HomeMy WebLinkAboutResolution 99-188 N.C.S. 09/21/1999
" Resolution No. 99-188 T.C.S.
1 of the City of Petaluma, California
2
3
4 TERMINATING PRIVATIZATION PROCESS AND ESTABLISHING CITY
5 OWNERSHIP OF NEW WASTEWATER TREAMENT FACILITY
6
7
8 WHEREAS, in 1938, the original wastewater treatment processes were constructed at
9 950 Hopper Street;
10
11 WHEREAS, to meet the community's needs and changing regulatory requirements,
12 various upgrades and additions to the wastewater treatment plant were conducted through
13 the 1960s;
14
15 WHEREAS, in 1972, the oxidation ponds were constructed at 4400 Lakeville Highway
16 to provide additional treatment capacity;
17
18 WHEREAS, in 1988, with influent flows exceeding 75% of the permitted capacity of the
19 wastewater treatment facility, and. necessary upgrades to the facility to increase treatment
20 capacity and continue to meet the needs to the community too costly, the City determined
21 to replace the existing wastewater treatment "facility;
22
23 WHEREAS, in 1991 the City executed a Memorandum of Understanding with
24 Envirotech Operating Services (EOS) to design, build, construct, own and operate (20
25 years) a new wastewater treatment facility (Resolution No. 91-107);
26
27 WHEREAS, on July 31, 1991, EOS submitted an application to the California Public
28 Utilities Commission (CPUC) seeking an exemption from CPUC regulation under the
29 California Local Government Privatization Act of 1985;
30
31 WHEREAS, on October 21, 1991, Administrative Law Judge Ramsey determined that
32 the MOU did not meet the requirements of the Public Utilities Code and ordered that "the
33 application is denied without prejudice to refiling after amendment";
34
35 WHEREAS, in February 1992 EOS and the City mutually agreed to rescind the MOU;
36
37 WHEREAS, on June 20, 1994, following a report prepared by Ernst and Young, the City
38 Council adopted Resolution No. 94-156, which directed that the Service Agreement
39 Approach (privatization) be utilized for procurement of a new wastewater treatment
40 facility;
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42 WHEREAS, on June 17, 1996, the City Council adopted Resolution No. 96-163, which
43 certified the Final EIR documents, Resolution No. 96-164, which approved the project,
44 and Resolution No. 96-165, which approved and authorized issuance of the Request For
45 Proposal;
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2 WHEREAS, on July 17, 1996, the RFP was issued to five pre-qualified vendor teams;
3
4 WHEREAS, in January 1997, the City received proposals from Montgomery United
5 Water (MUW) and US Filter/EOS;
6
7 WHEREAS, the Citizens' Wastewater Advisory Committee considered the proposals on
8 May 28, 1997, June 3, 1997, June 4, 1997, July 2, 1997, October 20, 1997, October 30,
9 1997, November 4, 1997, November 18, 1997, and on December 3, 1997;
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11 WHERAS, the City Council considered the proposals on July 7, 1997, September 8,
12 1997, September 15, 1997, September 22, 1997, September 29, 1997, October 6, 1997,
13 December 3, 1997, and December 8, 1997;
14
15 WHEREAS, on January 5, 1998, the City Council adopted Resolution No. 98-1 1, which
16 selected MUW for contract negotiations;
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18 WHEREAS, negotiations with MUW on technical, legal and agreement issues began on
19 January 27, 1998 and proceeded through spring 1999;
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21 WHEREAS, on September 21, 1998, the City Council, recognizing the need for
22 development of a public alternative to the proposed privatization project, approved
23 preparation of the wastewater treatment facility master plan;
24
25 WHEREAS, the objectives of the master plan were: 1) To identify a City owned facility
26 that will meet the City's wastewater treatment goals and needs, and 2) To identify a City
27 owned facility that can serve as a benchmark, publicly owned facility for comparison with
28 the proposed privately owned wastewater treatment. facility;
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30 WHEREAS, on June 7, 1999, Brown and Caldwell presented the master plan to the City
31 Council;
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33 WHEREAS, on June 14, 1999, MUW presented its proposal for a privately owned
34 wastewater treatment facility to the City Council;
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36 WHEREAS, on July 19, 1999, the City Council considered and discussed the wastewater
37 treatment facility project and determined that the City would no longer pursue
38 development of a privately owned wastewater treatment facility. Reasons cited for this
39 determination included, among others:
40
41 ~ Risk of Change Required Over 30-Year Contract Term. Changes in the
42 City's needs may occur during the 30-year life of the contract. The City is'at a
43 disadvantage by being able to negotiate with only one party for changes in the
44 facility's capacity.
45
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1 ~ Requirement of Fair Market Value Purchase. In order for MUW to retain
2 tax ownership, the City's option to purchase the facility at the end of the
3 contract term would have. to be at fair market value. The price of the facility
4 could not be fixed in the contract, but would depend on the value of the
5 facility at the time of the exercise of the option, thereby putting the City and
6 ratepayers at risk of having to pay for part of the plant twice.
7
8 ~ Lack of City Approval of Design. In order for MUW to retain tax
9 ownership, Section 4.8.1 of the agreement limited the City's participation in
10 the design process.
11
12 ~ Third Party Services. In order for MUW to retain tax ownership, Section
13 5.2.4 would allow the Company to provide services to others (in addition to
14 the City) at the Project Site.
15
16 ~ Inability to Agree On Contract Language. After extensive negotiations
17 between the City and MUW, specific contract language on the above and other
18 critical issues could not be agreed upon.
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20 NOW, THEREFORE IT BE RESOLVED by the Petaluma City Council that:
21
22 1. The City hereby rejects the proposals received from Montgomery United
23 Water and US Filter/EOS in response to the Request For Proposals; and
24 2. The City's Request For Proposals to procure a new wastewater treatment
25 facility that is designed, constructed, financed, owned and operated by a
26 private company (privatization) is hereby terminated; and
27 3. The City of Petaluma shall proceed to consider the design and construction of
28 anew wastewater treatment facility that will be owned by the City.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by ~he'""'~~` a o
Council of the City of Petaluma at a (Regular) (d[~oxm~kX~l~) meeting
on the .._.21~t day of _..-•--•--..S~Itt~llllzQ.r...-•------............., 1s..~.;I., by the
following vote:
it At
AYES: Healy, Torliatt, Cader-Thompson, Hamilton, Maguire, Vice Mayor P~eller, Mayor Thompson
NOES: None
ABSENT: None
ATTEST: .....l...--
City Clerk 99-188 NCS Mayor
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IU-R5 Rcs. No . N.C.S.