Loading...
08/12/1986 City CouncilTHESE MINUTES SUBJECT TO AUGUST 19, 1986 APPROVAL EDMONDS CITY COUNCIL MINUTES AUGUST 12, 1986 WORK MEETING The regular meeting of the Edmonds City Council was. called to order at 7:00 p.m. by Mayor Larry Naughten in the Plaza Meeting Room of the Edmonds Library. All present joined in the flag sa- lute. PRESENT Larry Naughten, Mayor John Nordquist Steve Dwyer Laura Hall Jo -Anne Jaech Bill Kasper Lloyd Ostrom CONSENT AGENDA ABSENT STAFF PRESENT Jack Wilson Bobby Mills, Pub. Wks. Supt. Nigel Euling, Chris Beckman, Eng. Coordinator Student Rep. Peter Hahn, Comm. Svc. Dir. Art Housler, Admin. Svc. Dir. Scott Snyder, City Attorney Jackie Parrett, City Clerk Margaret Richards, Recorder Items (B) and (F) were removed from the Consent Agenda. COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, TO APPROVE THE BALANCE OF THE CONSENT AGENDA. MOTION CARRIED. The approved items on the Consent Agenda include the following: (A) ROLL CALL (C) ACKNOWLEDGMENT OF RECEIPT OF CLAIM FOR DAMAGES FROM JAMES KOERBER ($75,000+) (0) REPORT ON BIDS OPENED JULY 8, 1986 FOR ONE DUMP TRUCK BODY, AND AWARD OF BID TO BEALL TRANSLINER ($14,916.72) (E) AUTHORIZATION TO CALL FOR BIDS FOR THERMOPLASTIC APPLICATION EQUIPMENT FOR TRAFFIC CONTROL DEVICES ($20,000) APPROVAL OF MINUTES OF AUGUST 5, 1986 ITEM (B) ON THE CONSENT AGENDA] Councilmember Hall noted that the City Clerk's memo states that the minutes should be dated Au- gust 5, 1986 and not August 8, 1986. COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEMBER OSTROM, TO APPROVE THE MINUTES AS AMENDED. MOTION CARRIED. AUTHORIZATION TO SELL TWO SURPLUS POLICE VEHICLES JITEM (F) ON THE CONSENT AGENDA] Councilmember Nordquist said it appears that selling the two surplus vehicles is not a bid re- quest but, rather, the fact that Financial Consultants International have been selected as the purchasers. He inquired if the vehicles should have gone out for bid. City Attorney Scott Sny- der recommended that this item be removed from the Consent Agenda for further investigation of whether the vehicles can be sold without bid. COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER HALL, TO PLACE ITEM (F) ON NEXT WEEK'S AGENDA. MOTION CARRIED. CONTINUED DISCUSSION ON PRIVATIZATION OF SEWAGE TREATMENT FACILITY Mayor Naughten noted that the City of Edmonds, as well as a number of other cities, has been ordered by the Federal and State governments to build secondary sewer treatment plants. The traditional form of financing has been revenue bonds, and the alternate form is privatization. Mayor Naughten said the primary goal of the City is to find a way to construct the plant with the least cost and, at the same time, protect the risk to the rate payers. The members of the.,,panel_ participating in the discuss -ion were as follows: Robert Marritz, attor- ney with Culp, Dwyer, Guterson, A Grader, said his firm was the principal which conducted the study on privatization for the Department of Community Development and drafted the law that Lynn- wood is proceeding under; Meryl Hrdlicka, Mayor of Lynnwood, said Lynnwood is also pursuing privatization; Bill Nims, Public Works Director, City of Lynnwood; Kline Barney, President of Parsons Municipal Services, a privatizer; Denis Dandeneau, Clean Water Services; Phyllis Lamphere, Consultant, CH2MHill, said she was a member of the team which conducted the study for the State of Washington on the feasibility of privatization for waste water treatment. The firm has been in the waste water treatment business for over 40 years; Ron Doctor, Arthur Young & Co.; Mark Alpert, Signal Environmental Services; Don Evans, CH2MHill. Mayor Naughten introduced Commissioner Iry Potter and Commissioner Phil Montgomery from the Ron- ald Sewer District. Mr. Marritz said under the law, the request for qualifications (RFQ) is an optional first step in the procurement process. A city may secure qualifications from a contractor by the same means as it secures proposals. He noted that the City of Lynnwood is dispensing with this step because of the shortness of time but will, instead, incorporate the qualifications to seek the credentials of the parties as part of the overall procurement process. Mr. Doctor said there is a detailed qualifications statement in the RFP that requires the propos- er to submit a fairly lengthy history of his qualifications. Mr. Doctor said the panel expects to be able to readily determine the proposers' qualifications from the statements submitted. Mr. Nims said the qualifications will require an introduction and background, corporate structure of the proposer, experience and qualifications including construction experience, operational experience, qualifications of team members, privatization experience, proposers' financial capa- bilities, proposers' technical concept of how the secondary treatment level will be developed, description of project financing and project implementation, and comments regarding service con- tract. Mr. Nims said a task force in the City of Lynnwood will peruse the proposals and narrow the selec- tion down to three to five proposers for serious consideration of detailed negotiations for a service agreement. The task force will be comprised of Mr. Nims; Loren Sand, Assistant Director of Engineering, Lynnwood; Pat Curren, Assistant City Attorney, Lynnwood; Ron Doctor; Robert Marritz; Hugh Spitzer; Whit, an insurance expert; Shearson -Lehman; Jim Dow, Consulting Engi- neer, Lynnwood. Mr. Marritz said the procurement section of the law is by far the bulkiest section because it involves a complex, long-term relationship. There are protections built into the process for the city, as well as a good deal of flexibility. Ms. Lamphere recommended that a city look for a proven track record regarding RFQ's, i.e., docu- mentation of past performance and the standard of that performance when accepting RFQ's and estab- lishing a relationship. Councilmember Ostrom inquired how a city would acquire the expertise in setting up criteria for evaluating proposals. Mr. Nims said there is a good deal of information contained in the RFP's and contracts that have been signed with entities that have entered privatization, which the panel has in its possession. Mr. Nims said the Parsons Company visited the site at Chandler, Arizona and spoke with city officials. The city decided to enter privatization because of the financial advantages. Councilmember Ostrom inquired who accompanied Mr. Nims on that trip. Mr. Nims said Mayor Hrdlicka, the City Attorney, and the Consulting Engineer did. Councilmember Jaech inquired how long the contracts have been in existence which the panel has in its possession. Mr. Doctor said the contract with Chandler was signed in December of 1983. Councilmember Jaech inquired if that was the first contract that was signed for secondary sewer treatment in the United States for waste water treatment. Mr. Doctor replied affirmatively. He noted that there has been extensive privatization activity in solid waste for ten to fifteen years. Councilmember Jaech inquired if there are ten to fifteen year contracts which the Council could use as a role model to ascertain what the entities have experienced. Mr. Dandeneau said Clean Water Services has been privatizing Resource Recovery Facility in Saugus, Massachusetts since 1972. Councilmember Jaech inquired about the term of the contract. Mr. Dandeneau said it is a twenty-year contract. He said Clean Water Services lias entered into other agreements with major cities since that time. EDMONDS CITY COUNCIL MINUTES Page 2 AUGUST 12, 1986 Councilmember Jaech asked how many firms exist that have a lengthy track record of implementing privatization. Mr. Dandeneau said privatization in waste water is a recent phenomenon so there is a very narrow history. Mayor Naughten recognized Katie Allan, Representative of the 21st District, in the audience. Councilmember Hall inquired if the contract with Chandler is a twenty-five year agreement. Mr. Barney said the contract' is a twenty-five year contract with an option to purchase the plant at fair market value at the end of the term. The details of the continuing contract are written into the contract, if Chandler wishes to do so. Councilmember Hall inquired if Chandler owns the land. Mr. Barney replied affirmatively. Mr. Doctor noted that the service agreement with Lynnwood has a number of options written into it at the end of the term as follows: 1) purchase the facility at fair market value at any time during the term of the privatization contract; 2) purchase the facility at the end of the term; 3) negotiate an extension of the service contract; 4) negotiate a lease of the facility. Mayor Naughten inquired: 1) about the number of solid waste privatizes plants in the United States; 2) about experience in privatization in solid waste. Mr. Doctor said he did not know the number of solid waste privatization plants in the United States, but there are a large number in existence. Mr. Dandeneau said the first solid waste privatization plant in the U.S. was operat- ing in 1982 in Saugus, Massachusetts. Mayor Hrdlicka said contracts with other cities were analyzed and shortcomings were apparent. He said some contracts can be so restrictive that the price is restricted, also. Councilmember Hall inquired: 1) if there are interloeal agreements with other privatized plants; 2) about the population of these cities. She expressed concern that the rate payers in Edmonds may be "heaped on". She also inquired if the privatized plants went beyond secondary treatment and where the waste was disposed. Mr. Barney said the Chandler plant has initial capacity of 5 million gallons per day and is designed for expansion to 10 and 20 MGD. The plant treats waste to advanced secondary treatment and is now suitable for body contact. Councilmember Hall inquired if there are any by-products other than purified water. Mr. Barney said there is sludge. Coun- cilmember Hall inquired how the sludge is handled. Mr. Barney said there is no reuse made of sludge of any significance at the present time. Councilmember Hall inquired if technical entities, such as NASA, have been contacted regarding up-to-date facilities. Mr. Marritz said an attempt will be made to draft the Lynnwood contract to anticipate possible modifications or expansions of the project that are required. Renegotia- tion can be specified in the contract. Mr. Doctor said NASA -type technologies are not designed for large numbers of people and may not be applicable. He said there may be spin-offs from those technologies that the engineering commu- nity can adapt. However, those kinds of technologies have been included if they are designed at a later time. Lynnwood has been allowed unilateral expansion of its project if they are unable to come to an agreement with the privatizer at the end of the term. Mr. Nims said the Department of Ecology (DOE) and Environmental Protection Agency set forth very narrow definitions of what processes they will approve to be constructed to comply with secondary treatment. Because of those definitions, a research and development project cannot be commenced; the engineering report would be not approved by DOE. The process that the privatizer would pro- vide remains open in the RFP. Mr. Nims said technical development in the treatment of sanitary sewage has been very slow. He said he is not aware of any technological breakthroughs which will alter secondary sewage treat- ment. Mr. Barney said the Chandler plant illustrates that the privatization process is amenable to upgrading and improvement. An addition to the plant has been negotiated with the city which will allow the effluent to be used in body contact situations. Mr. Barney said that costs increase a great deal as treatment becomes more advanced. Mayor Naughten inquired how the City of Lynnwood addressed contracts, service agreements, guaran- tees, and protection issues. Mr. Marritz said there are a number of ways a city can protect itself in the event that the privatizer declares bankruptcy. Bankruptcy would be defined in the service agreement as default, which would trigger various remedies, including the ability of the EDMONDS CITY COUNCIL MINUTES Page 3 AUGUST 12, 1986 city to enter the project or provide for another party to enter the project and take it over; ability of the city to terminate the contract; possibly the ability to collect on a performance bond. ' Mr. Marrit2 said'the city would be protected by a security interest in the project. He said there would be a number of cross protections, as well, which would be built in between the lease of the land and the service agreement which would protect and secure the city's position and enable it to take over the entire project. Councilmember Kasper inquired if a city could foreclose in the event of bankruptcy. Mr. Marritz said the service provider would be obligated on the bonds, and not the city. Because the bond holders are interested in protection and security, Mr. Marritz said it appears they would feel most secure if a city designed the contract to include continuity of operation. Mr. Doctor said a trustee would be appointed to collect the service fee payments from a city and make payments to a bond holder and service provider for industrial revenue development bonds. If a city took over operation of the plant, the payments would be made to the trustee, and the bond holder's interest would be protected. He said most agreements have credit enhancements or liquid- ity facilities. Councilmember Jaech inquired how the contract would address protection of a municipality from interruption of service due to backups, spills, etc. Mr. Marritz said breakdown in the plant due to the lines which were not part of the project that was not contracted for for service would be the city's responsibility, just as it would be if the privatization arrangement were not in ef- fect. If the facilities were part of the project, there would be obligations on the part of the service provider. Mayor Hrdlicka said the city must guarantee. the quality of materials which will be brought into the treatment plant. Councilmember Jaech inquired how the contract with the City of Lynnwood addresses maintenance of lines. Mayor Hrdlicka said the city will maintain a Public Works and Utility crew to service the lines. Councilmember Jaech inquired how a contract addresses negotiations at the end of the term. Mr. Marritz said Lynnwood's draft agreement is written so the basis for the continuation of the ar- rangement is set forth. Ile said at any time during or after the term, the City can contract and take over ownership and operation at fair market value. Councilmember Dwyer inquired if the draft agreement with Lynnwood provides that at the end of the term there is a designated price at which the city can require the contractor to continue operat- ing the plant. Mr. Marritz replied negatively. He said it is optional for both parties to go forward. If they do go forward, the basis on which they would go forward regarding the basic service fee is set forth in the contract. The basic service fee for the first twenty years would include payments to cover debt service to amortize the bonds as well as other fixed expenses. Councilmember Dwyer inquired what percentage of the total charge is the basic service fee. Mr. Dandeneau said the scenario for the City of Edmonds may be $1,000,000 in operating costs and $1,500,000 in capital amortization. $1,000,000 would be fixed for a twenty-year period, and the other $1,500,000 would potentially have some indexes that it would be increased over the twenty-year period as inflation goes out. The $1,000,000 that was invested would be paid off at the twentieth year. Councilmember Dwyer inquired how cities would arrive at the remainder of the price. Mr. Dandeneau said the fee at the twenty-first year could be projected, and the contractor could stipulate that the city could renegotiate the fee at the end of the term. Councilmember Dwyer inquired: 1) if there is a mechanism which is set forth that defines the margin of profit; 2) who will be in the pool of competitive bidders if the bid from the contrac- tor is unacceptable to the city at the end of the term. Mr. Nims said the contract allows for competitive negotiation. Mayor Hrdlicka said the city, itself, can operate the plant after purchasing it at fair market value. Councilmember Dwyer inquired how it would result that the city would not buy the plant twice after purchasing it at fair market value at the end of the term. Mr. Nims said the plant will be depreciated over twenty ,years. Mr. Marritz said the IRS requires that the sale has to be at fair market value. Ile said the fair market value will not be a new plant price but what the plant is worth. The city, during the prior twenty years, had the benefit of the reduced user fees. EDMONDS CITY COUNCIL MINUTES Page 4 AUGUST 12, 1986 Mr. Marritz added that the law provides that a city cannot enter into that type of arrangement unless it finds that it is financially advantageous to the city. Mr. Doctor said the feasibility study for Lynnwood included layout of the annual cost from the city's perspective in public ownership, in privatizing arrangements, and a purchase price at the end of twenty years, and, also, from the privatizer's perspective. A formula was worked up for the purchase price. Mr. Doctor said taking all these factors into consideration, the city would still save money if it purchased the plant at the end of the twenty years. Mr. Doctor said the percentage of basic service fee and operation fee would vary from one con- tract to another as well as one privatizer to another. He said the analysis for Lynnwood re- vealed that operation and maintenance costs at the end of the twenty-year period would be roughly equal to the debt service costs. Community Services Director Peter Hahn said it sounded as if the city would buy a plant twice. He said if the city were to conventionally finance a plant, the debt service would be zero after the plant is paid off. However, he said earlier testimony revealed that the debt service would not be zero if financed through privatization because the entities would renegotiate and buy the plant back. Mr. Doctor said, in a sense, the city would be buying the plant twice but would still realize a 20% savings. Councilmember Hall inquired if assessment levels and quality control -type measures are written into contracts. Mr. Marritz said there are various duties imposed on providers throughout the contract term to insure he is operating and maintaining the plant so it has value at the end of the term. These duties are subject to audit and monitoring by the city on a regular basis. Any failure to discharge that obligation by the service provider is a breach of the agreement. Councilmember Nordquist inquired what kind of format would be established to monitor those obliga- tions. Mr. Nims said there are provisions in contracts that a privatizer must provide: 1) an operation and maintenance manual subject to the city's approval; 2) audit of maintenance proce- dures throughout the years; 3) reports from privatizers on compliance with requirements of the operation and maintenance manual. The City of Lynnwood, he said, is going to require that the privatizer provide the city with information for the manufacturer's operation and maintenance manual life expectancy of equipment. The city also has the right to inspect the plant at reason- able intervals without interfering with the operation. Mayor Naughten inquired if the cost to privatize will be higher than usual because of the strin- gent requirements of a city. Mr. Barney replied negatively. Councilmember Dwyer inquired what secures performance other than the contract itself. Mr. Barney said a project can be bonded, but that is determined by the client. He said Parsons, Inc., guar- antees completion of a project on time within the budget. Mr. Nims said the conditions set forth in RFP's and the draft service agreement are true at the present time. However, he said the terms will not be settled until the parties sit down at the table and conclude negotiations. He said DOE has to review and approve the final agreement be- fore the city is authorized to proceed. Mr. Marritz said the city's cost in monitoring and auditing a project would be borne by the ser- vice provider, at least in the proposed draft. He said the entire agreement is predicated on an active role of the city in monitoring and supervising operations. Mr. Doctor said all of the city's costs for privatizing a plant, both before and during the term of the contract, are reimbursable by the privatizer simply because the privatizer, if he pays for those costs, realizes tax benefits. Mayor Naughten inquired if the City of Lynnwood had two scenarios for costs regarding convention- al financing and privatization. Mayor firdlicka said scenarios were worked out if the city fi- nanced the project independently, with a grant, privatization without a grant, and with a grant. The scenarios were contingent upon legislation. Mr. Doctor said the investment tax credit has been abolished; there will be a maximum tax rate that a corporation or individual pays; change in depreciation schedules; restrictions on use of industrial development bonds excluding waste water and solid waste facilities. EDMONDS CITY COUNCIL MINUTES Page 5 AUGUST 12, 1986 Mr. Doctor said there is currently a move in the House to specify ADR life of waste water treat- ment plants and, if specified, would extend depreciation schedules over fifteen years. If not specified, it would extend the schedules over ten years, or possibly five years. Mr. Marritz said the joint development law has a special provision which states that a privatization project should be eligible for a grant or loan just as if it were a publicly owned program, and it may be eligible for service fee grants to the extent that the program permits that kind of periodic payments. Mayor Hrdlicka said Mr. Katts from the Office of financial Management is giving consideration to grants as they relate to privatization as well as grants based on service fees. Mr. Marritz said he spoke with the Attorney General regarding the eligibility of cities which engage in privatization for grants. The Attorney General sympathized with Lynnwood's quandary and said he would be in contact within the next two weeks. Councilmember Dwyer inquired if it was a question of constitutionality of allowing grants for privatization. Mr. Marritz replied negatively. Mr. Doctor said additional analyses were conducted regarding the service fee grant after the privatization bill was passed. It was discovered, regarding a 50% construction grant versus a 50% service fee grant, that the 50% service fee grant would save the city approximately 30% and would allow the State to stretch their money over many more projects. COUNCIL QUESTIONS Councilmember Hall inquired: 1) if the panel recommended interlocal agreements; 2) what type and size of plant is recommended for South County, 3) if satellite plants have been constructed; 4) what the plant in Chandler looks like. Mr. Barney said regionalization makes a lot of sense, at least from an engineer's viewpoint. However, he said, regionalization poses political, techni- cal, and physical problems. Mr. Nims said a feasibility study for combining the Alderwood Water District with the Edmonds plant revealed that the only reasonable location for transporting the effluent to Edmonds was unfeasible and unreliable because of the instability of the beach area between the two plants. The City of Lynnwood submitted its report for secondary treatment to the DOE and EPA, which was accepted. The two entities are prepared to fund improvements to the existing location because it was demonstrated to be more economical and cost effective than to combine plants. Councilmember Hall inquired about the feasibility of a satellite operation with the City of Lynn- wood. Mayor Herdlicka said there is a possibility of a joint operation.of the two plants by one privatizer. However, he said if Edmonds builds a plant in a new location, Alderwood would have to rebuild its sewer, which would not be cost effective. Mr. Evans said CH2MHill has experience in both regionalization and satellite plants. The company successfully runs five plants locally on a regionalized contract basis, and sixteen plants in Mississippi. The meeting recessed at 9 p.m. and reconvened at 9:12 p.m. Councilmember Kasper inquired about the ramifications if Edmonds proceeded with the pre -design phase without completing the feasibility of privatization analysis. Mr. Nims said the City of Lynnwood feels it will be in a more favorable position if the privatizer has been involved since the beginning. A significant part of the privatizer's proposal is the treatment process that is selected. An engineering report must be submitted to DOE for approval which contains the pro- posed process. Mayor Naughten inquired what savings Lynnwood would realize through privatization as compared to traditional financing, given the volatile tax reform laws. Mr. Doctor said the savings would be approximately 20%/$4,00,000 in net present value terms. Mr. Doctor said there may be certain cases when it will not be cost effective for a city to under- take privatization. A process has been constructed which allows the city to withdraw at various points if it wishes to. EDMONDS CITY COUNCIL MINUTES Page 6 AUGUST 12, 1986 Mr. Doctor said even with new tax reform laws, cities may realize a savings of 17-18%. Savings to a city worked out to 70% if it receives a service fee grant; 70% savings relative to a revenue bond case; and a 30% savings relative to a traditional construction grant case. Councilmember Nordquist asked for clarification regarding buying the plant back. Mr. Doctor said there are a number of ways, i.e., put savings in an annuity or issue bonds. Mr. Doctor said in the draft agreement, Lynnwood realizes a 40% savings during the first 6 years or so, which averages out to approximately 20% over the term. Mr. Nims said the city could ex- pect a $4-5 a month reduction in the monthly service charge. Mr. Doctor said if revenue bonds are utilized, rates must be raised before the bonds are issued. If privatization is pursued, rates do not need to be raised until the plant comes on line. Mr. Nims added that 40% coverage is required for the bond issue but not for privatization. Mayor Naughten thanked the panel for attending the meeting. COUNCIL ACTIONS Community Services Director Peter Hahn reviewed privatization survey results with the Council. He said both the residential and multi -family questionnaire preferred keeping the plant at its present site 8:1, and 2:1 for ramping choices for the pay later scenario. Mr. Hahn noted that existing joint sewer agreements are less than satisfactory. Two concerns are raised regarding a new treatment plant: 1) how will the plant be financed between now and 1991, and 2) how will joint sewer responsibilities be handled for 20 years or longer?. Mr. Hahn said Edmonds would have to front end all of the costs and could not charge rate payers until 1992. He said the time is right to review and redraft the interlocal agreements and recommended to do so. Mr. Hahn said conducting a comprehensive financial and legal study of the agreements, and of the timing of conventional or privatized financing would be beneficial to the City. Mr. Hahn recommended that the City remain in the best position to receive funding. He requested authorization or some indication from the Council this evening to allow Staff to proceed with consultant selection. Mayor Naughten said privatization does have merit, but the City is concerned about the risk to rate payers. However, all of the analyses seem to address the City's trepidations. lie recommend- ed that privatization be pursued further. Councilmember Ostrom recommended that further information be gathered and that Staff visit on- line plants throughout the country. Councilmember Jaech inquired if the interlocal agreements are twenty-year contracts. Mr. Hahn said some expire in 1999 and some in 1997. He said the City will, in fact, be privatizing if Lynnwood decides to proceed with privatization because Edmonds owns a portion of the Lynnwood plant. Councilmember Jaech said because the City would be unable to charge other entities for their share of certain portions of the costs, Edmonds rate payers would be directly affected. Mr. Hahn said privatization would not pose that problem. Councilmember Jaech inquired if Edmonds tax payers would not lose money if privatization is pursued because the other entities would pay their pro rata of the costs. Mr. Hahn said that appears to be true. Councilmember Nordquist said Community Services Committee recommended that a current interpreta- tion of the joint sewer agreements be mace and how it relates to privatization. Councilmember Kasper expressed concern because, he said, some of the clauses have ceilings. City Attorney Scott Snyder said the City will want to have contracts with a useful life similar to the agree- ment with its privatizer. Councilmember Jaech noted that the plant in Chandler, Arizona has been on-line for only a few months. She inquired if the plant in Pennsylvania has been in existence for some time. Mr. Barney said it has not been operating as a privatizes for long. EDMONDS CITY COUNCIL MINUTES Page 7 AUGUST 12, 1986 Mayor Naughten inquired what the time frame was to make a decision regarding financing. Mr. Hahn. said he would like authorization from the Council this evening to begin consultant selection. He said the Council must decide to make the selection either through the usual procedure and get proposals on September 2 or declare an emergency and bypass the procedure and select a firm. Councilmember Ostrom inquired what service the consultants would provide. Mr. Hahn said they would provide financial and legal services which would encompass issues such as a comparison of conventional versus privatization financing, various options, etc. Mayor Naughten recommended, based on the advantages of privatization and the joint sewer agree- ments, that consultants be selected. Councilmember Hall inquired if Mountlake Terrace is interested in a joint sewer agreement. Mr. Hahn noted that -the City of Mountlake Terrace invited him to a 'meeting' recently. The Ronald Sewer District Commissioner, City Council, and other city officials of Mountlake Terrace were present to discuss their sewer agreements. Mr. Hahn said lie thought they would be amenable to negotiations. Councilmember Dwyer said the City must decide how much money it is willing to spend to keep the options open and for what period of time. Mr. Hahn said a feasibility study comparing privatization with conventional financing will cost approximately $20,000-30,000. The two-part request for proposals and draft service agreement will cost approximately $169,000. Councilmember Ostrom said the costs are not added costs because the work needs to be done anyway. Councilmember Dwyer inquired what work would be done regardless of privatization. Mr. Hahn said he would like the timing of the options and how it affects the rates to be analyzed. Mayor Naughten inquired if the costs would be reimbursed if the City chose to proceed with privatization. Mr. Hahn said Lynnwood negotiated that option, and the City of Edmonds could, also. Councilmember Dwyer inquired what percentage of the monies are for work that would be done regard- less of privatization and work that is contracted to keep options open. Mr. Hahn said approxi- mately $20,000 for the initial work, and an unknown percentage would be absorbed by the City if it chose to finance by conventional means after the proposals were received. He said by the time the study is completed, presumably, the Conference Committee will have completed its delibera- tions. Mayor Naughten adjourned the meeting at 10 p.m. COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEM- BER OSTROM, TO REOPEN THE MEETING. MOTION CARRIED. Councilmember Jaech inquired what the City needed to do at that point in time to pursue the con- cept of privatization. Mr. Hahn said the feasibility phase could be bypassed and a consultant hired to prepare an RFP, or conduct the feasibility study for privatization. Councilmember Jaech inquired if the study included analyzing the City's existing contracts. Mr. Hahn replied affirma- tively. Councilmember Jaech asked what the completion date would be if a consultant was hired to conduct the feasibility study. Mr. Hahn said four to six weeks. At that point, he said the City could decide whether or not to privatize. Councilmember Jaech inquired how the City would proceed if the usual consultant selection process was bypassed. Mr. Snyder said the Council would have to declare an emergency. The ordinance, he said, defines an emergency very broadly to be, "that the immediate execution of professional consultant services contract would avoid any delay necessitated by the procedures of the ordi- nance where they would be detrimental to the best interests of the City". Mr. Snyder said the twenty-one day notice would be avoided and a month's worth of paperwork would be bypassed if an emergency were declared and a consultant hired. Mr. Hahn inquired if State law gives the City sole source capabilities. Mr. Snyder said it would depend on the type of services sought. However, he said the City has wide latitude regarding legal services. EDMONDS CITY COUNCIL MINUTES Page 8 AUGUST 12, 1986 COUNCILMEMBER JAECH MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, TO PROCEED WITH THE SELECTION OF A CONSULTANT TO CONDUCT A FEASIBILITY/FINANCIAL STUDY FOR -[HE PRIVATIZATION OF SECONDARY SEWER TREATMENT AND ALSO ASSESS THE CITY'S EXISTING CONTRACTS. MOTION CARRIED, WITH COUNCILMEMBER DWYER OPPOSED. Mr. Snyder said the Council could delete all or any part of the ordinance if it so desired, i.e., instruct Staff to develop a list and contact a list of potential providers for services and have a Councilmember review the list to avoid the twenty-one day publication. COUNCILMEMBER OSTROM MOVED, SECONDED BY COUNCILMEMBER HALL, TO DECLARE AN EMERGENCY AND HIRE A CONSULTANT TO CONDUCT THE FEASIBILITY STUDY AND ELIMINATE THE TWENTY-ONE DAY NOTICE PERIOD AND INSTRUCT STAFF TO PREPARE A LIST OF QUALIFIED CONSULTANTS AND PRESENT IT TO THE COMMITTEE. MO- TION CARRIED, WITH COUNCILMEMBER DWYER AND COUNCILMEMBER KASPER OPPOSED. MAYOR Mayor Naughten announced that Community Transit extended an invitation to the Council to its Citizens' Advisory Committee meeting on August 20, 1986 at 7:30 p.m., at Edmonds Community Col- lege, Mountlake Terrace Hall. COUNCIL Councilmember Kasper noted that the Driftwood Players have requested that the City purchase the house to the west of the Driftwood Players to expand theatre space. He said the assessed value of the property is $72,000. Councilmember Ostrom inquired why the property is needed. Council - member Kasper said he will ask the Driftwood Players to bring that information to the Council. Council President Hall noted that Student Representative Nigel Euling wrote a letter to the Coun- cil explaining his absence this evening. He was playing a soccer tournament in Palo Alto, Cali- fornia. Councilmember Dwyer requested that the Council discuss the memorandum that the Council received from City Attorney Scott Snyder several weeks ago regarding pending litigation in an Executive Session next week. Councilmember Nordquist, .inquired what direction the, Council would like the Community Services Committee to take in discussing tourism as it was so directed to do by a motion by the Council. Councilmember Ostrom, who had made the motion, recommended to dispense with the matter. The meeting adjourned at 10:16 p.m. These minutes are subject to August 19, 1986 approval. JA QUELINE G. PARRETT, City Clerk LARRY . NAUGHTENJ Mayor EDMONDS CITY COUNCIL MINUTES Page 9 AUGUST 12, 1986