HOLYOKE CTIZENS FOR OPEN GOVERNMENT

MINUTES 11/22/04 MEETING

35-40 people.

Intros: Mt. Holyoke College is having a spring focus on global water issues. They’re very interested.

Nuestras Raices.

Daniel Ross Director, Nuestras Raices Community gardens, youth, environment, etc. Tested the water and found contamenents.  Concerned about environment and impact on workers.  Two of their youth spoke. Also working with Kim an intern from Mt. Holyoke College. 

Dr. Mitchell (New Haven), environment and privatization expert. Works with  communities on sewage and environmental problems.  Issues we need to be concerned about ion the Aquarion contract:

1. Long term maintenance is a problem as in New Haven. Sewage treatment facilities degrade over time. State regulators are unable to close down a sewage treatment plant if it is in violation, can only issue fines usually. Under privatization local plants can be made quasi-independent subsidiaries that are starved for cash. 

2. “Acceptable” rate of overflows. Typically sewer overflows are no more than once a year or once every ten years.  Often the streets are flooded to lower sewer overflow.  Ask about probability of flooding due to sewer system backup. 

Lawyer Mark Seigar spoke and answered questions for 1 ½ hours on the contract. He worked with the Lee citizen’s group and has worked for water and sewer treatment facilities. His background is in environmental protection. He had only reviewed the preliminary, draft contract which was missing both pages and all the appendices. These were his initial impressions/ concerns:

EMPLOYEES/ STAFFING. Aquarion is not responsible to maintain staffing levels.  Must offer employment to existing employees; but not guaranteed that their jobs will remain in Holyoke.  Aquarion can assign this contract to whomever they want. "Approval cannot be unreasonably with held".

“REVENUE ENHANCEMENTS” are allowed.

a) Can expect trucked in sewage for treatment from other communities. Sewage would be brought in under contract.  Up to 40,000 gallons of trucked in material a month. Aquarion gets 80% of the profit for treating this excess, the city gets 20%. Note: While this may be a significant source of untapped revenue which the city could explore, some members raised grave concerns over the prospect of having so many additional trucks going trough So. Holyoke.

b) Under the public-private partnership the company can apply for state money at low-interest rates (which it would not be eligible for otherwise). What are the differences in the costs with regards to the money borrowed? Who owns the capitol goods that are purchased with the state money

COST SAVINGS??

Mark Lubold stated that Holyoke's estimate was based on existing costs (using old facilities) but not on the costs with a new, more efficient waste water treatment plant (WWTP). The DPW’s baseline was based on 33 employees but actual staffing level is 26.  Note: Baseline numbers that the DPW gives for the cost of operating the WWTP itself keeps changing. At the 11/23 Pubic Hearing on the rate increase, the DPW presented lower estimates, which were different than the estimates they had given City Councilor Mark Lubold.

EMPLOYEES KNOWLEDGE/ EXPERTISE: “HUMAN CAPITAL ASSETS”

Mark Seigar:  Local knowledge of our employees is a great asset that is

not calculated. Aquarion is acquiring 26 licensed, experienced operators who they can shift to other facilities. Will this contract preserve our local knowledge? Aquarion gets the use of employee's operating licenses. What happens in 20 years if the city wants to take back operating/ managing the plant? Will we have the experienced personnel?

RECITALS

The contract begins by stating that, “The City has determined that it is in its best interest to contract out/privatize.” Did the “city” really determine that? Mark suggested that this was inaccurate/ misleading and should not be in the legal contract.

LACK OF GUARANTOR:

Absent from the contract is that the guarantor does not sign the contract.  Aquarion is a subsidiary of Kelda Corp. of England. But only Aquarion is signing this contract and it is a limited local liability company. These bonds and insurance claims may offer nothing. Letters of credit are very special devices which are not well understood in the US. Aquarion has a year to get the plant functioning if there is a problem.  We can get no remedy until this time runs out. 

Kevin J: Kelda will sign the letter of credit. 

Mark: The city cannot bring Kelda into court into the US to get letter of credit exercised.  What are the tangible items that can be seized if they fail. How would Holyoke sue Kelda for redress? Must present the documents to the financier of the letter of credit. You must sue Kelda.  Likely have to sue in DC or somewhere else.  Right now Kelda does not sign this contract.  Kelda should sign contract in Massachusetts.  This will bring jurisdiction to the state level rather than in Europe or elsewhere. 

LIABILITY:

EPA/monitoring agencies are reluctant to fine or enforce against potential violations. The EPA can’t just shut down a WWTP even if it isn’t functioning up to code.

Under this contract the city still owns the assets (the WWTP facility). Aquarion claims this is a positive benefit. Mark Siegar & Kevin Jourdain said no, it is actually a serious liability. What assets does Aquarion have that the city could seize if it failed to perform? What if it went bankrupt, could the city collect what it had already paid out? Moreover, Mark said that the city still retains liability/ responsibility in the case of non-compliance. Analogous to a landlord who owns property but hires a management company to manage it. The landlord is still responsible/ can be fined if his property is not up-to-code, etc.

Lawyer was very skeptical about the extent to which the city could escape responsibility, and was suspicious of some of the legal language. “Prudent” and “actual knowledge” were slippery terms.

Penalties – 1st offence: warning, 2nd $100 fine, 3rd $200 fine, etc.

OTHER CONCERNS RAISED BY AUDIENCE MEMBERS:

Currently we can hold our elected officials accountable. A corporation is legally responsible to its shareholders and to maximizing profit for shareholders.

Need to do more research on Aquarion – to date it seems that they are primarily a water company. Lack of expeience/ track record. Have not run a WWTP for longer than 18 months. One person had visited the Aquarion facility in Bridgeport and was not impressed. Dr. Mitchell spoke about odor problems from the Bridgeport plant.

We do not need Aquarion’s “expertise.” DPW Superintendent Bill Fuqua has stated publicly that the city has the knowledge/ expertise to operate an upgraded WWTP.

Lengthy discussion over how we should respond to the proposed sewer rate increase. Most agreed that a rate increase was necessary in order to resolve the CSO problem, but that we would not support it at this point. Slogan: No rate increase UNTIL… Until we know what that rate increase is going to. Right now opposing the rate increase is the only leverage city councilors have to prevent the mayor from signing a contract with Aquarion. Because of the special legislation, the mayor can go ahead and sign a contract without city council input/ approval.