Peshtigo To Seek Other Bids for Treatment Plant OperationIssue Date: July 10, 2013
A partnership of many years standing between the City of Peshtigo and the paper mill that is the largest user of the citys wastewater treatment facility could be about to end. The Water and Sewer Committee voted unanimously on Tuesday, July 9 to seek bids from other firms that may want the job of maintaining and operating the wastewater treatment plant (WWTP). BPM, Inc. and the mills predecessor, Badger Paper Mill, have handled the job since the original aerated lagoon system was built in 1976 as a jointly owned facility.
The options of negotiating further with BPM, Inc. or setting up a system designed to lead to full city operation of the plant also remain open.
The decision to at least get prices from outside contractors comes as a major rebuild of the system nears an end, and as new user rates show up on water and sewer bills for the first time.
Because the wastewater treatment utility had been showing a loss for several years, the city not long ago approved a significant user fee hike that meant an increase from $181.40 per year to $286.20 per year for an average residence.
Industrial use fees include provisions for things like suspended solids content. BPM, Inc. pumps more wastewater into the system than the rest of the city put together, and like every other user, pays a monthly water bill.
Completion of the rebuild is slated for the end of August. So far costs total approximately $2.5 million. According to Project Engineer Chris Kaempfer of Kaempfer & Associates of Oconto Falls, that should be the correct number, or at least very close, barring any more unpleasant surprises.
The DNRs Clean Water Fund has approved a low interest loan for long-term financing, and several grants will offset a small percentage of the price. Savings are already being seen. The electric bill dropped from about $11,500 a month to $6,500 after parts of the new system were put into use recently.
Under the June 11 proposal, BPM, Inc. proposed charging $22,610 per month to operate and maintain the wastewater treatment plant and lift station, a hefty price increase when compared to the current operating agreement at $14,440 per month, with BPM, Inc. paying the power bill.
That proposal was not well received by the committee, and on June 17 BPM, Inc. General Manager Jim Koronkiewicz submitted a revised proposal with a base price of $725 per month for operating the main waste water lift station and $18,975 for waste water treatment plant, a slight reduction from the initial proposal. There would be the equivalent of 3.3 full time employees, with different personnel responsible for different tasks. Services of an engineer are included. He declined to get into details of compensation for specific employees. The proposal included some special provisions that could affect the bottom line, and other changes to both the previous proposal and the existing contract that would have run until the end of 2015.
We were losing money, we cant continue that process, Koronkiewicz told the committee. He said when preparing for their new proposal BPM people had analyzed all expenses connected with running the WWTP, and found that many costs were not covered in the contract.
We as a manufacturing entity are in business to make money, Koronkiewicz said, adding the owners directions were: Either do not lose money or do not do it!
He expressed hope they could start working under the new contract within a month or so, but said in the meantime BPM, Inc. will continue to honor the existing agreement.
City Engineer George Cowell said in the past BPM, Inc. paid for electricity, propane, chemicals, and sludge hauling, all of which will now be paid for by the city, and this would shave about $100,000 from the contract costs.
We analyzed our expenses carefully, and the city can either accept our offer or reject it, Koronkiewicz replied.
We have three options, said Committee Chair Tom Gryzwa. Those would be to either accept BPMs proposal, reject it and look into alternatives, or leave things as they are.
Cowell suggested there are two ways to run the plant, one being to contract with an outside firm, and the other to run it with all city employees. He said there are firms out there who would send licensed operators to work with city employees until they were trained and ready to be licensed for a phased-in city takeover.
We just went with a rate increase and well have to go right out with another one if we accept this! declared Fred Meintz. This is more than $100,000 per year increase! My feeling is, with these numbers right now...we need to look at all the options. Meintz added the city and the mill were locked into a contract that neither could get out of until Dec. 30, 2015 had it not been for changes brought about by the rebuild, and reminded everyone the mill, not the city, had proposed the 10-year agreement.
Gryzwa suggested they could negotiate in closed session with BPM, and Koronkiewicz felt that would be helpful, since there are details he could not discuss in open meeting. He added BPM, Inc. will be spending over half a million dollars and did not feel the proposed price was excessive.
Committee members noted the BPM, Inc. proposal details should not become public if they were going to seek other proposals. There was a warning from a member of the media that whether the information was published or not, companies wanting to submit bids had a right to ask for copies of the offer since it had been distributed and discussed at an open meeting. Committee members felt the specifications they developed probably would not compare exactly with the BPM proposal.
If you run a business you look at making money. That is what you are expected to do, committee member Dan Seymour commented, adding, Our job is to consider what is best for all the residents of this city.
If we dont go out for proposals were never going to know whether BPMs proposal is good or not, Meintz suggested. Im not saying Jim (Koronkiewicz) is wrong, Im just saying we should look into it. George (Cowell) has looked into this quite a bit and he has a handle on it. He made a formal motion to draft specifications for obtaining operating proposals for the plant.
This is not anything against BPM, Gryzwa observed. This is just something we have to do.
Seymour asked who was to draft the specifications and decide what would be in them. The task was assigned to Cowell, who had already been doing some research into contracts for similar communities. Meintz was sure the job could take a while, and saw no way the work could be done within the month that Koronkiewicz suggested. Seymour suggested a five year term, not 10, and wanted proposals for the option of phasing in direct city operation with city employees as well.
In other action, the committee approved a change in the cost share payment to BPM, Inc. under the operating agreement so they are operating under the proper flow rate from June through September. The rate will be $14,440 per month.
The Clean Water fund formally acknowledged Peshtigos acceptance for funding. The city has until Feb. 8 to finalize the loan/grant agreement. Kaempfer said he is on top of that. Earlier in the meeting he had said they are assembling copies of all related e-mails and photos of the ongoing project and will assemble them as part of the project report.
Gryzwa commented by February they will have paid off $100,000 of the short-term financing and will have that much less to finance.
Thats unless the change orders keep coming in, Meintz grumbled. He has been concerned about change orders that come in at almost every meeting boosting the total cost of the project ever higher. Kaempfer assured him there should be no major change orders after this meeting.
Meintz earlier in the meeting had cautioned they should be ready to go ahead with the 20-year financing on short notice in case interest rates start rising, and there was general agreement.
Kaempfer said the city is guaranteed $77,883 in cost forgiveness, with more possible if other funded projects come in under budget.
Clerk/Treasurer Mary Ann Wills noted a check for $62,268 has already been received from WPS Focus on Energy.
WPS has approved a $62,268 Focus on Energy grant, along with a separate $25,000 grant which could be doubled to $50,000. He said WPS would like a photo op of them presenting a big check to the city.
Krizenesky noted last week the city received the real $62,268 Focus on Energy check, and Wills confirmed that.
The days agenda already included a $35,850 contract revision for Kaempfer & Associates connected with extending contract deadlines until the end of August.
Seymour wondered why part of the Kaempfer proposal was to be charged on a time and material basis, and the remainder at a flat rate. Kaempfer said they felt that would be more fair to their company and the city, since the scope of the work cannot really be determined. They will be dealing with several agencies and several contractors, and much depends on what you find at the treatment plant. Other items, mainly administrative, they know what the cost will be and listed them accordingly.
Will this last one (The sixth change order for Kaempfer since the project began) take care of everything? asked Gryzwa.
Kaempfer said it will, barring something unusual. He noted the construction will be completed in five to six weeks, but the Clean Water Loan Fund work will continue.
At Seymours suggestion, a not to exceed provision was added to the contract, item prices are not to exceed the estimate without specific committee approval.
Council will be asked to approve the contract change at their meeting on Tuesday, Aug. 6.
A change order extending the deadline for Elmstar Electric to the end of August was approved with no change in contract amount. Another change order decreased the Elmstar contract by some $10,000. The contract included payment for electricity for the project, but the city has been getting the bills directly from WPS and paying them. Since electric costs came in lower than expected, Kaempfer said, the city saved an extra $500.
Koronkiewicz distributed a progress report on the WWTP inspection list repairs and agreed next month will be a good time for the Committee to tour the facility so we can all see whats happening and together decide which direction we want to go. The meeting will start at 9 a.m. Tuesday, Aug. 13 and end with the onsite WWTP inspection.
Kaempfer noted the last time he was in the chlorine room he noted a nasty odor, which has been identified as Magnesium Bisulfate from an open air tank, which he felt was causing the corrosion. He read from a book on chemicals the effects of skin contact with the chemical, as well as effects of breathing it and advised,I dont think just sealing that open tank is a good idea. it should be replaced with a closed tank.
I will have Gary (the lead WWTP Operator) check into it and report back, Koronkiewicz told him.
Cowell suggested the operator also should check the hand rails on the main aeration basin. He said they still are disjointed, without connections between two pipes. Koronkiewicz said he will look into it.
Near the start of the meeting the committee unanimously approved a proposal from Hawkins, Inc. of Fond du Lac to treat and restore the filters in two of the citys wells, rather than replace the filter material, which was the other solution suggested by Cowell as a cure for foul tasting water from two of the citys four wells. Cost will be $8,484.94 for well no. 2 and $4,602.95 for well no. 3, provided they are done at the same time. Cowell recommended the chemical treatment explained by Hawkins representatives Jason Amsler and Scott Kinsella as being far, far less costly than replacing filter material.
The process so far has been used on wells in four other Wisconsin municipalities. Meintz was concerned that the committee had only the one price and proposal to consider. He was told no other company in Wisconsin does the chemical cleaning of water filter materials.
Cowell said Hawkins is the company that supplies all the citys chemicals and said they have been very helpful with solving problems in the past, which is why he talked with them on this problem and did not seek alternate proposals.
Down time for each well is expected to be three or four days. Once the filters are backwashed and fresh, water will be tested again before it is allowed to enter the citys water system. The Hawkins spokesman said on rare occasions the process needs to be repeated.
Mayor Al Krizenesky asked if the second treatment is free. He was told the labor will be free, but the city would need to pay for the second dose of chemicals. The cleaning can be done almost indefinitely, reusing the same filter materials for years provided they have not gotten too bad.
Kaempfer asked about DNR approval for the procedure, and was assured the treatment is certified and approved. The backwashed material and the water that carries it does not go into distribution, it is disposed of as wastewater.
In another committee agenda topic Steve Motkowski is to be compensated for the $350 he paid to have his sewer line televised. Motkowski explained he had tried several times to clean out the lines but nothing worked. He spoke with the city and was told the main was clear, so the problem was his. Then he called Hashimoto and had the cameras go down. They found no blockage. He then had Biehl dig up the street to determine where his sewer line might be blocked and they found roots growing from a break in the Y connection, which Cowell agreed is the citys responsibility. The city took care of the Biehl bill, but Motkowski felt the Hashimoto expense also was unnecessary. Gryzwa commented he liked it that Motkowski had followed proper procedure in dealing with the problem and the vote was all in favor of paying him.
There was brief discussion on finalization of the Clean Water Fund application for the wastewater treatment plant project.
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