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Community residents not enamored with idea of privatizing water, sewer systems

True to their word, members of the Sunnyside City Council sat for four hours last night listening to a variety of input concerning the possibility of entering into a contract with Veolia Water to operate the community's water and sewer systems.

Over the course of four hours, Sunnyside City Manager Bob Stockwell reiterated over and over that privatization of the community's water system would be the best avenue to pursue for the betterment of the city and services to its residents.

But there were two messages the community kept stressing to the Council, one of which was, what exactly is the problem? The second was, why the hurry to privatize the water system?

Sunnyside has operated its own water and sewer system since the beginning of its existence, said Stockwell. But operating a municipal water system has become more difficult with increasing government regulations.

Over the next two to three years, the city will be spending $20 million in capital projects, which includes $4 million in improvements to the city's water system and another $15-16 million in improvements to the city's wastewater treatment plant. The city is currently under a court ordered mandate to upgrade its wastewater treatment facility by April 2007.

Stockwell said the city has been able to qualify for low interest loans and grants to help supplement the $20 million in capital project expenses. However, the city will still incur $788,000 to cover debt service. The bright spot, said Stockwell, is that in the next couple of years, by paying off existing debt, the city will free up $500,000 to help with the new debt incurred. The city will still need $288,000 annually to pay for the debt service over the next 20 years. In addition, the city will need to cover all normal expenses with operating the water system and in seven to 10 years will need another $11-12 million to cover upgrades to the wastewater system.

If the city doesn't privatize the water operations, Stockwell said residents will be faced with an $8.95 per month increase in water and sewer rates to pay for the debt service.

"$8.95 per month is a significant increase to many of our rate payers," said Stockwell.

Stockwell was quick to point out if the city does enter into a contract with Veolia Water, the city will retain ownership of the water system. Veolia Water will simply be operating the system.

Annually, the city spends just over $2 million to operate the water and wastewater systems. Veolia presented a contract to the city to operate the system for $1.1 million. Veolia Water has presented the city with two plans, one for a five-year contract and one for a 10-year term. Stockwell said Veolia Water pointed out it could operate the city's system over a 10-year period for about $40,000 less each year than if the city only entered into a five-year contract. Based on this $40,000 savings, which the company is able to offer by incurring its costs over a long-term contract, the city could save as much as $400,000 in operating costs, said Stockwell.

Stockwell said the city will save $289,851 annually from what it pays now to operate the service by privatizing for 10 years.

One expense the city will be incurring is the cost of the electrical bill, which is estimated to be $192,719 annually. Stockwell said Veolia has agreed to operate the system at the same kilowatt expense the city has incurred over the past year. If Veolia saves any money with electrical expenses, the city and the private firm will share in the excess.

There will also be extra costs associated with the contract for Veolia working with the city in implementing its backflow prevention program, which is a requirement of the state, said Stockwell.

The city would still retain all rights to property and setting rates.

"We lose no control to set those rates," said Stockwell.

Stockwell did point out with the city growing there could be unforeseen operating expenses down the road.

Stockwell said Veolia will have employees available 24 hours per day to respond to calls, as the city does now.

By retaining city employees, Veolia will have as much knowledge about the water system as the city does now, so there should be no lost time by privatizing the company, said Stockwell.

Stockwell said the eight employees in the water division set to be hired by Veolia will be paid what they are being paid now, or more, if the city privatizes.

"No city employee goes without employment if we contract out," said Stockwell.

The knowledge and expertise Veolia will bring to operating the city's system is invaluable, said Stockwell. He said Sunnyside will have access to water system expertise with a wealth of knowledge at no extra expense to the city.

Stockwell said his purpose as city manager is to find the best avenue for operating the city's water system without it becoming a hindrance to residents. He said by entering into a contract with Veolia he feels this is the best avenue for residents.

"We could just keep raising rates and go out and buy new things, but that is not an option for this city," said Stockwell.

Councilman Bruce Ricks said one part he noticed in the city surveys is that the technical skills Veolia provides to cities is a selling point for him.

Mayor Pro-tem Mike Farmer wanted to make clear the city will still retain possession of its equipment under the contract, which Stockwell confirmed. Farmer was also curious how Veolia could be saving so much money in operating the system. Stockwell explained Veolia will be carrying eight city employees from the water department, three less than the city has now. Two of the employees not being hired by Veolia will be moved to other departments in the city with the remaining employee retiring later this year. In addition to those savings in manpower, Stockwell said Veolia has expertise and technology available that will bring significant savings.

Mayor Ed Prilucik wanted to make sure the partnership that exists between the different departments will continue if the city does privatize. Stockwell explained that in the contract it does state that the city will still be able to utilize Veolia employees.

After a couple more comments from Council members on issues ranging from retirement to the benefits Veolia could bring into the design and operation of the new wastewater treatment plant, local residents had their chance to speak.

Martin Campbell was anxious to speak after listening for more than an hour to what he referred to as a sales pitch.

Campbell said he is against the idea of the city privatizing. Campbell said he feels the city will lose connection with its employees if they go to work for a new company.

"As a citizen, I don't have to have this contract," Campbell said, holding up the city's proposed contract with Veolia. "I guess I haven't heard our problem defined."

Campbell said he was confused by some of the selling points the city had in contracting out with Veolia. He said one part is how the city can't cross train its employees right now, but Veolia will be able to do the training Sunnyside is not doing with less employees.

Campbell said he is very satisfied with the way the system operates now and he doesn't want to see that go away.

"It kind of makes me nervous to give them away," said Campbell.

Campbell also pointed out he wouldn't mind paying the extra $8.95 in water and sewer rates to keep things the way they are now.

"You guys talk about $8 like it is the end of the world," said Campbell.

Bruce Epps pointed out that Council choosing not to address the operation of the water system in the past is the reason for many of the problems being experienced now. Epps also pointed out that Veolia will be operating its office hours basically the same as the City of Sunnyside, Monday through Thursday. Stockwell was quick to counter that Veolia will be operating its office hours the same as the city, but there will always be someone on call, as there currently is now.

"There is no loss of man hours," said Stockwell.

"I am dead set against it," said Epps of privatizing. "I don't believe we have looked at viable options."

Stockwell, though, said contracting out the operation of the water system is the best thing the city can do. He said no one on staff in the water department has the ability to operate the new wastewater treatment plant when it opens.

Later in the meeting, Stockwell explained that Veolia will be offering its employees health benefits and a deferred compensation plan. Stockwell also said that Veolia will not be observing the same holidays the city does.

"We are not necessarily in a crisis situation here," said Sunnyside attorney Doug Garrison. "Folks, what is the hurry?"

Garrison said he would like to see the city invest in its current employees and improve their training. Garrison suggested using Veolia as a consulting firm for operating the water system. Garrison also recommended that due to the magnitude of the situation the Council should put the privatization issue to a vote.

Teamsters representative Joe Wurtz of Yakima presented Council with 380 signatures against privatizing the water system. He said there would have been more, but alleged that someone with the city went around to businesses and picked up petitions. Wurtz also said that with the city moving its employees over to Veolia, they may not be eligible for the Teamsters insurance the city purchases. Stockwell took exception to what he perceived as a threat from Wurtz.

"I personally believe we would be better off to give some training to our employees," said Vern Anderson.

Carol Stone said the city is in many ways to blame for the current state of the water system. She said no one pushed for funding for training and there are no incentives to recognize employees for their good work. She also took a shot at Councilman Don Vlieger, who has long been a proponent of privatizing. Stone said Vlieger has nothing vested in the community and his decision concerning privatization because he will be gone once his term is up this fall.

"It is our own fault where it is at right now," said Ron Hochhalter. "We have got to do something because we are not getting any smaller (as a community). Do something, but make the right decision."

The Sunnyside City Council is expected to make a decision on privatizing the water and wastewater systems at its Monday, Feb. 28, Council meeting.

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