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HomeMy WebLinkAbout76-03 RESOLUTION• • RESOLUTION NO. 76-03 A RESOLUTION APPROVING AMENDMENT NO. 9 TO THE OMI CONTRACT PROVIDING FOR A NET INCREASE IN FISCAL 2003 OF THIRTY-SIX THOUSAND TWO HUNDRED NINE DOLLARS ($36,209.00) TO PURCHASE EQUIPMENT AND PERFORM SERVICES IMPLEMENTING A MODIFIED SLUDGE DISPOSAL PLAN FOR THE LAST SIX (6) MONTHS OF 2003. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves Amendment No. 9 to the OMI contract providing for a net increase in Fiscal 2003 of Thirty -Six Thousand Two Hundred Nine Dollars ($36,209.00) to purchase equipment and perform services implementing a Modified Sludge Disposal Plan for the last six (6) months of 2003. A copy of the Amendment, marked Exhibit "A" is attached hereto, and made a part hereof. PASSED and APPROVED this 20th day of May, 2003. �FFvL , • • By: gad/tat Mu SONDRA SMITH, City Clerk APPROVED: By: D COODY, Mayor AMENDMENT NO. 9 TO THE AGREEMENT FOR OPERATIONS, MAINTENANCE, AND MANAGEMENT SERVICES FOR THE CITY OF FAYETTEVILLE, ARKANSAS WASTEWATER TREATMENT PLANT THIS AMENDMENT, entered into this n. £ 'day of ,2003, by and between the City of Fayetteville, Arkansas, whose address for any formal no ice is 113 W. Mountain St, Fayetteville, Arkansas 72701 and Operations Management International, Inc., (hereinafter "OMI") with offices at 9193 S. Jamaica Street, Suite 400, Englewood, Colorado 80112 is made and entered into fir purposes of amending certain provisions of the "Agreement for Operations, Maintenance, and Management Services for the City of Fayetteville's Wastewater Treatment Plant," dated August 16, 1994 (the "Agreement") to prevent the facilities covered by the Agreement from being deemed to be used in the trade or business of OM1 pursuant to Section 141 (b) of the Internal Revenue Code of 1986, as amended. This is Amendment No. 9 to the Agreement dated the 16th day of August, 1994, between the City of Fayetteville and OM1. NOW THEREFORE, The City of Fayetteville and OM1 agree to amend the Agreement as follows: 1. Article 4.1 is hereby delctcd in its entirety and replaced with the following Article 4.1: 4.1 For services rendered during the last half of the eighth year of this Agreement the City of Fayetteville shall pay to OM1 the actual cost of services performed plus an annualized management fee of Seventy Three Thousand Thirty One Dollars ($73,031.00). This revised fee and estimated cost (base fec) shall be paid in equal monthly installments. Any adjustments required for the six months of the calendar year shall be made in July 2003. The management fee for subsequent years will be determined proportional to the increase in estimated cost. 2 Article 4.3 is hereby delctcd in its entirety and replaced with the following Article 4.3: 4.3 OMI estimates the revised cost for services for the calendar ycar 2003 shall be Four Million Ninety -Six Thousand Seven -Hundred Sixty Five Dollars (54,096,765.00) annually. OMI shall invoice City of Fayetteville for the first six months of the calendar year according to Amendment No. 8 and the last six months of the calendar year shall he invoiced based upon the above stated cost of Four Million Ninety Six Thousand Seven Hundred Sixty Five Dollars ($4,096,765.00). Details of said cost arc shown in Appendix J with the increased payments to be prorated for the balance of the fiscal year, beginning on July 1, 2003. The base fee shall be negotiated each year in September, beginning in 2003 for calendar year 2004. Should the City of Fayetteville • • and OMI fail to agree, the base fee will be determined by the application of the base fee adjustment formula shown in Appendix F. Should the actual expenditures exceed estimated expenditures by more than Twenty Thousand Dollars ($20,000), in any year of this Agreement, specific approval will be obtained from the City of Fayetteville. 3. Article 4.4 is hereby deleted in its entirety and replaced with the following Article 4.4: 4.4 An administrative fee of 35 percent is added to personnel services and 10 percent to all other costs for administration, support, management and overhead, with the exception of electricity and lift station odor control direct expenses. These rates shall he revised effective 7/1/2003 to 30 percent and 10 percent respectively. 4. Article 7.1 is hereby deleted in its entirety and replaced with thc following Article 7.1: 7.1 This initial term of this Agreement shall be five (5) years and four (4) months commencing on September 1, 1994 and ending on December 31, 1999, followed by two (2) successive five (5) year options, each renewable at the sole discretion of the Owner. The City of Fayetteville is amending its second extension option for a period of five years, the start date for thc option to be December 31, 2003 and the ending date for the contract period to be December 31, 2008, said 5 -year contract period to overlap the final year of the current option.. All contract periods and renewals arc subject to and contingent upon yearly budget approval by the Owner. 5. Appendices J and K arc hereby deleted in their entirety and replaced with the attached Appendices J and K. All other terms and conditions remain in effect in accordance with the Agreement referenced in this Amendment. Both parties indicate their approval of this Amendment to thc Agreement by their signatures below as of the date shown above. Autho..cd Si Edward F. '.rbcs, Jr. Author i.¢d Signat Dan Coody Executive Vice President or Project Delivery Mayor OPERATIONS MANAGEMENT INTERNATIONAL, INC. Date: MAY or, 2o0 3 Cy CITY OF FAYETTEVILLE Date: µQu 4t) I.2-003 Appendix J COST DETAIL The revised annualized estimated costs for the calendar year of 2003 were calculated as follows: Direct Labor & Benefits Labor Markup Electricity Electrical Markup (0% Markup for 2003) Existing Other Direct Costs Other Direct Costs Markup Additional Other Direct Costs* Other Direct Costs Markup Subtotal Fixed Fee Lift Station Odor Control Capital Item Amortization Total 0 & M Budget SCADA Upgrade Project Total Annualized Budget Net Annualized Increase The following are some of the major reasons for cost circumstances: Modified 2003 (5 Yr Amortization) 51,519,208 $455,762 $738,000 50 S692,083 569,208 $253,501 525,350 $3,753,112 S73,031 $170,000 $100,622 $4,096,765 $0 $4,096,765 $222,264 Projected electrical costs due to the experience of 2001 with full utilization of the second aeration basin, as well as the experience of enormous increases in 'fuel cost adjustments' to the electrical costs in 2001. The reoccurrence of this situation cannot be ruled out in 2003, even though this adjustment did not occur in 2002. Continued increase in the cost of providing skilled professional labor in Northwest Arkansas' highly competitive job market, as well as a remarkable increase in the cost of benefits. 3. Projected decrease in spending to control odors in the collection system since the tanks, pumps, and controls installed in 2002 will be sufficient for 2003 as well. 4. Revised sludge management plan eliminating land application of liquid and utilizing dewatering to enable landfill disposal of the dewatcred biosolids. • • Appendix K INTERIM SLUDGE DISPOSAL PROJECT- SCOPE OF WORK Due to a series of interrelated conditions and circumstances beyond the control of OMI or the City of Fayetteville, it has become expedient for the City of Fayetteville to adopt an alternative method for disposal of sludge produced at thc Paul R. Noland wastewater treatment facility (WWTF). OMI will provide the equipment necessary to effect the implementation of this alternative, as described below. OMI will locate, procure and finance the cost of the necessary equipment at an annual interest rate of six and three quarter's percent over the course of 60 months, according to the amortization schedule listed below. The costs for the equipment will include the costs of purchase, delivery and any applicable sales tax, copies of the purchase orders, bills of sale or invoices to be fumishcd to substantiate the final principal amount. At the end of the amortization period, OMI will arrange for ownership of the equipment described herein be transferred to the City of Fayetteville. All operating costs excepting diesel, including labor, benefits, chemicals, electricity, landfill tipping fees, turnpike fees, licensing fees, tires, service of equipment and insurance arc included in the regular Operations and Maintenance budget and arc not part of the scope of work defined in Appendix K. Diesel for this operation, estimated to be $70,000 per year, will continue to he provided directly by thc City of Fayetteville as described in Article 3.8 of this Agreement. The following equipment will he provided for the express purpose of dc -watering sludge from the WWTF and transporting that sludge to a landfill. 1. An Andritz CPF, Low Profile, SMX-S8 skid -mounted 2.0 -meter belt filter press or equal This unit will include an emulsion polymer system and high-pressure belt wash pump. Estimated cost for this belt -filter press is $216,000. 2. Thrcc (3) used ten -wheel tri -axle semi -tractors suitable for hauling up to 80,000 pound gross vehicle weight payloads over public roads. Estimated costs for these tractors is $45,000 each or $135,000. 3. Thrcc (3) new eight -wheel double -axle end -dump trailers suitable for hauling semi- liquid dc -watered sludge over public roads. Estimated costs for these trailers is $25,000 each or $75,000. OMI will amortize the actual costs of this equipment (currently estimated at $426,000.00) over the course of 60 months at an cstimated monthly cost of $8,385.15, according to tilt, amortization schedule below (six and three quarter's percent (6.75%) annual compound interest). The first payment will be due with the July 2003 invoice, and the last payment will be included as part of the June 2008 invoice. If for any reason this contract is terminated prior to the completion of the capital cost amortization, the City of Fayetteville will pay to OMI the remaining capital improvement principal amount, in full, within 30 days following contract termination. Estimated Amortization Costs for the $426,000.00 equipment purchase Total Capital Investment $426,000 Terms of Amortization 6.75% Length of Amortization 60 Monthly Payment $8,385.15 Month Payment Principal Interest Balance 1 $8,385.15 $5,988.90 2 $8,385.15 $6,022.59 3 $8,385.15 $6,056.47 4 $8,385.15 $6,090.54 5 $8,385.15 $6,124.80 6 $8,385.15 $6,159.25 7 $8,385.15 $6,193.89 8 $8,385.15 $6,228.73 9 $8,385.15 $6,263.77 10 $8,385.15 $6,299.00 11 $8,385.15 $6,334.44 12 $8,385.15 $6,370.07 13 $8,385.15 $6,405.90 14 $8,385.15 $6,441.93 15 $8,385.15 $6,478.17 16 $8,385.15 $6,514.61 17 $8,385.15 $6,551.25 18 $8,385.15 $6,588.10 19 $8,385.15 $6,625.16 20 $8,385.15 $6,662.43 21 $8,385.15 $6,699.90 22 $8,385.15 $6,737.59 23 $8,385.15 $6,775.49 24 $8,385.15 $6,813.60 25 $8,385.15 $6,851.93 26 $8,385.15 $6,890.47 27 $8,385.15 $6,929.23 28 $8,385.15 $6,968.21 29 $8,385.15 $7,007.40 30 $8,385.15 $7,046.82 31 $8,385.15 $7,086.46 32 $8,385.15 $7,126.32 33 $8,385.15 $7,166.40 34 $8,385.15 $7,206.72 35 $8,385.15 $7,247.25 36 $8,385.15 $7,288.02 37 $8,385.15 $7,329.01 $2,396.25 $2,362.56 $2,328.69 $2,294.62 $2,260.36 $2,225.91 $2,191.26 $2,156.42 $2,121.38 $2,086.15 $2,050.72 $2,015.09 $1,979.25 $1,943.22 $1,906.99 $1,870.55 $1,833.90 $1,797.05 $1,759.99 $1,722.73 $1,685.25 $1,647.56 $1,609.66 $1,571.55 $1,533.23 $1,494.68 $1,455.92 $1,416.95 $1,377.75 $1,338.33 $1,298.70 $1,258.83 $1,218.75 $1,178.44 $1,137.90 $1,097.13 $1,056.14 $420,011.10 $413,988.50 $407,932.04 $401,841.50 $395,716.70 $389,557.45 $383,363.56 $377,134.83 $370,871.06 $364,572.05 $358,237.62 $351,867.55 $345,461.65 $339,019.72 $332,541.55 $326,026.94 $319,475.69 $312,887.58 $306,262.42 $299,599.99 $292,900.09 $286,162.50 $279,387.01 $272,573.41 $265,721.48 $258,831.01 $251,901.78 $244,933.57 $237,926.17 $230,879.35 $223,792.89 $216,666.57 $209,500.16 $202,293.45 $195,046.20 $187,758.18 $180,429.16 r 38 $8,385.15 $7,370.24 39 $8,385.15 $7,411.70 40 $8,385.15 $7,453.39 41 $8,385.15 $7,495.31 42 $8,385.15 $7,537.48 43 $8,385.15 $7,579.87 44 $8,385.15 $7,622.51 45 $8,385.15 $7,665.39 46 $8,385.15 $7,708.50 47 $8,385.15 $7,751.86 48 $8,385.15 $7,795.47 49 $8,385.15 $7,839.32 50 $8,385.15 $7,883.41 51 $8,385.15 $7,927.76 52 $8,385.15 $7,972.35 53 $8,385.15 $8,017.20 54 $8,385.15 $8,062.29 55 $8,385.15 $8,107.64 56 $8,385.15 $8,153.25 57 $8,385.15 $8,199.11 58 $8,385.15 $8,245.23 59 $8,385.15 $8,291.61 60 $8,385.15 $8,338.25 $1,014.91 $973.46 $931.77 $889.84 $847.68 $805.28 $762.64 $719.77 $676.65 $633.29 $589.69 $545.84 $501.74 $457.40 $412.80 $367.96 $322.86 $277.51 $231.90 $186.04 $139.92 $93.54 $46.90 $173,058.92 $165,647.22 $158,193.83 $150,698.52 $143,161.05 $135,581.17 $127,958.66 $120,293.28 $112,584.77 $104,832.91 $97,037.44 $89,198.12 $81,314.70 $73,386.94 $65,414.59 $57,397.39 $49,335.10 $41,227.46 $33,074.21 $24,875.09 $16,629.86 $8,338.25 $0.00 • • NAME OF FILE: Resolution No. 76-03 w/Amendment No. 9 CROSS REFERENCE: Item # Date Document 1 05/05/03 Res. 76-03 w/Amendment No. 9 2 05/08/03 staff review form draft resolution memo to City Council copy of two maps draft copy of Amendment No. 9 3 05/27/03 copy of memo to Greg Boettcher copy of memo to Greg Boettcher NOTES: • FAYETTEA LE THE CITY OF FAYETTEVILLE, ARKANSAS • DEPARTMENTAL CORRESPONDENCE • To: Greg Boettcher Water & Wastewater From: Clarice Buffalohead-Pearman City Clerk's Division Date: 5/27/2003 Re: Resolution No. 76-03 Attached hereto is a copy of the above resolution passed May 20, 2003, and executed by the mayor and city clerk approving the OMI contract Amendment No. 9, in the amount of $36,209.00. One original of the above amendment is attached signed by the mayor. This information has been recorded in the city clerk's office and will be microfilmed for archives If anything else is needed please let the city clerk's office know. /cbp Attachment(s) cc. Nancy Smith, Internal Auditor ?S. 6 CS. COM I) I rv, Lt,t,t{ r eanne 4-o -Lek up �h2tr cor`t-rctJ Qnr..e.rd tv,.en-E.4 /_90. Q) m 028 2_,c)0 3 . oaf FAYETTEV?LLE TNS CITY Of SAYETTEVIIIL ARKANSAS DEPARTMENTAL CORRESPONDENCE • To: Greg Boettcher Water & Wastewater From: Clarice Buffalohead-Pearman City Clerk's Division Date: 5/27/2003 Re: Resolution No. 76-03 Attached hereto is a copy of the above resolution passed May 20, 2003, and executed by the mayor and city clerk approving the OMI contract Amendment No. 9, in the amount of $36,209.00. One original of the above amendment is attached signed by the mayor. This information has been recorded in the city clerk's office and will be microfilmed for archives. If anything else is needed please let the city clerk's office know. /cbp Attachment(s) cc. Nancy Smith, Internal Auditor PS, 5/28103 �`.,, Li.efAir on? DMP X AGENDA REQUEST CONTRACT REVIEW GRANT REVIEW • STAF'r' REVIEW FORM • s/� ortlenftraa For the Fayetteville City Council Meeting of: May 20, 2003 FROM: Greg Boettcher Name Water & Wastewater Water Wastewater -Wastewater Treatment Division Department ACTION REQUIRED: A resolution approving Amendment No 9 to the contract with Operations Management International for: (1) extension contract term by 5 -years to an expiration date of Devember 31, 2008, (2) modification of sludge disposal plan to accomodate dewatering and hauling to landfill, (3) repayment of OMI's actual capital equipment costs over 5 -years salvage to be granted to city (belt fitter, tractors and trailers), (4) net increase in fiscal year 2003 contract with OMI to be $36,209.00 (total 6 -month increase = $111,133, less fiscal year 2003 cost offsets = $74,924, FY 2002 contract reconcilliaiton credit), (5) Fuel cost increase for 6 -months in fiscal year 2003 = $40,000 and (6) predicted full -year cost increase in 2004 = $250,000.00. COST TO CITY: $36,209.00 $ 4,427,541.00 Water/Sewer-Wastewater Treatment Cost of this request 5400.5100.5328.01 5400.5100.5328 Account Number Project Number S Program Category / Project Name 4,257,248.00 Wastewater Treatment Funds Used to Date Program / Project Category Name $ 170,293.00 Water is Sewer Rema ning Balance Fund Name BUDGET REVIEW: X Budgeted Budget Manag4'r 5/2-o3 Date tem Budget Adjustment Attached CONTRACT/GRANT/LEASE REVIEW: aka Date ,2111(Alt s C o City Att rney to Purchasing Manager ?S` dab csna..d0 ,ilslo3 internal , idito- Date 1 48103 Date STAFF RECOMMENDATION: Division iead Departthent Director Finance & Internal Services Dir. Chien Vrtinistrative Officer Ma .1 1 'ea traits 411. Date S-2 0,3 Date S -43--Q3 Date Date Cross Reference New Item: Yes Previous Ord/Res#: Orig. Contract Date Orig. Contract Number Rec'd in M o%'s Office s7a/d � L, . Staff Review Form - Page 2 411 Description Meeting Date Comments: Budget Manager Accounting Manager Reference Comments: eiCJ t / �� eta. vt Ant.,�A,, ( is ALL ,1 ( ' pt � -iti : is At,s Leis., i Aziefe, Lin tut9J S chc 60A 84ak 1 6" .1 $I.acl-iA .,,c/.o9A4.cA ✓%Yl CL4� �ActZp 5 i&'S L -b f2 c City Attorn JPI: t)( asr();(ik kcks ‘41,,c Ls CLAys cit ash e.arceAto(-1 bek4 itt6L4 Purchasing Manager ADA Coordinator Internal Auditor Grants Coordinator • • RESOLUTION NO. A RESOLUTION APPROVING AMENDMENT NO. 9 TO THE OMI CONTRACT PROVIDING FOR A NET INCREASE IN FISCAL 2003 OF THIRTY-SIX THOUSAND TWO HUNDRED NINE DOLLARS ($36,209.00) TO PURCHASE EQUIPMENT AND PERFORM SERVICES IMPLEMENTING A MODIFIED SLUDGE DISPOSAL PLAN FOR THE LAST SIX (6) MONTHS OF 2003. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves Amendment No. 9 to the OMI contract providing fora n t increase in Fiscal 2003 of Thirty -Six Thousand Two Hundred Nie oll s ($36,209.00) to purchase equipment and perform services ere ting a Modified Sludge Disposal Plan for the last six (6) months" 0 A cop of the Amendment, marked Exhibit "A" is attached hereto,cfnd ade a part her of. PASSED and APPROVED this 20th day o y, 2003. A B RA SMITH, City Clerk AN COODY, Mayor • • FA YETTEVILLE THE CITY OF FAYE"/'1'EVILLE, ARKANSAS WATER AND WASTEWATER DIVISION DEPARTMENTAL CORRESPONDENCE TO: Fayetteville City Council THRU: Dan Coody, Mayor of Fayetteville Hugh Earnest FROM: Greg Boettcher, P.E. Water & Wastewater Director DATE: April 29, 2003 RE• Wastewater Treatment Plant Operations Contract Operations Management International, Inc. Modification of Term and sludge Disposal Contract Amendment No. 9 BACKGROUND The City of Fayetteville first recognized a need for wastewater treatment improvements as early as 1996 whcn the first facility planning activities were commenced. One of the justifications for this project was the development of alternative sludge management practices due to growing concerns over the long-term effects of such activity upon soil characteristics, as the site had been in use since 1985. In 2002, a directive from the Arkansas Division of Environmental Quality prohibited use of the sludge management site for irrigation of plant effluent, requiring the city to secure a land application permit in order to continue this practice. The irrigation of plant effluent is an integral component of the NPDES permit compliance program, as the 187 million gallons of effluent holding capacity is not sufficient to satisfy the needs of normal summer weather conditions. During specific summer periods when the White River experiences low flow and high water temperature, the Noland Plant is not permitted to release treated wastewater effluent and must rely upon storage to comply with such NPDES Permit condition. In past years, the wastewater plant's flexibility to land apply treated effluent can effectively increase the summer holding capacity by an estimated 503/4 (irrigation of 90 million gallons). This option to irrigate wastewater effluent has the supplemental benefit of maximizing the sludge management site's nutrient uptake and crop production (Bermuda grass). In order to apply for a permit to land apply wastewater effluent (zero discharge irrigation permit) the soils on the irrigation site must be classified and tested for chemical composition, such mandatory permit data validating the relatively high levels of 1 • • phosphorous (2,400-6,800 pounds of phosphorous per acre). These phosphorous results are considerably greater than the naturally occurring levels that range from 100 to 300 pounds per acre. It is the professional opinion of the permit consultant (CH2M Hill) that the state agency's approval of an effluent irrigation permit will be conditioned upon discontinuing the city's use of the site as its primary sludge disposal methods. The choice between effluent irrigation and land application of wastewater sludge requires consideration of multiple factors (future outcomes, analysis of costs and a comparison of benefits). DISCUSSIONS The city's current wastewater improvement program anticipated the need for alternative sludge disposal, and pursued several options during the facility planning process. Disposal of wastewater sludge is the subject of a thorough study by the Northwest Arkansas Conservation Authority, seeking strategies that may have regional applications and favorable economics of scale for the cities of Northwest Arkansas. At this point in time, none of the long-term sludge management strategics have materialized; however, it is known that any final concept will require every wastewater system authority to dewater the sludge. Continued management of wastewater sludge in liquid form will not be viable for a community the size of Fayetteville regardless of the final process selected to enable the sludge's beneficial reuse. At this point in time, it is perceived that Fayetteville's foremost priority should be compliance with its NPDES permit conditions, as violations would pose threats to water quality as well as expose the city to fines. To reduce the possibility of summer season permit violations, the city must proceed with efforts to obtain a no discharge irrigation permit, as this is the only viable strategy to maximize effluent holding capacity. Pursuit of this approach requires the discontinuance of land application of sludge upon the 540 acres (as the primary disposal method). This interim sludge management approach is consistent with long-range planning as the increased sludge disposal costs are a part of the wastewater rate structure communicated to citizens in November of 2001. The proposed cessation of land disposal of wastewater sludge is one of the elements of the wastewater improvement program. The short-term solution to this need will involve the trucking ofdcwatered sludge to a landfill as an interim measure. Landfill disposal is deemed a more environmentally responsible approach that the current practice of land application of liquid sludge. This short-term landfill alternative is a more costly operating method, justified by the benefits of improved potentials for permit compliance and enhanced nutrient management. As other alternative disposal approaches materialize, or more economical strategies are discovered, this short-term solution may be quickly abandoned in favor of new opportunities. The key components of the recommended Amendment NO. 9 are summarized as follows: • Extend OMI contract 5 -years to December 31, 2008 • Increase fiscal year 2003 operating contract by the total of $111,133.00, with a net contract increase being $36,209.00 by applying the fiscal year 2002 contract reconciliation crcdit of $74,924.00 • Capital expcnditure for belt filter press, tractors and trailers to be amortized over 2 • • the 5 -year period at 6.75 % based upon actual costs for purchascs • Belt filter press, tractors and trailers to become property of city at the end of 5 - year period • City will furnish diesel fuel, due to the existing favorable fuel contract, which will have an annual cost predicted at S75,000 The benefits that accrue to the citizens of Fayetteville include: • More responsible sludge management program using landfill disposal for short- term benefits • Reduced potential for adverse environmental impacts and negative publicity due to NPDES permit violations • Decreased probability for summer discharge violations and fines by maximizing avenues for effluent storage and irrigation • Positive posturing of sludge management program to capitalize on reuse opportunities by commencing sludge dewatering as part of treatment process • Increase service levels to customers that will correspond to rate changes This modified approach to the management of Fayetteville's wastewater sludge is directly connected to the Fayetteville Vision 2020 Guiding Principles listed below: 1. Naturally Beautiful City: Our Mountains and Hills, Our Creeks, Our Open Greenspaces 2. Well maintained City Infrastructure and Facilities This action protects the quality of local streams by removing significant volumes of phosphorous from the watershed, using short-term disposal in an approved landfill to meet such goals. The provision of alternative sludge management is essential for the maintenance of the city -owned infrastructure (540 acre sludge management site) enabling high phosphorous levels to be naturally corrected by crop nutrient management. • RECOMMENDAT"T tot, a, 1 694 61,6 To provid• System it i. with Operas for thc balan S36,209.00 (t operating con, fiscal year acti costs are predic analysis and opt be absorbed by ti budget adjustmen Fayetteville Wates e management of the Fayetteville Wastewater wville City Council approve Amendment No. 9 t. for S4,09 eased costs Tressed b) n , :e of ing a cor Ind a S3 ustmen for fis. )perat is bu( s rev 1 29 3 !4.00 2002 sfer). 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Jamaica Street, Suite 400, Englewood, Colorado 80112 is made and entered into for purposes of amending certain provisions of the "Agreement for Operations, Maintenance, and Management Services for the City of Fayettevillc's Wastewater Treatment Plant," dated August 16, 1994 (the "Agreement") to prevent the facilities covered by the Agreement from being deemed to be used in the trade or business of OMI pursuant to Section 141 (b) of the Internal Revenue Code of 1986, as amended. This is Amendment No. 9 to the Agreement dated the 16th day of August, 1994, between the City of Fayetteville and OMI. NOW THEREFORE, The City of Fayetteville and OMI agree to amend the Agreement as follows: 1. Article 4.1 is hereby deleted in its entirety and replaced with the following Article 4.1: 4.1 For services rendered during the last half of the eighth year of this Agreement the City of Fayetteville shall pay to OMI the actual cost of services performed plus an annualized management fee of Seventy Three Thousand Thirty One Dollars ($73,031.00). This revised fee and estimated cost (base fee) shall be paid in equal monthly installments. Any adjustments required for the six months of the calendar year shall be made in July 2003. The management fcc for subsequent years will be determined proportional to the increase in estimated cost. 2 Article 4.3 is hereby deleted in its entirety and replaced with the following Article 4.3: 4.3 OMI estimates the revised cost for services for the calendar year 2003 shall be Four Million Ninety -Six Thousand Seven -Hundred Sixty Five Dollars ($4,096,765.00) annually. OMI shall invoice City of Fayetteville for the first six months of the calendar year according to Amendment No. 8 and the last six months of the calendar year shall be invoiced based upon the above stated cost of Four Million Ninety Six Thousand Seven Hundred Sixty Five Dollars ($4,096,765). Details of said cost are shown in Appendix.) with the increased payments to be prorated for the balance of the fiscal year, beginning on July 1, 2003. The base fee shall be negotiated each year in September, beginning in 2003 for calendar year 2004. Should the City of Fayetteville and OMI fail to agree, the base fcc will be determined by the application of the base fee adjustment formula shown in Appendix F. Should the actual expenditures exceed estimated expenditures by more than Twenty Thousand Dollars ($20,000), in any year of this Agreement, specific approval will be obtained from the City of Fayetteville. Article 4.4 is hereby deleted in its entirety and replaced with the following Article 4.4: 4.4 An administrative fec of 35 percent is added to personnel services and 10 percent to all other costs for administration, support, management and overhead, with the exception of electricity and lift station odor control direct expenses. These rates shall be revised effective 7/1/2003 to 30 percent and 10 percent respectively. Article 7.1 is hereby deleted in its entirety and replaced with the following Article 7.1: 7.1 This initial term of this Agreement shall be five (5) years and four (4) months commencing on September 1, 1994 and ending on December 31, 1999, followed by two (2) successive five (5) year options, each renewable at the sole discretion of the Owner. The City of Fayetteville is amending its second extension option for a period of five years, the start date for the option to be December 31, 2003 and the ending date for the contract period to be December 31, 2008., said 5 -year contract period to overlap the final year of the current option.. All contract periods and renewals are subject to and contingent upon yearly budget approval by the Owner. 5. Appendices J and K are hereby deleted in their entirety and replaced with the attached Appendices J and K. All other terms and conditions remain in effect in accordance with the Agreement referenced in this Amendment. Both parties indicate their approval of this Amendment to the Agreement by their signatures below as of the date shown above. Authorized Signature. Authorized Signature: Edward F. Forbes, Jr. Dan Coody Executive Vicc President for Project Delivery Mayor OPERATIONS MANAGEMENT CITY OF FAYETTEVILLE INTERNATIONAL, INC. Date: Date: Appendix J COST DETAIL The revised annualized estimated costs for the calendar ycar of 2003 were calculated as follows: Direct Labor & Benefits Labor Markup Electricity Electrical Markup (0% Markup for 2003) Existing Other Direct Costs Other Direct Costs Markup Additional Other Direct Costs* Other Direct Costs Markup Subtotal Fixed Fee Lift Station Odor Control Capital Item Amortization Total 0 & M Budget SCADA Upgrade Project Total Annualized Budget Net Annualized Increase The following are some of the major reasons for cost circumstances: Modified 2003 (5 Yr Amortization) $1,519,208 $455,762 $738,000 50 $692,083 $69,208 5253,501 $25,350 $3,753,112 $73,031 $170,000 $100,622 $4,096,765 $0 $4,096,765 $222,264 Projected electrical costs due to the experience of 2001 with full utilization of the second aeration basin, as well as the experience of enormous increases in 'fuel cost adjustments' to thc electrical costs in 2001. The reoccurrence of this situation cannot be ruled out in 2003, even though this adjustment did not occur in 2002. 2. Continued increase in the cost of providing skilled professional labor in Northwest Arkansas' highly competitive job market, as well as a remarkable increase in the cost of benefits. Projected decrease in spending to control odors in the collection system since the tanks, pumps, and controls installed in 2002 will be sufficient for 2003 as well. Revised sludge management plan eliminating land application of liquid and utilizing dewatering to enable landfill disposal of thc dcwatered biosolids. Appendix K INTERIM SLUDGE DISPOSAL PROJECT- SCOPE OF WORK Due to a series of interrelated conditions and circumstances beyond the control of OMI or the City of Fayetteville, it has become expedient for the City of Fayetteville to adopt an alternative method for disposal of sludge produced at the Paul R. Noland wastewater treatment facility (WWTF). OMI will provide the equipment necessary to effect the implementation of this alternative, as described below. OMI will locate, procure and finance the cost of the necessary equipment at an annual interest rate of six and three-quarters percent over the course of 60 months, according to the amortization schedule listed below. The costs for the equipment will include the costs of purchase, delivery and any applicable sales tax, copies of the purchase orders, bills of sale or invoices to be furnished to substantiate the final principal amount. At the end of the amortization period, OMI will arrange for ownership of the equipment described herein be transferred to the City of Fayetteville. All operating costs excepting diesel, including labor, benefits, chemicals, electricity, landfill tipping fees, turnpike fees, licensing fees, tires, service of equipment and insurance arc included in the regular Operations and Maintenance budget and are not part of the scope of work defined in Appendix K. Diesel for this operation, estimated to be $70,000 per year, will continue to be provided directly by the City of Fayetteville as described in Article 3.8 of this Agreement. The following equipment will be provided for the express purpose of de -watering sludge from the WWTF and transporting that sludge to a landfill. 1. An Andritz CPF, Low Profile, SMX-S8 skid -mounted 2.0 -meter belt filter press or equal. This unit will include an emulsion polymer system and high-pressure belt wash pump. Estimated cost for this belt -filter press is $216,000. 2. Three (3) used ten -wheel tri-axlc semi -tractors suitable for hauling up to 80,000 pound gross vehicle weight payloads over public roads. Estimated costs for these tractors is $45,000 each or $135,000. 3. Three (3) new eight -wheel double -axle end -dump trailers suitable for hauling semi- liquid de -watered sludge over public roads. Estimated costs for these trailers is $25,000 each or $75,000. OMI will amortize the actual costs of this equipment (currently estimated at $426,000.00) over the course of 60 months at an estimated monthly cost of $8,385.15, according to the amortization schedule below (six and three quarter's percent (6.75%) annual compound interest). The first payment will be due with the July, 2003 invoice, and the last payment will be included as part of the June 2008 invoice. If for any reason this contract is terminated prior to the completion of the capital cost amortization, the City of Fayetteville will pay to OMI the remaining capital improvement principal amount, in full, within 30 days following contract termination. Estimated Amortization Costs for the $426,000.00 equipment purchase Total Capital Investment $426,000 Terms of Amortization 6.75% Length of Amortization 60 Monthly Payment $8,385.15 Month Payment Principal Interest Balance 1 $8,385.15 $5,988.90 2 $8,385.15 $6,022.59 . 3 $8,385.15 $6,056.47 4 $8,385.15 $6,090.54 5 $8,385.15 $6,124.80 6 $8,385.15 $6,159.25 7 $8,385.15 $6,193.89 8 $8,385.15 $6,228.73 9 $8,385.15 $6,263.77 10 $8,385.15 $6,299.00 11 $8,385.15 $6,334.44 12 $8,385.15 $6,370.07 13 $8,385.15 $6,405.90 14 $8,385.15 $6,441.93 15 $8,385.15 $6,478.17 16 $8,385.15 $6,514.61 17 $8,385.15 $6,551.25 18 $8,385.15 $6,588.10 19 $8,385.15 $6,625.16 20 $8,385.15 $6,662.43 21 $8,385.15 $6,699.90 22 $8,385.15 $6,737.59 23 $8,385.15 $6,775.49 24 $8,385.15 $6,813.60 25 $8,385.15 $6,851.93 26 $8,385.15 $6,890.47 27 $8,385.15 $6,929.23 28 $8,385.15 $6,968.21 29 $8,385.15 $7,007.40 30 $8,385.15 $7,046.82 31 $8,385.15 $7,086.46 32 $8,385.15 $7,126.32 33 $8,385.15 $7,166.40 34 $8,385.15 $7,206.72 35 $8,385.15 $7,247.25 36 $8,385.15 $7,288.02 37 $8,385.15 $7,329.01 $2,396.25 $2,362.56 $2,328.69 $2,294.62 $2,260.36 $2,225.91 $2,191.26 $2,156.42 $2,121.38 $2,086.15 $2,050.72 $2,015.09 $1,979.25 $1,943.22 $1,906.99 $1,870.55 $1,833.90 $1,797.05 $1,759.99 $1,722.73 $1,685.25 $1,647.56 $1,609.66 $1,571.55 $1,533.23 $1,494.68 $1,455.92 $1,416.95 $1,377.75 $1,338.33 $1,298.70 $1,258.83 $1,218.75 $1,178.44 $1,137.90 $1,097.13 $1,056.14 $420,011.10 $413,988.50 $407,932.04 $401,841.50 $395,716.70 $389,557.45 $383,363.56 $377,134 83 $370,871.06 $364,572.05 $358,237.62 $351,867.55 $345,461.65 $339,019.72 $332,541.55 $326,026.94 $319,475.69 $312,887.58 $306,262.42 $299,599.99 $292,900.09 $286,162.50 $279,387.01 $272,573.41 $265,721.48 $258,831.01 $251,901.78 $244,933.57 $237,926.17 $230,879.35 $223,792.89 $216,666.57 $209,500.16 $202,293.45 $195,046.20 $187,758.18 $180,429.16 • • 38 $8,385.15 $7,370.24 39 $8,385.15 $7,411.70 40 $8,385.15 $7,453.39 41 $8,385.15 $7,495.31 42 $8,385.15 $7,537.48 43 $8,385.15 $7,579.87 44 $8,385.15 $7,622.51 45 $8,385.15 $7,665.39 46 $8,385.15 $7,708.50 47 $8,385.15 $7,751.86 48 $8,385.15 $7,795.47 49 $8,385.15 $7,839.32 50 $8,385.15 $7,883.41 51 $8,385.15 $7,927.76 52 $8,385.15 $7,972.35 53 $8,385.15 $8,017.20 54 $8,385.15 $8,062.29 55 $8,385.15 $8,107.64 56 $8,385.15 $8,153.25 57 $8,385.15 $8,199.11 58 $8,385.15 $8,245.23 59 $8,385.15 $8,291.61 60 $8,385.15 $8,338.25 $1,014.91 $973.46 $931.77 $889.84 $847.68 $805.28 $762.64 $719.77 $676.65 $633.29 $589.69 $545.84 $501.74 $457.40 $412.80 $367.96 $322.86 $277.51 $231.90 $186.04 $139.92 $93.54 $46.90 $173,058.92 $165,647.22 $158,193.83 $150,698.52 $143,161.05 $135,581.17 $127,958.66 $120,293.28 $112,584.77 $104,832.91 $97,037.44 $89,198.12 $81,314.70 $73,386.94 $65,414.59 $57,397.39 $49,335.10 $41,227.46 $33,074.21 $24,875.09 $16,629.86 $8,338.25 $0.00 • • Interim Sludge Disposal Alternatives For the City of Fayetteville Wastewater Treatment Facility Prepared by: OMI March 2003 Interim Sludge Disposa,ternatives • Page 2 Executive Summary The City of Fayetteville treats and discharges wastewater and associated process residuals in accordance with a permit regulated through the State of Arkansas. In recent months, the State has altered previous interpretations of that permit, obliging the City to alter the method of operation of its treatment facilities in order to remain in compliance. Additionally, the process of expanding and upgrading the City's solids handling facilities has required much more time for ultimate design and construction than was originally anticipated, further obliging the City to take interim steps for solids handling. Several potential alternatives were investigated by the City's Water and Wastewater Department to meet the interim solids handling needs of the treatment facility. Because most beneficial reuse alternatives require long-term commitments and facilities to be constructed, the only viable short- term option available to the City is dewatering of raw sludge combined with landfill disposal. It is fully understood that the City will work toward a more environmentally friendly solution in the long-term, most likely at a Regional level. To facilitate implementation of the selected short-term alternative, the City has the opportunity to expand its existing contractual agreement with OMI to include acquisition of the necessary equipment, supplies, and personnel. OMI has agreed to provide these necessary services in a cost-effective manner that takes advantage of OMI's national and local alliances and allows the City to amortize the capital costs over a five-year period. At the end of this amortization period, OMI would convey ownership of the purchased equipment to the City of Fayetteville. An amendment is therefore proposed to the current operating contract with OMI that would authorize OMI to proceed with steps necessary to perform these actions, at a net increase to the City of $36,209 for the last six months of 2003. Subsequent budgets would continue to be negotiated beginning in September of each year, as has been the previous practice. Interim Sludge Disposallternatives • Page 3 General Circumstances The City of Fayetteville's Paul R. Noland Wastewater Treatment Facility (WWTF) routinely treats an annual average of approximately 12.0 million gallons per day (MGD) of influent wastewater, and safely recycles the treated water back into the water environment of Northwest Arkansas via the White River and the Illinois River drainage basins. The effluent discharged from the WWTF is routinely of higher quality than required by the City's very stringent National Pollutant Discharge Elimination System (NPDES) permit and the City of Fayetteville should be justifiably proud of the compliance record and environmental protection efforts demonstrated over the life of the facility. Another important aspect of wastewater treatment is the disposal of the residuals of the treatment process, commonly known as sludge. 1t is well known and often publicly discussed that the City has been working for several years toward an eventual solution to the complex problems surrounding the need for a second WWTF and the ongoing problem of wet -weather overflows from the sewer collection system, as well as the issue of sludge disposal. Circumstances beyond the City's control have now created a situation where the sludge disposal issue needs to be addressed on an interim basis well before the final design decisions are made pertaining to the second treatment plant and the collection system improvements. The City has always dealt with the issue of sludge disposal, as well as the actual discharged plant effluent, in an environmentally responsible manner and has employed the concepts of Beneficial Reuse to the greatest degree possible. The City's Sludge Management Site (SMS) was given an EPA Region VI Environmental Excellence Award for Beneficial Reuse in 1996, and was recognized as an innovative and highly desirable sludge disposal method throughout the early 1990's. As early as 1993, however, WWTF operating personnel were becoming anxious about the increasing levels of phosphorus in the soil of the SMS. Subsequent investigation done in conjunction with the University of Arkansas in the summer of 1993 indicated that much more phosphorus was being applied to the land than could be utilized by normal plant growth, and that the City likely needed to begin the process of identifying a different ultimate sludge disposal plan. Phosphorus cannot be destroyed and any phosphorus applied to the land must be used by the crop being grown or build up in the soil. The exact level of soil phosphorus that is acceptable varies depending upon soil type and land use practices, but the level found at the SMS is very high by any standard. Also during the early 90's, the EPA and State of Arkansas were becoming insistent that the City address the wet -weather overflow issue within the City's collection system, giving the City two issues that needed to be addressed, i.e. wet -weather overflows and sludge disposal. Subsequently, the long-range facility planning process, which was started by the City, resulted in the completion of the original facility plan in 1997. At that time, it was expected that the planning process would move into the design and construction phases relatively quickly and that the plan would be fully implemented well before the end of 2002. For various reasons the entire planning/design/construction process has been delayed to the point that final construction and startup of new facilities is not expected to occur until mid 2006. The delay in implementation of an alternative sludge disposal option has now reached the point where an interim solution very much needs to be implemented as soon as reasonably possible. Interim Sludge Disposaiternatives Page 4 • Two other contributing factors to the entire set of issues come from the Arkansas Department of Environmental Quality (ADEQ). One of these issues involves the use of plant effluent for irrigation and the other with the level of allowed nitrogen that can be applied to the SMS in any given year. During the summer of 2002, the ADEQ reached the conclusion that the City's NPDES permit did not allow plant effluent to be used as irrigation water on the SMS, even though that practice had been followed every year since 1988 and was always a part of the plan of operations for the Noland WWTF. Using plant effluent for irrigation is done mainly for two reasons. • First, the NPDES permit restricts the ability of the plant to discharge effluent to the Whitc River during the months ofJuly-September. While some effluent storage is available and City -owned Lake Scquoyah can be used to augment the flow of the White River for a time, it is necessary during normal summertime weather patterns that a large amount of plant effluent be disposed of via irrigation on the land application site in order to comply with those summertime flow restrictions. • Sccond, thc crop being grown on the SMS needs the additional moisture provided by plant effluent in order to maximize the beneficial reuse of the nutrients from the sludge. Failure to provide this supplemental moisture further aggravates the potential buildup of nutrients beyond the already undesirable levels previously mentioned. The ADEQ required the City to develop an application for a permit to use plant effluent for this purpose, which process began in the fall of'2002. The application process is remarkably involved and has been further complicated by thc very high levels of phosphorus found in the soil of the SMS. In fact, the nutrient balancing calculations required as part of the application to apply plant effluent to the site cannot yield acceptable results as long as sludge continues to be applied to the existing SMS. The second regulatory issue involves the amount of nitrogen that can be applied to the site in any given year. In 1992, the EPA promulgated new rules for Beneficial Reuse of Biosolids under 40 CFR Part 503. These rules were `self -implementing', meaning that each municipality had to follow these rules as a minimum, even if their NPDES permit had other or different restrictions. ADEQ officials verbally informed plant staff on numerous occasions that the old NPDES permit rules no longer applied and that the City had to comply with the new 503 rules. The ADEQ enforcement group, however, has recently altered their view of this situation as well as their view on thc use of plant effluent for irrigation. The upshot of this change in viewpoint is that the nitrogen limits expressed in the 1992 NPDES permit must still be met. Organic loadings to thc wastewater plant have continued to rise over the years. While the plant is still producing high quality effluent, the result of the process removing increased levels of organics is increased levels of sludge and the nitrogen that goes along with that sludge. Under the current regulatory stance, it is probable that more nitrogen will be available from the sludge being produced from the WWTF in 2003 than can be applied to the SMS. The result of thc combination of events and circumstances mentioned above is that the City needs to use an alternative method of sludge disposal other than the existing SMS on an interim basis Interim Sludge Disposa,ternatives Page 5 • beginning in July of 2003. Failure to take decisive action at this juncture will greatly increase the risk of potential excursions of the City's NDPES permit, both as it relates to discharge restrictions to the White River basin and to nutrient application on the SMS. Assuming that the City does choose to move ahead with a change in sludge disposal on an interim basis, the chosen alternative should be viable for at least several years, giving the final design and construction efforts time to be completed and a long-range solution found. The problem of what to do with sludge from the WWTF has been addressed by planners working for the City of Fayetteville on numerous occasions over the past several years, and their investigations need not be duplicated for this effort. Other area Cities are also facing this dilemma and at least one has had to use an interim solution as well, which is also valuable information for the City Fayetteville to use in making this decision. There are many potential long-range ideas, including drying the sludge to use it in a fertilizer product, composting the sludge to make it available to area residents, and lime -stabilizing the sludge to use it in mine - reclamation efforts in Southern Missouri. Each of these solutions and any others that might be proposed are at best several years from actual implementation, which will not be of benefit to the City of Fayetteville in solving the current dilemma. The only viable short-term alternative as identified by the previous consultants as well as our neighboring City has been to dewater the sludge and send it to a landfill on a short-term basis. Use of this alternative will in no way preclude Fayetteville's participation in a regionally based long-term solution, when that solution matenaltzes. The landfill option will let the City address most of the current problems and provide a short-term buffer for making the decisions about a long-term solution without duress. With that in mind, OMI has developed a series of alternatives that could be implemented to enable sludge disposal to occur from the Fayetteville WWTF while the final planning and implementation of a more environmentally friendly disposal method is completed, most likely at the Regional level. (Please note that it is very likely that all future sludge disposal alternatives, including this interim one, will be considerably more expensive than the method that has bcen used on the existing SMS.) There arc two distinct actions that must be performed to implement the landfill alternative, i.c. dewatering of the sludge and transport of the sludge from Fayetteville to a viable landfill site. There arc various methods of dealing with both of these actions, the most viable and cost- effective of which are further detailed below. Dewatering Dewatering of the sludge is a process whereby most available free water is removed from the sludge, producing a thick mud -like material that occupies Tess space and can therefore be transported more cost-effectively. The raw sludge currently being produced from the Fayetteville treatment process contains only about 2% solids and would fill approximately 22 trucks per day in this condition. It is expected that dewatered sludge would be a minimum of 15% solids and would fill about three trucks per day. It should also be noted that straight liquid sludge is not allowed to be disposed of in a landfill and that some sort of dewatering is required for this option.