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City Council to consider contracting private firm to operate wastewater plant

The city of Bemidji could save about $100,000 annually if it contracts with a private firm to operate the Wastewater Treatment Facility.

But those savings would likely come at the cost of city employees' jobs.

The Bemidji City Council will meet in a work session at 5:30 p.m. Monday at City Hall to discuss the proposals from four private firms interested in operating the city's treatment plant. Council action may or may not be taken on Monday.

Having a private company operate the treatment plant would save the city $87,607 to $118,612 a year, according to the staff report in Monday's council packet.

The city of Bemidji now employs eight full-time employees at the treatment plant, according to information in the council packet. Two of the four firms have proposed staffing five full-time employees at the facility while a third suggested four full-time employees. The fourth firm did not indicate a number of employees.

The City Council voted unanimously in December to solicit proposals from private companies that might have an interest in running the facility. The proposals were expected to offer a comparison on the cost of having a private firm operate the plant versus the city expenditures of doing so.

The city now spends nearly $1 million a year to operate the treatment plant, according to council documents.

Four firms responded to the city's request for proposals, according the staff report. They were rated on a 100-point scale by four city of Bemidji employees and two companies topped the list:

E Veolia Water, which scored a 94, operates 65 plants in central Minnesota with Minnesota contracts in the cities of Monticello, St. Michael and Delano. Veolia proposed four full-time employees in Bemidji. Savings for the city of Bemidji are projected to be $118,612 a year.

E People Service Inc., which scored a 90, operates plants in 54 Midwestern communities with 27 smaller contracts in Minnesota. Their largest contract is with the city Otsego, Minn., which has a population of 8,210. People Service proposed five full-time employees in Bemidji. Savings for the city of Bemidji are projected to be $104,050 a year.

E EarthTech and NTS also responded to Bemidji's request, but were not preferred by staff. EarthTech proposed five full-time employees and was projected to save $87,607 a year. NTS did not specify a number of employees and proposed an operating cost over $1 million, which would not save the city any money.

The proposals from Veolia Water and People Service Inc. were similar, but the main difference was the number of people who would be employed at the Bemidji plant, according to the staff report from City Engineer Craig Gray and Public Works Director Andy Mack.

Because People Service proposes five employees versus four, Gray and Mack recommended that if the city does wish to contract for the treatment plant's operations, it would do so through People Service, the report says.

"The additional (full-time employee) that People Service is proposing would certainly help to make a transition process smoother," the staff report says. "People Service would hope to hire the staff they need to run the plan from the existing plant staff."

Additionally, People Service plans to staff the plant about 50 hours a week versus 42 to 44 hours as proposed by Veolia Water, the staff report says.

If the City Council does decide to pursue a contract with People Service, it could expect to save about $500,000 in five years, the staff report notes.

The decision by the council to consider an alternative for the treatment plant arose while the council was considering a report on the condition of its sewer fund.

The city is poised to begin generating a deficit in the fund in 2011, according to a report prepared by Public Financial Management Inc.

This city has adopted sewer and water access charges, SAC/WAC fees, but while they are expected to generate between $180,000 and $216,000 annually, the sewer fund is slated to have deficits of $2.6 million in 2011 and $3.3 million in 2012, PFM reported.