May 03, 2018

Erin to outsource water operations

After years of concern about the cost of running the Erin water department, town council has finally pulled the plug – deciding to contract the job to an outside agency.
The town expects to save over $200,000 per year in a five-year deal with the Ontario Clean Water Agency (OCWA), a crown corporation that operates water and wastewater systems for more than 180 clients.
Council voted 3-2 at a special meeting April 24 to begin negotiations with OCWA. They delegated full authority to Mayor Allan Alls and CAO Nathan Hyde to sign a contract without bringing it back to council. 
Councillors John Brennan and Jeff Duncan voted against the motion. They both support contracting out, but said they wanted more information.
“Negotiations will involve a dialogue about the possibility of the Town’s water department staff transitioning into new positions,” said Communications Officer Jessica Spina. “It is anticipated that OCWA will begin operating the town’s water system by August 1st of this year.”
The town will retain ownership of the system, and hopes to use the savings to reduce future water rate increases. More money will go into reserves needed for replacing antiquated parts of the system.
In February, CAO Nathan Hyde issued a Request for Proposal, and received two bids. Town council was not involved in the process, which included hiring an independent consultant, Public Sector Digest (PSD), to compare the bids to the existing costs of running the water department (about $1 million annually).
In closed session, PSD provided council with analysis, and then gave the public an abridged version. Measured in 2018 dollars with inflation at 2 per cent, a bid from H2O Systems would save the town $347,723 over 5.5 years. The OCWA bid would save $1,112,839.
Coun. Matt Sammut asked, “Do you feel a good analysis has been done from a qualitative perspective.” Tyler Sutton and Saramad Mahbouba of PSD said their only reference was the executive summaries of the bidders themselves, who each claimed to have an excellent record of service delivery. The bids were not made public.
“The Town of Erin can expect to benefit from economies of scale and accumulated experience,” the PSD report said. The town is expecting strong technical support, reducing the need for other consultants. 
The mayor said OCWA can do the job with fewer hours and less overtime, since staff service more than one client, and that OCWA will share liability for the system.
OCWA manages 75 per cent of Ontario’s outsourced water treatment facilities, serving 4.5 million people. The agency has already made a pitch to manage Erin’s future sewer system.
Guelph-Eramosa Township used to have OCWA managing Rockwood’s water and wastewater systems, but cancelled the contract 10 years ago, citing unpredictable extra costs. Alls said he has heard positive feedback from other municipalities.
Councillors were warned not to discuss the water service bids in public, because of staff privacy and to avoid harming the town’s negotiating position. Water Superintendent Joe Babin was also barred from speaking.
“The devil is in the details – we would be derelict if we didn’t investigate further, but there are a lot of things to be fleshed out,” said Brennan. “The responsibility regarding quality is on the shoulders of council.”
Mayor Al Alls said councillors should forward any concerns privately to the negotiating team.
Duncan said the decision was “hasty”. He said bringing a tentative deal back to council in closed session would be a normal negotiation process, but the CAO said it would be unfair to OCWA and the negotiating team to have to start the process over again.