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Harris goes private for waste-water operations |
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By Clark Natalie
The Harris city council approved contracting with PeopleService, Inc (People) to operate the Water Treatment Plant (WTP) and Waste Water Treatment Facility (WWTF) at a cost of $118,400 per year for the next five years in an effort to save approximately $44,054 each year.
A comparison was made of what the cost would be if the city used the existing employees to run the plant, and fund all operating costs, including hiring a part-time Class B operator and the cost of People running the facility, picking up some of the costs. The proposal, as originally presented, showed that City Maintenance Supervisor Mike Kriz would spend 40 hours per week operating the WWTF and the present assistant maintenance worker would spend 20 hours operating the WTP. A part-time Class B operator would have to be hired.
Mayor Rick Smisson had contacted North Branch, to obtain an estimated cost for their Class B operator to run the Harris facility on a part-time basis. The estimated cost would be $20,800.
This amount would cover four hours twice a week and would not include emergency situations. According to the mayor, North Branch said they would not be interested in providing this service on a long-term basis, and would expect the contract to only be for six months.
The city also estimated they would have to hire an additional maintenance person, because so much of the present employee’s time would be spent operating both plants. This position was based on 40 hours at $14 per hour, with an annual estimate cost of $37,775 with all benefits and costs.
An additional cost of chemicals, Internet, testing, and start up training brought the total annual estimated cost of the city personnel running both plants to $220,229.23.
This cost was compared to People running both facilities. Their contract would include most of the additional costs, such as chemical, computer, etc. The amount they proposed was $118,400.
The proposal as presented, retained the new maintenance position of 40 hours at $14 per hour. This brought the annual cost to $156,175.27, for a savings of $64,053.96.
The proposal as originally presented called for the elimination of Kriz’s maintenance supervisor position and the existing assistant maintenance position, as both individuals were being paid an hourly rate which included the two operating licenses the individuals hold. It was thought that these licenses would be necessary to operate the two new facilities. By contracting with People to operate the facilities, the operating licenses would not be used. The proposal would cut additional costs by having only the new $14 per hour maintenance position which is less than the existing employees are being paid.
PeopleService, Inc. is a contract operator for water and sewer plants. The company headquarters is in Omaha, Neb., and was incorporated in Sept 1996. People presently has 111 clients in five states. Of the plants they presently run, 47 are mechanical, similar to the new Harris WWTF and have wet weather flows ranging from .05 million gallons per day (MGD) to 5.0 MGD.
People has operated the Hinckley plant for approximately 15 years. The contract with Hinckley originated similar to how Harris is starting up.
When People took over running the Hinckley plant, they hired the existing city employees to work for People and operate the plant. Jerry Williams, the contract employee that is stationed at Hinckley was at the meeting. Williams expressed the good working relationship People has with their employees. The company is employee owned. Williams had nothing but good things to say about People.
In addition to the individual plant operators, People also has a Regional Manager, based in Arlington, Minn. The regional manager coordinates what has to be done at each plant. All operators in each state work as a team. Sometimes, when needed, four to five personnel may be on site to tackle a problem. But each site has someone checking on all aspects of operation at least once each day. People cross trains the operators so that they can run each others’ plants if needed.
One aspect that is included in the contract proposed by People is dealing with the disposition of the bio-solids. This is the sludge that has to be dealt with. People has been able to locate farms where the biosolids can be spread. Because of the nitrogen in the biosolids, generally the farms will take the biosolids at no cost.
People also is able to cut costs by buying supplies, such as chemicals, in much larger quantities than cities can. They will buy them by the ton, instead of by the case.
Peoples had proposed hiring Kriz to run the Harris WWTF and WTP. Kriz is not interested in taking a position with People. People will then hire someone else to operate the plant. People requires that the operator live within 30 miles of the plant, and if they live within 10 miles, People will provide a company vehicle.
Councilman John Pelant felt that it was a necessity to retain Kriz as maintenance supervisor, even if People was awarded the contract. Pelant thought that the city was so “screwed up” that it was necessary to have someone with all of Kriz’s skills to keep the city functioning. In addition to being an operator for the city’s heavy equipment, Kriz has an intricate knowledge of all aspects of the city and how they operate.
City resident Dave Hutcheson said, “Mike is invaluable.” The extra cost of retaining Kriz would be money well spent.
In the end, the council chose to contract with People to operate the plant and also keep Kriz as a city employee. Smisson suggested that the supervisor position was probably not needed and could be eliminated. Smisson estimated that 60 percent of Kriz’s time now was spent on the WWTF and WTP, and with that eliminated, the supervisor position would not be needed, and may not require 40 hours per week.
Pelant pointed out that Kriz should retain his present salary and supervisor position, as their will be part-time employees that Kriz will supervise. Also, any contractors that were hired by the city, Kriz would make sure that the job they were hired would be completed. As far as hours spent, Pelant thought that without the time spent at the facilities, maybe Kriz would only put in a 40 hour week instead of the excessive time he now spends.
Kriz will retain his present position, title and salary. This dropped the potential savings by approximately $20,000 per year.
City Attorney Peter Grundhoefer gave his analysis of the contract agreement. Grundhoefer said that the contract cost can only be increased in two ways. The first, is that the contract is tied to the Consumer Price Index (CPI). As that goes up, People can increase their contract rate at the same percentage. Over the past five years, this has been around three percent. The second way to increase the contract amount is if there is a substantial increase in flowage. If the flowage increases by 20 percent in a 12 month period, the contract can be increased. It was pointed out that if the flowage increases, it will be caused by new customers coming on line, which will pay additional funds to the operating costs.
Grundhoefer expressed concern about the five-year length of the contract, as there is no way to cancel the contract except for breach of contract. Grundhoefer did say most attorneys are concerned about entering any contract without some way of getting out.
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