CH2M Hill, city settle on 15-year water/sewer contract

Sean C. Morgan

To nail down a 15-year contract, CH2M Hill accepted a counteroffer from the City Council earlier this month that would limit routine annual increases in payments to 3 percent per year.

CH2M Hill operates Sweet Home’s Wastewater Treatment Plant and Water Treatment Plant. Its contract with the City of Sweet Home is in its ninth year and expires next year.

For extending the contract early, this year, CH2M Hill offered graduated discounts based on the length of the new contract.

Without an extension, CH2M Hill would have increased its rate by 3 percent this year, for a total of $1,015,382 in the final year of the contract.

With a five-year extension, expiring in 2021, it would impose a 2-percent increase, a savings to the city of $9,858 this year, based on the proposed increase with no contract extension. Under a 10-year extension, it would impose no increase, a savings of $29,574 this year.

Under the 15-year contract, it offered a 1-percent decrease, a savings of $39,432. Over the life of the contract, that will net Sweet Home a savings of $789,935.

CH2M Hill had a cap on annual increases of 4 percent. During the past nine years, its rate increased at an average of 2.92 percent.

Councilors were concerned about agreeing to a 15-year contract at that level and proposed 3-percent and 3.5-percent caps at their regular meeting on Aug. 11.

CH2M Hill considered the council’s response and counteroffer, accepted a 3-percent cap and returned to the council at its regular meeting on Aug. 25 for a decision on the contract.

If it experiences large increases in its costs, CH2M Hill can seek larger increases under the contract.

During their meeting on Aug. 11, council members discussed the benefits of working with CH2M Hill and the potential benefits of requesting proposals from other providers as well as operating the plants with city employees.

CH2M Hill operates the plants with five employees. The city used seven prior to contracting with CH2M Hill. Based on that staffing level, Public Works Director Mike Adams estimated that labor would cost the city between $427,000 and $584,000 annually at this point.

Councilor Dave Trask wondered aloud if CH2M Hill could run the plants with five employees, why the city couldn’t.

Adams told him the city staff was up to seven when the city stopped running the plants, so that’s what he used. He added that, at the time, the city was operating the old Water Treatment Plant, and he noted that CH2M Hill has more resources than the city.

“The savings we’d have over 15 years is pretty substantial,” Trask said, and knowing the council can reopen discussions about the contract, he said he didn’t have a problem with it.

“I think a 15-year extension is probably most responsible,” said Councilor Ryan Underwood.

The council voted 5-0 for the contract extension.

Present at the meeting were Marybeth Angulo, Underwood, Greg Mahler, Mayor Jim Gourley and Trask. Bruce Hobbs and Jeff Goodwin were absent.