Live Oak weighs water costs

Turning over operations of Live Oak’s wastewater treatment plant to a private company could reduce the costs of a state-mandated upgrade, but it’s not a guarantee, the city’s interim manager told the City Council Tuesday.

The treatment plant was the focus in the latest of a series of meetings between the city and stakeholders of land outside the city limits seeking annexation as part of the general plan update. Both sides have said the plant is one of the biggest issues on the table as the city’s Dec. 17 deadline looms for stakeholders, who are financing the update, to commit to finishing it.

In 2004, the city was told by the Regional Water Quality Control Board that discharged wastewater from the plant was not meeting new, stricter requirements. There is an April 2009 deadline for the city to meet the standards. Costs to do the upgrades have been estimated as high as $25 million.

Stakeholders, those who either own land affected by the update or plan to develop it, have suggested the city have a private company, St. Louis-based Environmental Management Corporation, or EMC, take over operations of the facility.

Maurice Gutierrez, EMC’s general manager for California, said the proposal shouldn’t be viewed as a privatization of the city’s wastewater plant, since the company would just handle the operations. The city would still own the plant and set water and sewer rates for city residents.

“We would work on a fee basis,” Gutierrez said. “We’ll set the amount up front.”

Gutierrez said the company could come in and “optimize” the plant’s current operations. That could reduce the amount of capital improvements needed in the plant’s upgrade, lowering the $25 million price tag.

Interim City Manager Tom Lando said that’s something worth looking at, since the most attractive aspect of privatizing for the city would be the reduction in capital costs.

But the city is also a strong contender for a state revolving fund loan, which would be more attractive than privatizing since the loan’s interest rate would be lower than the profit margin the company would expect from the money it puts into the plant.

“Like any private firm, they would expect a return on their capital investment,” Lando said.

Lando also voiced concerns about the status of plant workers who also are part of the city’s road crew and that any potential fines from the state would create a situation where the city and EMC would be “pointing fingers at each other.”

The city and stakeholders agreed to continue looking at their options for the plant.

The next general plan update meeting, scheduled for Nov. 28, is planned to include a discussion of levees.

Appeal-Democrat reporter Robert LaHue can be reached at 749-4713. You may e-mail him at rlahue@appealdemocrat.com.