Travis County Commissioners Court
December 20, 2005
Item 8
Number 8 is to discuss capital improvements to city of Pflugerville's wastewater treatment plant and its potential impact on reuse water availability and rates charged to Travis County for irrigation of northeast metropolitan park. Oerk r.
>> we entered into a interlocal agreement with the city of Pflugerville in the year 2000 where they would provide us with treated effluent from their sewer treatment plant, which is right next to the park. So it was a very convenient source of irrigation water for Travis County. In that agreement we agreed to pay for some improvements within the treatment plant, and then they agreed to sell us water at five cents per thousand gallons. And that is very -- a very, very low rate for treated effluent. We've been operating off that agreement for -- up to today. We, Travis County, designed, but did not actually make the improvements to the sewer treatment plant to provide the effluent to the park. We did a tour of the treatment plant, and in that tour with the operator and the city officials, it turned out that they had two surplus pumps that they had at the site. And rather than the county come in and build new stuff, they said why don't you just use these pumps that we have available? And we did that. We basically connected in our line to the treatment plant, got to use their surplus pumps, and we were off and we have been operating off that for some time. But because of the population growth of their service area, they are now up against tceq guidelines to expand their treatment plant. They have designed improvements to the treatment plant that will require them to take back those two pumps that they had basically loaned the county to use for treated effluent. They have now integrated those into their expansion plan and they have come to the county to say, look, we would still like to provide you with treated effluent, but it's going to require about a 390,000-dollar improvement to the plant to put in three pumps, some skimmers, some other associated communications network that will allow us to continue to pump treated effluent to the park and provide all the treated effluent you want. So part of it is they're asking us to pay for those capital improvements. They have already put out a bid. They've designed the improvement. They have awarded the main body of the construction. They have an alternate bid which they're holding back on, the 390,000 dollars' worth of improvements. They will proceed to award that bid if the county agrees to pay for it. And they have until mid January to either act on the alternate bid or it expires. If they don't award the bid, they will provide us with whatever water they can with the equipment that they have, but they do have some concern that it will not meet our needs long-term. The other thing that -- a couple other issues here. One is the agreement specifies five cents per thousand gallons of treated effluent for the first year. And then every year after that they were going to recalculate based on the actual cost of operating and maintaining the part of the system that provides us the treated effluent. They never really did that, so they've been selling the water to us at five cents per thousand. At this point they've gone back and recalculated and they estimate their current cost to be 24 cents per thousand gallons, and not five cents per thousand. We understand, we do, that 25 cents per thousand is much more likely to be their true cost than the five cents. The five cents was a deal.
>> of the century.
>> and 25 cents quite frankly is probably more closer to what basically is a base price. If you went to the city of Austin or any other water provider for treated effluent today, you would pay over a dollar per thousand gallons. So we're still at a very, very good rate for receiving treated effluent. As I致e said in my memo, we are searching for raw water supplies for east metro park and for southeast metro park. We're moving toward basically tapping our own wells to provide ourselves irrigation water for those other parks. But we also expect to pay anywhere between 25 and 50 cents per thousand gallons to operate and maintain our own system jution to get raw water to irrigate the parks. So we believe that the bottom line is that Pflugerville is recalculate -- Pflugerville's recalculated rate is a fair rate and I would suggest to the court that that is probably something we should consider. The final issue is when they go to reconstruct the treatment plant, they're going to have to take down the treat the effluent system. The plant will be under construction for a year. During six months during that year our service will be interrupted. It will not be able to provide us treated effluent because the system will be down. They have agreed to sell us potable water from a fire hydrant close to the park at $1.25 per thousand gallons. $1.25 per thousand is the cost for potable water. So they're selling to us at cost. What they would normally sell the water for retail to their own customers, especially the volume that we would need, is over $5 per thousand gallons. So it's not an ideal situation. We're going to get hit probably during our peak demand during the summer with interruptions of service. And when they interrupt the service, they're going to ask that we pay for the water at $1.25 per thousand. So that will cost us a good bit more than we're currently paying for irrigation during this coming fiscal year.
>> joe, help me out here because in the memo you say that during the six-month period, just this little interim period, they've actually agreed to sell us the potable water at 67 cents cents per one thousand gallons and it is actually a later o and m of $1.25 of potable water. So they really are cutting us --
>> my memo was in error on that. The 67 cents per thousand was the cost -- they had initially calculated the $1.25 per thousand -- there are two ways to pay for the 390,000-dollar improvement. At one time they estimated that the cost was going to be more like $550,000 for that capital improvement. And they said there's two ways of paying for that. You could pay for it in lump up front or pay for it in a higher water rate for an extended period of time. When they thought the capital improvement was valued at half a million dollars, they said the capital cost plus the debt service would translate to $1.25 per thousand gallons as an ongoing water rate. Because the bid came in lower at 390, they now have said, if you want to pay for this over time, it will be 67 cents per thousand. So that's where the 67 cents comes in. That's one way to pay for the capital improvement is just a higher rate over an extended period of time. But nonetheless, when water service -- when the treated water service goes down and they have to sell us potable water, they have agreed to sell that to us at $1.25 per thousand. That's the cost of the base cost of potable water for us during what they call the interim periods. So here's -- let me summarize again. If we pay for the 390,000-dollar capital improvement up front, our ongoing cost of the water would be 24 cents per thousand. If we choose just to pay for the capital improvement as part of the water rate, our ongoing rate would be 65 cents per thousand. When the water service is discontinued during those six months, and only during that six-month period of time, will be $1.25 per thousand. Now, there is a legal issue which I don't have -- yet have an answer for, and that is whether or not we can pay for the 390,000-dollar capital improvement if we don't own the property that the capital improvement sits on. Now, I asked this question to the city of Pflugerville, and part of the costs are actually capital improvements that they could say the county owns these pumps, the county owns these pipes, and it is your property even though it's attached to our land. Another piece of the improvements, the 390,000, which are basically systemwide costs. Those are some of the communication systems, the overhead of the administration of the contract. Those are things that are just spread across the entire project, so they're not able to allocate that and say that Travis County owns that piece of the 390. So the legal question is still outstanding with regard to whether or not we can use certificates of obligation to pay for the 390,000. We believe in looking at our budget that we do have the operating cost in tnr's approved budget to cover the cost of the ongoing operation and maintenance cost, including the interim interruptions. We have consulted with pbo with regard to the availability of remnants of co's left over from earlier issuances. I believe they at this time say that they do have 390 available if they can legally use it for that purpose. And those are questions that still have to be answered by the county attorney's office. I also have asked roger, who has been our project manager for northeast metro park and also the most knowledgeable about our irrigation system, to look over the engineering plans of that 390,000-dollar capital improvement to make sure that we're basically getting our money's worth and we're not buying things that we wouldn't need otherwise or there's not some alternative to putting those improvements in. So I知 not asking the court's decision today, I知 just briefing you on what decision has to be made before January 19th, and that's when the bid expires that the city of Pflugerville has. So we will be back to the court with more information next week and the following week, but kind of ramp up to a decision here within the next three weeks.
>> a couple of points related to probably the biggest example of where we have invested huge sums of money for something we do not own. It would be sh 130. We bought right-of-way, but it is not our right-of-way, it belongs to the state of Texas and it meant a giant asterick and huge notes on our consolidated statements, we have to explain that up in new york about how you have an expenditure going out and you do not have something -- you do not have an asset on your books. So that is a discussion we've had before. Certainly in terms of what makes sense when you've got 18 soccer fields and the eight baseball fields, those fields need water, so if there is one of you have a choice of an ongoing expense of 24 cents or 65 cents, sign me up for the 24 because sometimes, especially in the drought times when you have to hit those fields with lots of water, there's the variable. And I think it makes fiscal sense, prudent sense to go with the up front costs. Quite frankly, on the 390 that was a delayed investment that we did not have to pay back in '97 when we first got the authorization for this plant, and we were lucky that Pflugerville never did recalculate that five cent charge. That was the deal of the century and we're grateful for it, but in fairness to them, they have the right to recalculate it and it is truly still far below market rate if these fields were located in somebody else's jurisdiction. So we've got a wonderful partnership with the city of Pflugerville and hopefully we can get the answer within a week related to whether we can use the co's, but there's been a lot of work on this.
>> I have given you my business opinion about this. I think tom wants to provide you some legal guidance in executive session with regard to the interlocal agreement.
>> tom wants to give us that legal opinion when we're closer to needing to take action, right, not today?
>> well, tom can speak for himself.
>> you will put this back on for action when?
>> I値l probably keep rolling it week to week until I get a decision. I値l have more information next week and then if we can't act next week, the following week.
>> we need agenda wording then that allows unconscious to do the two or three things that you're suggesting. This really goes to the 390,000 more than to the other pieces, right?
>> well, I think tom's legal advice goes to both ongoing o and m and to the capital cost.
>> this is basically an upgrade to the system. And you're saying it's a good business deal for the county to upgrade the system. So that's the decision. If you'll feel it's a good business decision, I don't need to spend your time talking about the contract. If it's a good business decision, it's a good business decision and it will be an amendment to the contract basically to upgrade the system.
>> some bright lawyer in the county attorney's office asked the question about whether we need to own the improvement.
>> I値l look into that. I don't think that's going to be an issue, but we can look into it.
>> like I said, on sh 130 it's like boy howdy, do we not own lots of right-of-way?
>> we always look forward to your legal opinion, but my question is shouldn't we give it a chance to crystal crystallize rather than here you opining sort of generally?
>> on that piece I do think a week would be appropriate from what I致e seen from the e-mails that they want more time on that legal issue.
>> my point about the agenda wording is that when it comes back, you are asking for several actions.
>> yes, I am.
>> but the wording needs to reflect --
>> I will reword the agenda.
>> right.
>> joe, if you could communicate to the city of Pflugerville, which I know you will, to basically say, it's all laid out today and we will hopefully have action on this shortly, but certainly in time for their bid expiration. We're quite cognizant of that date.
>> I致e somewhat indicated to them that we would have something back to them before then.
>> joe, during this period when the water is more expensive, you are going to alter greatly the amount of water you would have to use?
>> no.
>> why?
>> because those fields, it's not something -- you've got grass growing during the summer. If you don't water it, it dies.
>> I was in the business for 17 years. Grass will not go away -- I mean, will it not be as green? Will it not be what some people would want it to be? No. Will it die? Will you lose all your grass? No. I mean, it needs to be -- I mean, there are a lot of times when people don't water -- everybody would like to water their yard to keep it green and keep it whatever, but we have water rationing. I think that we ought to -- if we've got to tell users, do you know what? As opposed to taking the hit and spending money on additional dollars or spending additional dollars to keep something aesthetically nice and this and that, it's not going keep people from playing on it, it's not going to go away. But I think that we need to -- I think that we need to look at that. The grass is not going to go away.
>> I just would also make the point that at some of our other fields we're paying considerably more for water and nobody has said, I知 sorry, you need to cut down the use of your water because it's more expensive and somehow there's a meter running on how much these fields take. We have gotten an incredible deal on water out in the Pflugerville area, and the other fields going in are paying considerably more for the same stuff and they're not being asked to work on the health of these fields. These fields need water.
>> I知 not saying they don't need water, Commissioner. And maybe it is something that we ought to look at the other fields, but grass is not going to go away because you don't water it as much during a six-month period. I mean, you're right. If you want to compare it to some areas that you water it costs you a lot more, then that's one argument. But I知 just saying that given -- that's not accurate that the grass is going to go away. Now, is it going to be something less than what you may want? You make that call.
>> I値l just remind everybody, I went to the Austin city limits for three days and snorted dust for weeks afterwards because they didn't water the grass, the grass died. And when people used it, in this case people were just walking over it as opposed to playing soccer on it, but they were the soccer fields, it died, it went away, and they had a disaster on their hands in terms of dust.
>> Commissioner, you're not talking about putting hundreds of thousands of people on this thing. You could have watered wherever they did the concert eight inches, it wouldn't have made any difference. You would have had mud then. I know they're soccer fields, but I知 saying they were not constantly -- hey, there's not -- there aren't a lot of subject matters up here that I know as much as some of you, but grass I can tell you. You've hit a subject matter that I can give you a little bit of advice. Take it or leave it, but it's not going to be what you want it to be -- anyway, that's it.
>> make sure our good friends at the city of Pflugerville know how much we appreciate their working with us and we plan to work with them.
>> very good. I will.
>> number 22, a question I had just about the wording there that threw he off. 22 is to approve contract award for a bi-directional amplifier system for Travis County, rfp number p 050072-lc to the highest scored proposer, gpd telecom incorporated. And it was that high score proposer that kind of threw the county judge off. The backup says the best fitting solution for the county, and my question is what's the legal standard and does the highest sco r. Score meet it?
>> highest ranking is what the agenda says --
>> the agenda says the highest scored proposer.
>> the back up says highest ranked.
>> I知 sorry. I didn't have this.
>> you're not saying the county judge change that had language?
>> I don't know who change that had language. It really doesn't matter. What you've got here is a difference, but in view of the facts behind it, it's a different -- our distinction was out of difference because when you look at -- what you have to do is look at the criteria that you had to make your decision on. And when you look at those criteria, one of the criteria was whether it was the best fitting solution, and that criteria took -- potentially took 100 out of 200 points, so it was the biggest issue. And when you look at all of the criteria that were scored, the average scoring on six people who were on the review team turned out to be this proposer, gpd, getting 181 points out of a possible 200 and the other proposer getting 167 average. So they were the best fitting solution, they were also the clearest proposal. They were also the -- when they submitted their proposal initially, they were not the least cost, but the best and final offer and their review of their cost and they are in fact the lowest cost as well. And they have a very high reputation in the industry for doing a good job.
>> two quick questions. One, what's the legal standard? And two, is this language legally sufficient?
>> this language is legally sufficient.
>> that's the answer to two.
>> and the law says that you're to award to the best negotiated offer. And so best negotiated offer is what you've got here. They meet the legal standard as well.
>> that's why I move approval.
>> second.
>> discussion? Do we anticipate seeing language like this in the future? [ laughter ]
>> I thought this was the first time in terms of highest awarded.
>> highest scored, it may be a first timer. What the purchasing office usually uses is highest ranked. And it doesn't mean -- they're the same thing.
>> don't do this any more. [ laughter ]
>> well, if the purchasing agent plans to be a lot more creative in '06, I just want to be able to understand and tag right along. All in favor? Show Commissioners Gomez, Daugherty, Sonleitner and yours truly voting in favor. Abstaining, Commissioner Davis. Thank you, ms. Wilson.
>> thank you, barbara.
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Last Modified:
Wednesday, December 21, 2005 11:44 AM