Pittsfield Finance Panel Is No on $74M Wastewater Project
PITTSFIELD, Mass. — The City Council's finance subcommittee is recommending that the city hold off on borrowing $74 million to make major repairs to the wastewater system.
The subcommittee voted down in a split 2-3 vote a petition from Mayor Linda Tyer to borrow the money to start construction on the upgrades to comply with EPA mandates. The councilors on the Finance Committee, however, want to know more about what led to the logjam with the EPA.
"I'm sick of being rushed through these things," Ward 4 Councilor Christopher Connell said, citing that for years he's been asking for information and had even called for a water and wastewater commission to be created.
Connell was joined by Councilor at Large Melissa Mazzeo and Ward 2 Councilor Kevin Morandi in opposing the expenditure at this time. Council President Peter Marchetti and Councilor at Large Earl Persip voted in favor it.
The expense has been a long time coming, starting with the city seeking to renew its National Pollutant Discharge Elimination System permit in 2005. The U.S. Environmental Protection Agency oversees those permits in an effort to keep waterways clean and had issued a permit in 2008 requiring significantly higher standards of phosphorus, and aluminum treatment, and nitrogen optimization.
Alan Wells, of the city's consulting firm Klienfelder, said most communities in New England have complied with those standards, which are intended to keep an excessive amount of those chemicals flowing into the Housatonic River.
"They are essential nutrients to life but in excess quantities in water bodies it stimulates an excessive growth of algae," Wells said, adding that too much will cut down on the oxygen in the water.
The new standards were set under the Clean Water Act and the city's system doesn't currently conform. The city fought the permit first with the EPA's Environmental Appeals Board and then in federal court. But in 2010, a federal judge ruled in favor of the EPA.
"It was obvious it was going to be a very large upgrade in 2008 to achieve compliance with the permit," Wells said.
Mazzeo expressed frustration with those denials. In reading the legal documents, she said the EPA's appeals board and the court never even looked at the city's argument. The denial was because the proper information wasn't filed.
"They basically said the environmental appeals board didn't even look at it," Mazzeo said.
Mazzeo said the denials weren't based on the merits of the case but that the attorney the city hired, Donald Anglehart, didn't give sufficient information to the court. And neither City Solicitor Richard Dohoney, who didn't handle the case but was working in the solicitor's office at the time, nor Anglehart were on hand Wednesday night to answer questions.
"We really have to figure out exactly how we go into this position," Mazzeo said.
Director of Finance Matthew Kerwood said there isn't anything left the city can do. He, too, expressed frustration but at this point, there is no way to appeal it further without having the Supreme Court accept the case.
"We followed the process. We appealed the denial of the review to the First Circuit Court. The First Circuit Court denied the appeal. At that point, it is done. There is no appeal process," Kerwood said.
He said the appeals came after a public process. The EPA issued a draft permit and the city had the opportunity to voice its concerns. The EPA then issued the final permit and denied the city's request for a review. But Mazzeo said the denials wasn't on the merits, but rather the lack of information. The city then hired an attorney to appeal it to the First Circuit Court and the denial was upheld there.
"The circuit court said the Environmental Appeals Board was in its right and within its authority to deny the review," Kerwood said.
From there the city held a study on the plant but the EPA didn't think the city was moving quick enough. In 2015, the EPA issued an administrative order that demands the city comply with the permit by Aug. 1, 2021. That order outlined a specific timeline, which calls for construction to begin on Aug. 1.
Those timelines had been agreed to by the city. Mazzeo has a document from the EPA regarding it dated just two months before former Mayor Daniel Bianchi had left office. Kerwood suggested those conversations may have been had by former Commissioner of Public Services and Utilities Bruce Collingwood, whose employment was terminated under Mayor Linda Tyer. Mazzeo wants to know the context behind the conversations and agreement on the administrative order and timelines.
Marchetti, however, said responsibility doesn't fall entirely on the administration of the city because the council was informed along the way. It was back in 2012 when the City Council approved using $1 million of retained earnings to start the design.
"When we say we haven't been doing anything for how many years, we've been slowly inching our way toward this place and time," Marchetti said.
Marchetti said if the city denies this borrowing now, it will have lost all the money spent so far on the design.
Last March, the City Council approved the borrowing of $4.9 million to complete the design, adding to the $1 million approved in 2012.
Through that process, Tighe & Bond served as an independent reviewer of the design and the technology. Wells said while the cost of the project is high, he is confident that he was able to find the best technology for the right price. He compared the price per gallon to other communities in New England that had to comply with similar standards and Pittsfield was lower than most.
"It is still obviously a really big number but I feel good about the work we did to keep the costs down," Wells said.
On Aug. 1, 2017, an early design was submitted to and approved by the EPA, according to Wells.
"You are absolutely in compliance with the administrative order to date," Wells said.
Now, the design is complete and Tyer has submitted a petition asking for the authorization to borrow for the construction. Construction is supposed to start in August and if not, there is a threat of penalties from the EPA for non-compliance.
Wells said environmental groups in Danbury, Conn., were successful in suing the city for not complying with the standards and won $100,000.
"The Clean Water Act is something citizens can hold their government to. They are not dependent on the government enforcing it," Wells said.
He added the EPA has the authority to fine $2,500 to $25,000 per day depending on the violation.
Mazzeo is willing to call the bluff, however.
"I feel like we are being somewhat threatened. Really? Because we've been talking about this since 2005," Mazzeo said.
Morandi echoed that sentiment, saying the EPA has worked with the city for years on the water runoff issues at the William Stanley Business Park. He believes the EPA would be reasonable with the city.
The project itself entails multiple changes. First, the city needs to install a new tertiary treatment system. That would be a new process added to the system. But with that, the city's aging secondary systems would need to be upgraded to work seamlessly with the new equipment. Then the city needs to expand the de-watering plant, which pulls water from the sludge and reduces the disposal costs, to handle the additional capacity.
Lastly, there is the need for nitrogen optimization process. Wells said while that is not especially spelled out in the administrative order, it is part of the permit. He said a study was required to be done and recommendations to reduce the nitrogen flowing into the river need to be implemented. Wells said Pittsfield sends a large amount of nitrogen into the Housatonic River, which flows down to the Long Island Sound.
"Pittsfield is the largest distributor of nitrogen in the Housatonic River in Massachusetts," Wells said.
Wells said even if it wasn't in the permit, it would still be the right thing to do. Between additional capital costs for another clarifier and repairs to the trickling filters that would be needed without the nitrogen optimization system and energy costs, there would be some $35.4 million of additional costs the city would incur.
He said the trickling filters will be decommissioned with this proposal and used for overflow storage instead. Currently, the city uses energy to pump the sludge throughout the multiple trickling filter tanks. He added that the nitrogen levels would also be decreased and right now the city is in compliance with those requirements, but just barely.
Connell, however, questioned if the nitrogen isn't absolutely needed so why is it being done? He also asked why the city can't repair its current systems to save money rather than building new processes.
"It looks like we are almost trying to build a new plant," Connell said.
Wells responded that repairing the equipment is exactly what the project entails. The tertiary treatment process is the only new construction while the others are using the same structures and replacing the internal mechanics.
Specially, Connell asked what the cost would be to eliminate the nitrogen part altogether, to which Wells responded $4 million could be cut out. However, Wells said the trickling filters, which are expected to be taken offline, would have to be replaced at more than $1 million each.
"I know it was less than 5 percent of the project cost. But if it was taken out, just remember you will have to do something with the trickling filters," Well said. "The equipment is essentially failing already."
Connell added that the new presidential administration has been scaling back the EPA's powers. He wonders if there is a chance that the changes in the political environmental could ultimately let the city off the hook.
"We have a new administration in Washington, whether you like it or not, and they already decreased some of the EPA mandates," Connell said.
He added right now the EPA isn't doing much with the levels of PCBs in the Housatonic River so he doesn't know why the federal government care so much about the nitrogen in the same river.
To pay for the project, the city is also in line to be eligible for a $50 million loan through the state's Clean Water Trust Fund. That loan was be at least half of the interest rate the city would get on its own - 2 percent through the low-interest loan program compared to the 4 percent the city tends to bond at.
"You will not be any higher than 2 percent interest rate. I believe you are bonding around 4 percent so that is significant," Wells said, estimating the city will save $12 million in interest on that $50 million.
That doesn't cover all of the project. In all, the project will cost just short of $80 million - $6 million of which had already been spent on the design. The remaining $24 million would be bonded as any other capital project the city undertakes.
The project itself is estimated to cost $65.5, $1.2 million for the owner's project manager, and $7.1 for the bidding process, construction administration, and oversight of the project.
Persip questioned exactly how will the city pay the loan back. Director of Public Services and Utilities David Turocy said sewer rates would have the increase, though he couldn't say by how much. Turocy said right now the rates pay for a $6 million operation and the estimates are the payments on this project would add $4.5 million to that.
"We're going to propose new water and sewer rates effective July 1. We have not determined what they are," Turocy said.
Kerwood said the current rates are also paying for past projects that will fall off the debt schedule. He is planning to slowly integrate the rate increases over time as some of those older projects fall off.
"We are not going to give anybody sticker shock on their rates... the intent is to structure this to raise the rates over a gradual period of time," Kerwood said.
Nonetheless, Persip was frustrated that the city has pushed this project off for so long without putting money aside to pay for the construction.
"We've been kicking the can down the road. We could have brought sewer rates up a bit, stashed away a little bit of money," Persip said. "I would hate to see us kick the can further down the road."
Persip said this project was once estimated at $40 million and since then it has doubled. He doesn't want it to go up any further.
"We knew this was coming and we approved this design," Persip said.
Resident Craig Gaetani is asking the city to start the entire process start over. He said the plant can be rebuilt at a significantly lower cost. Particularly, he wants the city to get rid of the consultants and work directly with the equipment vendors.
"These consultants recommendations are far, far more costly than what vendors would charge," Gaetani said.
Gaetani boasted of his work in developing the water system in the 1980s. In speaking for 45 minutes, Gaetani said he wants the city to hire a new commissioner who can talk to the EPA to buy some more time. He said the EPA is reasonable and will listen to a knowledgeable commissioner.
Secondly, he wants the city to reach out to vendors and have them pilot the technology. Those pilot studies will reveal the best working equipment at the best price. He also believes much of the construction work can be done in-house, rather than paying an outside contractor.
"There are much better ways to go about doing than what you saw tonight and don't be fearful of the so-called fines," Gaetani said.
Wells said nearly that identical process had already been followed by his organization. He reached out to many vendors for all types of equipment, including Gaetani's former employer Krofta, for piloting.
But, he said many of the alternative equipment options weren't going to get the city in line with the requirements at a lower cost. Of the equipment that will work, the consultants had not only chosen the best and most cost effective, but he said he even had multiple vendors compete on the pricing of the selected equipment.
"We canvassed all technology," Wells said.
The timeline laid out by Klienfelder calls for the bidding process to start soon with a contract being awarded in July.
The petition will head back to the full City Council. At that, the Finance Committee is asking for Anglehart to appear to provide context of that appeal and answer questions.
Tags: Finance Committee, municipal borrowing, wastewater,
