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HomeMy WebLinkAbout1983-12-14 MinutesMINUTES OF A SPECIAL BOARD OF DIRECTORS MEETING A special meeting of the Board of Directors of the City of Fayetteville was held at 3:00 P.M. on December 14, 1983 at the Chamber of Commerce, Fayetteville, Arkansas. PRESENT: Mayor Noland; Directors Osborne, Sharp, Bumpass, Orton and Johnson; City Manager Grimes; Assistant City Manager McWethy; City Attorney McCord; City Clerk Kennedy; members of the press and audience ABSENT: Director Lancaster CALL TO ORDER Mayor Noland called the meeting to order. WAIVER OF COMPETITIVE BIDDING/FURNITURE FOR CITY HALL Mayor Noland introduced an ordinance to waive competitive bidding for the purchase of furniture for the renovated City Administration Building. City Attorney McCord read the ordinance for the first time. Director Osborne, seconded by Orton, made a motion to suspend the rules and place the ordinance on second reading. Upon roll call, the motion passed by a vote of 6-0, with Director Lancaster absent. The City Attorney read the ordinance for the second time. Director Osborne, seconded by Johnson, made a motion to further suspend the rules and place the ordinance on third and final reading. Upon roll call the motion passed unanimously and McCord read the ordinance for the final time. Mayor Noland noted most of the Board members had had an opportunity to discuss the Riverside and Jasper orders with the interior decorator, Marynm Bassett. Assistant City Manager McWethy stated there is an additional Riverside order totaling $1,669.00. Director Orton asked if this order would be included in the ordinance. City Attorney McCord explained the ordinance waives requirements for any furniture purchases, but that a separate motion to authorize the additional purchases might be in order after the ordinance is acted upon. Director Bumpass noted these purchases will be priced substantially less than retail. Upon roll call the ordinance passed unanimously. Director Orton, seconded by Bumpass, made a motion to approve the three orders under discussion. Mayor Noland stated this represents a total amount of $30,701.25 plus the additional order for $1,669.00. Upon roll call, the motion passed unanimously. ORDINANCE NO. 2966 APPEARS ON PAGE 03( IN ORDINANCE AND RESOLUTION BOOK IN( 249 249.1 249.2 249.3 249.4 2bu 250.1 250.2 250.3 250.4 250.4 12-14-83 OPERATING CONTRACT/WASTEWATER TREATMENT PLANT Mayor Noland introduced Cliff Thompson representing CH2M Hill and Chuck Mcllroy and Mike Stump from OMI, a subsidiary of CH2M Hill. The Mayor explained that two contracts and Amendment Number One to an agreement have been submitted to the Board. City Attorney McCord said he and representatives of CH2M Hill have agreed, for the sake of clarity, that there should be two separate contracts - one covering the construction phase during which OMI will serve as a consultant, render the service and be paid the fee set out in what was labeled an Amendment - and a second operations contract, the term of which would start upon the operation date of the new treatment plant and run for a period of two years. This would require certain provisions to be modified but the substance and intent would not be changed from what is reflected in the documents which the Board has seen. Cliff Thompson addressed the Board. Mr. Thompson stated, since the City has asked that CH2M Hill guarantee the performance of the treatment plant, the engineers are prepared to enter into an operating contract with the City. Thompson stated CH2M Hill proposes entering into a contract at this time guaranteeing a 5/5/2/1 effluent limit and amending it later to reflect the actual permit limits. Thompson reported also that the value engineering review is now taking place and the pre -design documents have been submitted to the City Engineer. Mike Stump, President of OMI in Houston, addressed the Board. Mr. Stump stated OMI is owned and was founded by CH2M Hill about three years ago and presently operates 25 facilities. He stated this is the first time they have ever guaranteed the performance of a treatment plant. Mr. Stump stated they are proposing a cost -based contract which he thinks would offer advantages to the City in the first two years of operation. Chuck Mcllroy, Vice President of Operations for OMI, addressed the Board. He said he has been working closely with Pollution Control Plant employee, Mike Lawrence, and with Cliff Thompson regarding the specifics of the project and the review of design specifications and they feel confident the plant will meet waste discharge specifications. Mcllroy stated OMI will provide complete operation and maintenance of the plant facility, absolving the City of routine administrative problems and procedures associated with the work force. They will install and implement a comprehensive operations and maintenance program software into the City's micro- computer. With this program, they will provide biological process control and preventative maintenance programs in the early stages of the plant operation. Mcllroy stated he had discussed metals concentration limits with City Engineer Don Bunn (in Appendix D of contract), specifically copper and zinc, which have been exceeded over the last six months. He stated the Appendix states that when- ever the plant effluents exceed those limits, the engineers are no 1 1 • 12-14-83 longer obligated to meet waste discharge requirements because those particular metals have an inhibiting effect on nitrification and make it more difficult to meet the nitrogen limitation. Mcllroy stated they are willing to increase the maximum concentrations of .25 for copper and .29 for zinc to 1.0 in each case, so that effluent compliance can still be guaranteed. Mike Stump explained two types of agreements which the Board might consider using for the operating contract - a lump sum contract or a cost -based contract. He stated they had submitted a lump sum price of $1,550,000 to operate the facility but, because of concerns that OMI could make too much profit, a cost -based contract is now being proposed. Under this contract, OMI would be paid the costs of operating the plant plus a modest fee. He said, because there is no motivation for the contractor to minimize costs, he proposes incorporating an incentive arrangement so that, if costs can be minimized, the fee goes up. He said, under a cost -based contract, the total estimated cost is slightly different because some contin- gencies have been removed which were contained in the lump sum arrangement. He explained, other than the payment provisions, the two contracts would be identical. Director Orton asked City Engineer Don Bunn and City Manager Don Grimes which contract they thought should be used. Don Bunn said he thought the cost -based contract would be in the best interests of the City, since there is no operating history on the plant. He stated he thought $1.4 million is a reasonable fee. Don Grimes concurred with Bunn's comments. In answer to questions from Director Sharp, City Attorney McCord explained the Board is being asked to contract with CH2M Hill to operate the plant for two years as soon as improvements are completed. Director Sharp asked why CH2M Hill could not just charge a consulting fee for the first two years rather than taking over the operation of the plant. Mr. Stump explained experience has shown they do a better job of guaranteeing plant performance with their own employees. He said they have a bonus plan to encourage employees to be innovative and save costs. He stated there has been a preliminary review of transition problems and these do not seem significant. He said the intent is to retain the present employees and add other locally hired employees, all of whom will benefit from training. Director Orton asked about potential employee problems with the transition back to working for the City. Mr. Stump stated they do not anticipate any problems, the contract states that, six months before expiration, if the client elects not to continue, there is a transition plan developed. Director Johnson asked what personnel changes are anticipated. Mcllroy stated they intend to work closely with Mike Lawrence but would also bring in some management personnel who will leave after employee skills reach an adequate level, and before the two year contract has expired. 2451 251.1 ' 251.2 251.3 251.4 12-14-83 252.1 Director Bumpass asked Grimes and Bunn what changes they see in administrative staff presently operating the plant, and what is envisioned as far as monitoring the operations of the new plant. Mr. Grimes said the City will work through the OMI staff who will be operating more independently than the plant staff does now; and that, as far as monitoring, the City will have access to daily operations through the computer. Don Bunn explained there presently is not a great deal of interaction between the Water and Sewer Department and the Pollution Control Plant, other than occasionally borrowing equipment and he stated he did not contemplate much change in that relationship. Bunn stated he felt there was a great benefit to present employees receiving training from the standpoint of having an efficiently operating plant. 252.2 Director Osborne asked if two years of employment under CH2M Hill could jeopardize retirement benefits of a City employee, after the return to the City's employ. The City Attorney stated an ordinance could be passed to ensure that an employee would still have credit for two years of employment but this is a policy decision to be made by the Board. 252.3 Director Bumpass asked if any contact had been made with others who have had contractual relationships with OMI, stating he wondered if any clients have stated they wished they had "done it a little differently". Director Sharp stated he was pleased with the training concept but concurred with Bumpass with regard to checking with other clients before signing a contract. Sharp stated he thought operating costs should be based on national figures but also stated he had no objections to approving Amendment Number One. 252.4 Mayor Noland stated there should be a provision in the contract to protect the City in the event the plant cannot be built because of funding problems or a national emergency. McCord stated he would add a provision for termination of the contract in such an event. 252.5 In answer to questions from Director Johnson about 512 on page 12, Cliff Thompson explained this is only important as it would relate to the lump sum contract. He stated the intent is to allow the City to have the option of choosing OMI to operate the sludge site or to use local expertise under OMI supervision. 252.6 Director Johnson asked where in the contract it provides for OMI to pay any fines. Thompson noted that on page 18, at 18.4, a total of $152,000 in fines has been set and is described separately in 8.3 as $100 per violation, with additional liability of up to $40,000 for EPA enacted fines. Thompson pointed out there has been no fine imposed in excess of $40,000 in the State of Arkansas for water quality issues. 252.7 Director Johnson asked about provisions for termination of the agreement. City Attorney McCord explained immediate termination by the engineer exists only for non-payment; the City is given thirty days to cure any other default. Cliff Thompson explained the $75,000 fee is intended as a de -mobilization cost if the City terminates the agreement. Director Sharp suggested there should be a like fee in the event the engineers terminate the agreement. 1 12-14-83 Director Johnson*asked what would be included under 14.2, where it states the owner shall pay all extra costs associated with equipment outage. Thompson stated this would only apply if the City were to enter into another construction project on the plant site which would disrupt plant operation. Director Johnson asked, regarding 4.3, "things added to improve operations", if costs would be borne by OMI. Mr. Stump stated different wording might need to be used in the case of a cost -based contract because additions would only be made in order to lower cost of operation and he suggested additional wording such as "...subject to prior approval by the owner..." Director Osborne, seconded by Sharp, made a motion to approve a contract along the lines of what is now labeled "Amendment Number One" but as a separate contract, and that the Mayor and City Clerk be authorized to enter into that contract with the appropriate parties. Upon roll call, the motion passed unanimously. At Director Bumpass' suggestion, the Board decided to check into references supplied by CH2M Hill, of others who have entered into contractual relationships of a similar nature with CH2M Hill. Bumpass stated the intent of his suggestion is to check into performance and to see if any problems have arisen since operation had begun, and how any of these problems can be cured in a contract. Cliff Thompson asked if it would be possible to take action on the basis of favorable references being received, in order to avoid another presentation from CH2M Hill. The City Attorney advised, if it is the will of the majority of the Board to enter into a cost -based contract, a resolution could be drafted authorizing execution of a revised contract consistent with the substance of the existing contract, upon receipt of favorable references. Director Orton, seconded by Osborne, made a motion to approve the recommendation of the City Attorney. Upon roll call the motion passed unanimously. RESOLUTION N0.153-83 APPEARS ON PAGE 5a OF ORDINANCE AND RESOLUTION BOOK NO. XV11 1 ADJOURNMENT With no further business before the Board, the meeting adjourned at 4:25 P.M. 253.1 253.2 253.3 253.4 253.5