12/12/2005Z
MINUTES
COMMITTEE OF THE WHOLE
DECEMBER 12, 2005
The village board met at 7:00 p.m. in the board room of the village hall on Monday,
December 12, 2005. In attendance were:
Village Board
Steven Harris, Mayor
Robert Benton, Trustee
Michelle Feldman, Trustee
Harriet Rosenthal, Trustee
William Seiden, Trustee
Matthew Wylie, Trustee
American Water Presentation
Staff
Robert D. Franz, Village Manager
Robert Fialkowski, Finance Director
Barbara Little, Director of Public Works
and Engineering
Philip Kiraly, Asst. to the Village Manager
Village Manager Bob Franz opened the meeting with brief background information on
American Water's interest in privatizing Deerfield's sanitary sewer system. Staff has
worked with the private company over the past several months as they learned about our
operations and developed the proposal they are presenting this evening. A conclusion
reached early in the process was that the collection and treatment systems should not be
separated. It is one system that should be treated as one entity.
Daniel Thompson, Manager of Business Development, and CPA Jeff Hensen of
American Water made a three part presentation: (1) Information on American Water,
(2) American Water's overall analysis of the options for privatization, and (3) Specific
recommendations on what they feel is the best approach for the village. A 21 page
booklet summarizing their proposal was distributed to the board.
American Water believes that there are an estimated $25 million in improvements needed
at the treatment plant, roughly $10 million more than the specific improvements
recommended by Stanley Consultants (Alternate #1). They are also estimating $8-10
million in projects to upgrade the sanitary sewer collection system. The main reasons for
the higher costs at the treatment plant are: the likelihood of an EPA mandate for removal
of phosphorus and the recommendation of a belt/filter press to replace sludge drying
beds.
Of the three options available to the village:
1) Deerfield continues to own and maintain its sanitary sewer system
2) American Water acquires the system
3) Deerfield enters into a financing/capital improvements/operations agreement
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American Water recommends Option 3. They estimate a 20% savings in operating and
maintenance costs due to what they believe they can offer in more efficient management
techniques. Their program management fee to oversee capital upgrades would be in the
range of 6-10%. Financing would be through Certificates of Participation at comparable
rates to village costs for bond financing. They would guarantee a maximum price for
capital improvements after a reasonable level of design (30%).
The board questioned why American Water does not feel acquisition of the system is
preferred. They responded that, because of the heavy capital costs projected, sewer rates
would be much higher under an acquisition scenario. The contractual option would allow
the village to remain in control of the utility and, by using American Water to manage
and operate it, keep the rates lower. Also, acquisition of the system would be hard to
reverse, should things not operate as expected.
Some board members expressed concern that the projected savings do not seem to
warrant what might be considered a radical change from the current situation. American
Water responded that they would view this new arrangement as a partnership that offers
benefits to both parties. Concern was also expressed that customer service could falter as
a result of the need for American Water to be profitable. Also noted was the impact the
arrangement would have on sewer personnel, who are now used to perform other
functions within the public works department.
It was agreed that there appear to be several partnership options which could and should
be explored further. The board will meet in a follow up workshop meeting without
American Water to discuss the matter in more detail.
Minutes prepared by:
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