CITY OF
LAREDO
M2002-SC-004
CITY
COUNCIL CHAMBERS
1110 HOUSTON STREET
LAREDO, TEXAS 78040
MAY 7,
2002
5:30
P.M.
In Attendance:
Elizabeth G. Flores, Mayor
Louis Bruni, Council Member, District II
John C. Galo, Council Member, District III
Johnny Amaya, Council Member, District IV
Eliseo Valdez, Jr., Mayor Pro Tempore, District V
Jose A. Guerra, Council Member, District VI
Jose A. Valdez, Jr., Council Member, District VII
Gustavo Guevara, Jr., City Secretary
Larry Dovalina, City Manager
Cynthia Collazo, Assistant City Manager
Jaime Flores, City Attorney
Motion to excuse Cm. Agredano and Cm. Ramirez.
Moved: Mayor Pro Tempore Valdez
Second: Cm. Amaya
For: 6 Against: 0 Abstain: 0
First public hearing regarding the City Review Committee’s recommendation on the proposal for
privatization of the City of Laredo’s water and wastewater operations.
Mayor Flores gave a brief review regarding the proposal for privatization of the City of Laredo’s
water and wastewater operations. She read the following:
“First of all, the formal process
was started when the City issued a Request for Proposal
(RFP) on August 8, 2000.
Then, pursuant to the terms of that
RFP, the City formed a Review Committee to evaluate
the responses to the RFP and to
develop a recommendation to City Council.
To perform the evaluation, the Review
Committee then structured its own methodology
which involved analysis of cost,
technical, and business considerations.
The Review
Committee
utilized reports from Consultants in reaching their recommendation: Specifically, the consultants were: Competitive Government Strategic, Inc. (for
pricing aspects). The Utility
Management Specialists (for technical aspects; and Hawkins, Delafield and Wood,
Attorney at Law (for business and contractual considerations).
The City
Review Committee then presented its evaluation report and recommendation to the
Water Issues Committee and the Privatization Oversight Committee and
subsequently, to the full City Council on April 22, 2002.
On April
22, in fact, Council received a report from Attorney Rick Sapir of Hawkins,
Delafield and Wood, outlining the respective values according to the evaluation
categories.
Council,
following the process in the RFP, studied all of the reports and the Review
Committees’ recommendation, and based upon their individual analysis, found
that it was in the best interest of the City to proceed with negotiations for a
contract with United Water Services.
Today, in accordance with the requirements which we
placed in the RFP to hold public hearings once a recommendation is made to
select a proposal, we want to hear from the public regarding the selected
proposal and the proposed contract with United Water Services, and with that I
would like to move on with this proceeding.”
Motion to open the
public hearing.
Moved: Cm. Bruni
Second: Cm. J. Valdez
For: 6 Against: 0 Abstain: 0
Larry Dovalina, City Manager, stated that Council received a
recommendation from staff and made a selection of United Water for the
privatization of the Utilities Services.
He then instructed staff to go into intense negotiations with the company
to finalize a contract agreement for the final structure.
Rick Sapir, with Hawkins, Delafield and Wood, commented on the lengthy
process in selecting United Water for the privatization of the Utilities
Services. He discussed the following
terms that the vendor has agreed to:
1.
The company has agreed
to perform all the management services for a guaranteed price.
That price will only increase based upon an inflation
index and based upon pre-negotiated increases related to growth in the system.
2.
The company has agreed
to various performance guarantees. With
respect to these
guarantees that the company is giving us, if the
company does not meet the guarantees, not only will they have to pay damages,
but they will also pay liquidated damages to the City for the harm inflicted
for their failure to perform.
3.
The contract will allow
the City, in its own discretion, the right to renew the contract for
an additional five years on the same terms and
conditions agreed to today.
4.
The company will offer
employment to all the employees that work on these management
services for equal or better wages and benefits,
equal or better positions, and no layoff policy.
5.
There will be an
Employee Issues Committee formed to make sure that the company is
complying with all employee-related issues in the
contract.
6.
The company will pay
the first $15,000.00 of all corrective maintenance work that needs
to be done in the system.
7.
The company will
guarantee a maximum of electricity utilization so if they use electricity
above what they guarantee, they will be responsible
for paying the cost of that electricity.
8.
The company will be
offering employment to the utility construction crews will not be
able to charge the City for the labor done on capital
improvements.
9.
The company has agreed
to a very strong guarantee that will guarantee all the obligations
of the company.
10. The contract will allow for the City to terminate the
service agreement at any time, for
any reason, even if the company is not in breach by
paying a stated termination fee.
11. The company will supply a $2,000,000.00 letter of
credit to the City that the City can
draw upon in the event of a breach of contract or in
the event the company otherwise owes the City money.
12. The company will replace meters on an accelerated
basis. This program will require all
meters under one inch to be replaced if they are ten
years of age by two years into the contract.
Also, meters greater than one inch have to be calibrated and serviced
annually.
Richard Geissler expressed his concerns for the
customers of the City of Laredo Utilities Department if the Council agrees to
privatize. He feels the customers will
experience much higher rates and inferior service once the City
privatizes. He noted that he is pleased
with current services from the Utilities Department and he questioned the City
Council’s desire to privatize.
Adolfo Palacios informed Council of a waterhole where
he would swim as a teenager. He said
the waterhole was covered by a prior Council’s decision and he wants Council to
consider exploring underground water sources for drinking water.
Gary Miller, Executive Vice President with OMI
Thames, respectfully requested that Council reconsider their decision to
negotiate with the low bidder and instead honor the criteria in the Request For
Proposals. He redefined the process in
which the City proceeded in selecting a proposer. He exemplified the efforts of the committee to assure a level
playing field for both proposers; however, he noted his disappointment by the
Council’s decision to negotiate with the low bidder. He said the Request for Proposal outlined a specific process for
selection and the process was not followed.
He went on to say that City staff and the advisory team recommended OMI
Thames Water, based on how well the proposals stacked up against the criteria,
and Council selected United Water.
Finally, he expressed disappointment in the bid process by saying that
the other proposer was given a second chance to revise their proposal with OMI
Thames proposal terms in the site. He
asked that the Council reverse their decision and confirm the selection of OMI
Thames water.
Hector Farias, representing Voices in Democratic
Action, expressed the following concerns for the City Council’s decisions to
privatize the Utilities Department:
1.
Why did the City spend
a quarter of a million dollars on a consultant and set the recommendation
aside?
2.
Did Council thoroughly
investigate both companies?
3.
How much money did the
City spend sending employees to Washington, and what did they negotiate?
4.
Why is City Council and
staff reluctant to release the contract to the public?
5.
How many City employees
will lose their jobs once the City agrees to privatize?
6.
Why would Council agree
to spend millions of dollars to convert to privatization when taxpayers are
happy with the current service? Why
can’t they pass that savings to the tax payer?
He further stated that the City is in violation of
the Government Code sections 252.021 and 252.042. He encouraged Council to start the process again to avoid future
litigation.
Chris Arthur, president of West Wind Homes and
representative of the Laredo Builder’s Association, spoke in favor of
privatization of the Utilities. He
submitted a list of 53 different businesses that are in favor of privatization. He asked Council to accept the best bid with
the lowest possible price for the community.
Heberto Ramirez, Interim Utilities Director, affirmed
that the rates would not increase as a result of privatization.
Cm. Galo asked staff if the proposer would have the
authority to raise the rates?
Heberto Ramirez, Interim Utilities Director, stated
that the company will not have the authority to raise the fee. The rate will be set by City Council based
on recommendations set by staff.
Mayor Pro Tempore Valdez asked if the number of
employees would be affected if the City privatizes.
Heberto Ramirez, Interim Utilities Director,
mentioned that the proposer will offer jobs to all employees that are currently
employed. He added that there are 216
positions available of which 204 are currently taken. He went on to say that the benefits will be equal or better. Each employee will have to be evaluated
depending on the years they have been employed with the City in order to match
their benefits.
Mayor Pro Tempore Valdez questioned the water quality
requirements set in the contract.
Heberto Ramirez, Interim Utilities Director, assured
that the water quality qualifications will be equal or better.
Mayor Flores asked staff to work hand in hand with
the media to assure the facts are complete so the public will not be mislead
about the Council’s decisions. She
suggested printing the article verbatim so the public will understand the
process and reasons why they Council entered into the project of privatization. She added that the process has been a long
endeavor for Council and staff.
Cm. Bruni mentioned that the water is rated superior
quality with TNRCC.
Motion to close the public hearing.
Moved: Cm.
Galo
Second: Mayor
Pro Tempore Valdez
For: 6 Against: 0 Abstain:
II. EXECUTIVE
SESSION
The City Council hereby reserves the right to go into
executive session at any time during this
public meeting, is such is requested by the City Attorney or other legal
counsel for the City, pursuant to his or her duty under Section 551.071 (2) of
the Government Code, to consult privately with his or her client on an item on
the agenda, or on a matter arising out of such item.
III. ADJOURNMENT
Motion
to adjourn.
Moved: Cm. Galo
Second: Mayor Pro Tempore
For: 6 Against: 0 Abstain: 0
I,
Gustavo Guevara, Jr., City Secretary, do hereby certify that the above minutes
contained in
pages
01 to 05 are true, complete and correct proceedings of the City Council meeting
held on
May
7, 2002.
_______________________
Gustavo
Guevara, Jr.
City
Secretary