TAWAS CITY – Following a special meeting on Jan. 27, the Tawas City Council took action at their regular meeting on Feb. 1, regarding operations of the Tawas Utilities Authority (TUA) wastewater treatment plant (WWTP).
It was during the special meeting when they gave consensus to consider self-operations of the plant in the future, but to continue with contract operations with an operations company until the WWTP upgrades are completed. After that time, the council may consider a different arrangement.
City Manager and TUA Board Member Annge Horning said that if official action were taken on this, it would give her and Mike Russo a firm decision to bring back to the TUA Board. Russo is a council member and represents Tawas City on the TUA Board.
Therefore, the consensus from the special meeting was made into the form of a motion during the council’s regular meeting, and it was approved 7-0.
The TUA is a joint venture among East Tawas and Tawas City, to operate the wastewater treatment and collection system. The TUA currently contracts with Fleis & VandenBrink (F&V) to run the WWTP.
Horning informed the council that, earlier in January, the TUA Board had a special meeting to review responses to a request for proposals (RFP) for operations of the WWTP. Four different companies replied and the board voted to accept a proposal from Inframark, headquartered in Pennsylvania. The board has asked the company for contract language, which will be approved at a future meeting.
The four proposals are as follows: F&V Operations and Resource Management, $393,633; Mead & Hunt, $536,000; Operations Services, Inc., $434,456; and Inframark, $408,734.
Along with the RFP topic, Horning advised that the TUA also agreed to post accepting applications for their own employees to staff the plant. “We have a couple of options to weigh – either self-staff or hire with a contract company. But either way, our relationship with F&V Operations will be coming to an end at the beginning of April.”
Tawas City officials came to their decision on Feb. 1, after discussing the matter at length during the Jan. 27 special meeting.
Horning reminded the council of the RFPs which were issued for operating the plant, and that a new company will be brought on. “However, along with that, there’s been a desire to have the TUA self-staffed, where the TUA would have their own employees and their own manager – similar to like the police authority was. And then they would be directed by the TUA Board.”
She said this is what she wanted to discuss with the council, adding, “I have not been in favor of that model. Mike has some concerns with it, as well.”
But Horning said this is something which continues to be brought up and, since she represents the council, she wanted their thoughts on whether they would like to change the operations. “Because I’ll certainly change my position at the TUA on that.”
She said her primary concern is that, when there’s an operations company, they’ve got layers and layers of employees. So, if something happens to somebody at the plant, they’ve got other staff they can pull from to bring them in. “Where, if we have our own employees there, that’s not the case.
“And finding qualified people is a concern for me too,” she continued.
Horning said she reached out to Sault Ste. Marie, which has been advertising for a plant manager. As is also the case at the TUA facility, they require a Class B Michigan certification. But the municipality – which is offering a very appealing benefits package – has had this job posted for several months, and not one qualified person has applied.
So, Horning shared that she’s not confident that the TUA will be able to find somebody with the proper certification and have them working in the plant by April 9. “But these operations companies already have them on staff.”
Russo said there are pros and cons to the options, but he agreed with Horning that the deadline to make a decision is fast approaching. “If we commit ourselves solely to ownership, self-operation, I don’t know if we can get there from here in the short amount of time.”
He also remarked that he thinks it’s no small amount of work that would be required – as far as administrative actions, procedures and so on – to implement self-operation.
“I’m not saying that it wouldn’t be something to entertain. If we can pull it all together between now and then, and the right candidates are there, it could be a good thing,” Russo went on. However, he maintained that he is concerned about the timing.
If this is run on a city basis, Councilman David Lesinski said he wonders who has the expertise to run it over and above the plant manager. He also questioned what would happen if the plant manager was gone or had a health emergency. “Who’s going to carry the license; how are we going to take care of that?”
He said another concern is that the WWTP is an old facility which needs work. “What happens if something goes down? Do we have the expertise to pull a part in overnight? Probably not; where, a company may have it somewhere on a shelf or in one of their other plants, or have a source for it. I don’t know that the two cities have the capability of doing that.”
Russo said that he, too, brought up the point that the TUA has a lot on its plate.
This includes the fact that they are applying for a state revolving fund (SRF) loan for the numerous improvements needed at the WWTP. As has been reported, since January 2017, Horning and other TUA Board members have been advising that there are some very expensive projects identified in the TUA’s asset management and capital improvements plan.
Horning has since noted that the C2AE company has been working on the SRF application with the TUA. The forms are due June 1, and the target to begin the construction period is 2022. The application is for $6 million, but C2AE representatives have explained that this is just an estimate. It can be changed later, based on what the TUA can afford.
Russo said that with the SRF improvement project set to kick off, there is going to be a lot of work underway at the plant. “And if you couple that with in-house operations, I mean, we’re tasking ourselves with some pretty healthy challenges.”
To Lesinski’s comment about if something happens to somebody, this is where Russo says there is a plus in the contracted services, as there is a pool of people and/or material to draw from. But self-operation is a little thinner in that department.
When Councilman Ed Nagy asked about the benefits of self-operation, Horning said there is a little bit of a financial savings. However, the numbers they’ve been seeing are preliminary and they don’t know anything for certain because they don’t have prices on such items as benefits.
Horning said there’s some additional upfront costs, since the lab is not up to date. “It’s not a functional lab. All of that is contracted out. So we’re going to have to do some updates there. But where the challenge comes in is, again, if something happens to one of those people, we don’t have any backup staff.”
She said this is one of those situations where you get what you pay for. “I would rather pay a little more, just to have that security that someone else is going to be there.”
Horning added that any time the self-operations topic has come up in the TUA meetings, some of the words that keep being mentioned are ownership, power and control. “If we’re staffing it with our own employees, we have those things. If we’re contracting with somebody else, there’s a feeling that we’re losing that.”
She said that this could be argued as a pro, but, “I don’t know that we were all in agreement on that.”
She then noted that, after scheduling the Tawas City special meeting, an e-mail was sent by East Tawas City Manager and TUA Board Member Brent Barringer.
Addressed to the board, he requested that they have a special meeting on Jan. 27. He later stated that it appeared as though they will not have the needed request of three members to hold a meeting, prior to the next regular city council meetings. Therefore, he provided via e-mail the information that he had hoped to discuss. (He requested that the recipients not respond to the e-mail group, so they can maintain compliance with the Open Meetings Act).
“As you are aware, we are at the tail end of the bid and evaluation process to decide on the operations of the plant. Consultant bids were reviewed and the best candidate selected,” Barringer wrote.
“The next step is to make a decision between contracting and self-performing. To better understand the market for staffing, the TUA approved advertising the positions and we now need to be able to have a real conversation with potential candidates,” he stated.
“Financially and operationally it appears that self-performance is in the best interest of the TUA’s future, given all of the data we have reviewed to date,” according to Barringer. “Getting there is burdensome as we do not have the infrastructure set up within the TUA for staffing.”
In order to put things in motion, he said he would like to propose that East Tawas provide staffing for the TUA’s operations. “This would be in alignment with the operations RFP and this staffing would be invoiced to the TUA. I wanted to present this to the TUA prior to presenting it to our Council, but will rely on each of you to convey this scenario for consideration.”
Barringer pointed out that he would be presenting this to the East Tawas City Council for the first time at their next meeting, which was Feb. 1.
Horning shared the e-mail with Tawas City officials, and reiterated that the idea to have the staff be employees of East Tawas was not proposed yet to that council, and is not an official offer. “But I think it’s worth a preliminary discussion, if and when we do get that proposal from East Tawas.”
She said that she still has some of the same underlying concerns, as far as the layers of staffing and who’s going to step up if something happens to the manager.
But beyond that, she said she spoke with the city attorney because an RFP was issued, responses came in within the deadline and all of that information was reviewed. “And we never made it a secret that we were going to look at self-operations; and now one of the partners is saying, ‘I can do it cheaper. Have a contract with me.’ I have some moral issues with that. I don’t know that I can support that.”
However, Horning said, that is something they can deal with if and when they get to that point.
If things were the other way around and she was proposing that Tawas City employees handle the operations, for example, she said she would have a lot of concerns about liability and legacy costs if they decided to terminate that relationship. “And now we’re paying unemployment, or if there’s a worker’s comp claim or something like that. So I’m not sure how East Tawas is going to feel on that, and maybe that’s not something we need to really discuss that much in-depth. So, again, I rely on you guys for your direction on those things, because I will vote the way you direct me to.”
Lesinski said the other important part of this is that they have to remember where the WWTP is located, which is in East Tawas, and that they have to work together. If something major were to occur, there is no plant in Tawas City. “We would have no control; nowhere to turn. I don’t want to get us in that situation, either.”
“Does Inframark know that we’re going with them?” asked Studley, which Horning confirmed.
She said the official action by the TUA board was to accept the proposal and ask for contract language. “They have given us that contract language, but it has not been presented or discussed at a board meeting. So we haven’t approved a contract, we haven’t signed anything; we’ve just accepted their proposal.”
Mayor Ken Cook said it seems that if they were going to consider self-operation as an option, they need to make that decision by a certain date so that Inframark has time to get their people together, get their contract in order and begin preparing to work at the plant.
Russo said that the last couple TUA Board meetings have included talks on the posting of the job descriptions, to see if they get any candidates interested in working at the WWTP as a self-operating plant. “And I explained then, that it’s a pretty short fuse.”
But he repeated that he has no problem putting a train on two tracks. “We know we can continue to work with Inframark on the contract language and set things in place and, in the meantime, still solicit candidates to see if there’s anybody out there that can do it.”
Nagy questioned why the concept of self-performance versus a contracted company came about, and he asked if there have been any problems with the latter.
“They’ve kind of centered around a couple different things. One is the possible cost,” according to Russo.
He said the TUA is paying for overhead for the companies to be here, whereas with self-operations, there isn’t that same overhead. “Because we would be obviously not for profit, in that regard, as far as employees go.”
He said there has also been some concerns about general maintenance and upkeep of the plant, and this is where the ownership word comes into play which Horning referenced. “Where you would want to have those employees that are employees of the municipality or the TUA, maybe take a little bit more heart and pride in their facility.”
Russo said he knows some of these are intangibles, but they’re worth discussing. “So that was a couple of the reasons why self-operation kind of came to the forefront, and has been there for a bit.”
If Tawas City was to support self-operations, Horning said she feels that they need to know a date sooner rather than later, because they have to finalize job descriptions, benefits and so on, for interviews to be scheduled. “There’s a lot of work that needs to be done, and I don’t want to do it if the council’s not going to support it.”
“I just don’t have a good feeling on this,” Lesinski remarked, saying he doesn’t know how they can pull off doing it themselves, on such short notice.
Russo said he has been fairly open-minded about the situation and he doesn’t necessarily think that self-operation is something they should walk away from completely. But it is the timing of everything, combined with the numerous TUA tasks at hand, which is where the concern lies. “It’s something that we can come back and visit later on, after the plant’s been remodeled and after things smooth out a little bit.”
Fellow council members also said they are not opposed to self-operations. But they simply don’t know if there is a big enough window to do so before April 9, and they think the WWTP improvements should be carried out first.
“Maybe after those projects are done and our facility’s updated, maybe that’s when we need to look at that,” said Studley.
“I think it would be foolish on our part to say we can do this within two months,” Lesinski expressed. “Why rush? If we’re going to do it, we want to make sure we do it right.”
“We’re so close to the contract date that we need to continue to move. And to bring somebody in as an employee and then get into a big project, may not give us the expertise that a contract company is going to be able to give us during that construction project,” Cook also pointed out.