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City of Bessemer, Alabama Mayor Quitman Mitchell
Population: 31,234 City Contact:
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
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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. |
J. Thomas Cochran, Executive Director
1620 Eye Street, NW, Washington, DC 20006
Telephone (202) 293-7330, FAX (202) 293-2352
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