from a deficit projection in the 10-year financial plan completed in 2018.
He said the city is committed to exploring options that would not lead to cost increases, noting rising inflation against more than $4 million in grants for the city plus five years without sewer rate increases.
The city manager said there was a trend for cities to contract for wastewater treatment operations.
That had been considered by city officials this past year. Last September, the City Council directed staff to prepare a request for proposals regarding operations, maintenance and management of the wastewater treatment plant. A request for proposals was approved in December, and two firms were interviewed in April of this year.
Wier estimated savings of $1.5 million under a five-year contract with Jacobs Engineering to run the sewer plant. As part of that contract, the current employees would be hired by Jacobs.
Wier said that because plant operations were among other duties of city staff, the contract would free up people to do other work.
He and Public Works Director Jon Olson emphasized that the decision was not a reflection of staff performance.
Dennis Burrell of Jacobs Engineering said the contract was a good fit for his company. He said Jacobs has 15 responders who could reach Crescent City within a few hours if any emergencies were to arise.
Burrell presently is heading up sewer operations following the resignation of the city’s chief plant operator.
Wier said that while the city remains in control of the plant, Jacobs assumes the risk of running it. He said equipment failures, warrantee protections and human resource risks are also assumed by Jacobs.
Burrell said Jacobs would bring to the table resources that go beyond operating and managing the plant, such as funding, construction management, rate studies, permitting and design expertise.
Crescent 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. Leaver predicted a switch to contracted operations would create an overall $128,000 boost to the general fund.
A staff report said the expense of hiring contract operators would be approximately $26,000 to $34,400 a month per operator or maintenance staff, significantly higher than the cost of a staff operator, but not outside the range of typical fees for contract operators.