City of Bessemer, Alabama

Mayor Quitman Mitchell

Population: 31,234
Service Area Population: 45,000

City Contact:
W.W. Leadbetter, City of Bessemer
1800 Third Ave., North Bessemer, Alabama
205-424-4064

DESCRIPTION OF PARTNERSHIP ARRANGEMENT

The City of Bessemer purchased water wholesale from Birmingham for almost 50 years. A 1994 feasibility study found that the city could provide water more economically, and exercise rate control if it treated water on its own. This level of independence of water provision fit into the strategy to attract new economic development. The city, through its Governmental Utility Services Corporation (GUSC), signed an agreement in February 1997 with Ogden Water Systems for a Design/Build/Operate (DBO) Partnership with a 20-year term. Ogden is responsible under the agreement for the design, engineering, construction and 20-year operation of a 24-mgd surface water treatment plant. Initial throughput will be approximately 10-mgd. Ogden Water Systems also will be responsible for installing and maintaining 6 miles of raw water pipeline, and 15 miles of finished water pipeline. Total project cost is $44.7 million, and was financed with a $56 million revenue bond. The city retains ownership of the plant and system.

GUSC contracts with the city to sell treated drinking water at cost. Bessemer Utilities sells drinking water retail. The city controls/sets rates to consumers, determines capital improvement plans, and determines growth policy.

ESTIMATED/ACTUAL COST SAVINGS — Capital Upgrades, Consumer Rates, and Fees

Construction of the surface water treatment plant, raw water and finished water pipelines are new infrastructure investments. Ogden will upgrade the existing water distribution pipelines. Ogden's fixed price construction contract of $36 million was 10 percent lessthan the City's engineering estimate.

The annual cost savings are significant for the City. First year water cost will be 15 percent less than current price, or approximately $1 million in savings. Over 10 years the City estimates savings of more than $100 million. Thereafter, annual water costs will escalate at approximately half the amount that would occur without the plant in operation. Additionally, the expedited construction schedule of 24 months guaranteed by Ogden results in the City saving another $1.6 million in bonded capitalized interest.

No concession fees are included in the Partnership agreement.

LABOR RELATIONS

Ogden Water anticipates hiring 12 employees to operate the plant. Some of the employees will be transferred from Bessemer Utilities.

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