Process to decide water utility’s future begins

The Utility Advisor Committee appears to be reasonably comfortable with the city administration’s choice for the water utility advisory contract.

After an intense question-and-answer session with the chosen team, the UAC aexpressed approval of their expertise and are ready for a report as soon as possible.

The UAC was asked by the City Council to review the proposal and make a list of recommendations before the council approves the $85,000 contract later this month.

GHD Inc. was selected by the administration to complete the task of evaluating all the strategic options for the long-term ownership, governance, operations and financing of the city’s water utility. Included will be a review of the Kitsap Public Utility District proposal, which was compiled in fall 2010 after city management authorized the nonprofit to make a transfer proposal.

Thomas Keown of GHD is the lead consultant, with Katy Isaksen of Katy Isaksen & Associates and Gary Bourne of BHC also involved.

The UAC asked the consulting group numerous questions, including: their legal expertise; their understanding of the complex and unique facets of the Bainbridge water utility; and its history in the community. The end result was UAC’s confidence in the administration’s choice and positive anticipation of GHD’s report, which should provide definitive information to resolve a multitude of water utility governance issues.

Concerns with the water rates and mismanagement of the utility have circled for years and led the city to consider transferring or selling the water utility, which is one of three utilities owned and operated by the city. The water utility serves only one portion of islanders – primarily residents in Winslow and others using water from the Fletcher Bay aquifer.

“The UAC came away with the feeling that the consultants are well qualified,” said David Ward, chair of the UAC. “The [consultants] understood many of the issues and are working to understand others as needed, which hasn’t always been our experience with the consultants the city has hired in the past.”

Ward said the consultants fielded their questions openly throughout the two-and-a-half hour meeting. Ward also said the UAC doesn’t want to interfere in the process. But in an effort to get a timely report, he added, UAC interaction with the consultants would be useful

The UAC has already spent a considerable amount of time reviewing the water utility. Its members hope to share information with the consultants as needed to avoid the duplication of work. It will be up to city administration to determine how or if the UAC will be involved.

“We want to make sure we get a usable report that is focused on the issues we have identified as important without reinventing the wheel,” said UAC member Andy Maron at Tuesday’s meeting.

Some UAC members expressed concern about for whom the report should be written – the ratepayers, city or community. Interim City Manager Brenda Bauer said in an email that the consultants will be working in the best interest of all parties involved, including ratepayers, city, staff, council and the community as a whole.

The consultants plan to begin with the status quo, which would have the city retaining ownership, operations and maintenance responsibilities while reorganizing internally to achieve competitive rates. They plan to set a standard of benchmarking and a way to fairly compare the status quo with other alternatives.

From the status quo they will look at other options, including contracting some or all of the management of the water utility to an outside entity or selling/transferring the water utility to KPUD or another entity. In each of the potential options they will investigate the financial, operational and strategic issues associated with each result.

The consultants expect the report to take approximately 120 days.

The UAC expressed some concern over the $85,000 contract and who will pay for it. As currently proposed by the administration, the contract would be paid for by the water utility. Council can choose multiple or alternative funding sources.

The UAC suggested having both the water utility and general fund share costs since the water utility is paid for by ratepayers, and the entire tax base of the island may benefit from the report.

City Attorney Jack Johnson will be charged with assisting the team in all the legal hurdles they may occur.

Bauer said Chris Munter will be the city’s project manager. Munter has a background in civil engineering and was a project manager on the city’s water system plan and has been involved in water utility projects. Bauer said the staff will be in routine communication with the consultants and provide oversight in addition to written reports.

At the UAC meeting, Councilor Bill Knobloch urged the consultant team to explain why the current ratepayers are charged nearly double what KPUD said it would charge for the same service.

Keown said that will be part of the benchmarking and through due diligence they will define how ratepayers can get the best return on their investment.

Councilor Barry Peters aid he is concerned about what outsourcing the water utility might due to the commingled and cross-trained workforce and cost jumps for the other city-owned utilities.

Knobloch told the council at Wednesday’s meeting that he was skeptical prior to heading into the UAC meeting of the city buying another consultant to justify the city’s position.

“But by the end of the meeting I was convinced we will get a qualitative type of report due to the [consultants] comments and how they are approaching the overall intent of why we are spending off the water utility, the impact on the city and what is best for the ratepayers rather than just trying to justify a certain position by the city,” said Knobloch. “Overall we got ourselves a going thing here.”

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