OIL CITY, Pa. (EYT) — Thomas Hartwig, Vice President of the engineering firm Arcadis, addressed the Oil City Council on Thursday about the city’s decision regarding the wastewater treatment plant.

At the first meeting in January, the council heard from HRG, a firm it had contracted to help put a value on the city’s wastewater system, which the city is considering selling. After that presentation, it asked Hartwig and Arcadis to review the work and offer his thoughts.

While HRG pegged the value of Oil City’s system between $18.4 million and $61 million, it believed the sale of the system would generate at least $35 million.

In Hartwig’s belief, the sale of the system could generate between $32 million and $35 to $36 million.

If the city chooses to sell the system or at least investigate the sale of the system, there are two ways it could go about it, Hartwig said.

“There are two approaches you could take,” Hartwig said. “You could go through a cost/benefit analysis to see if it makes sense to go through with the sale, or you could advance forward a half step and put the system out for bid. If you do that (putting it out for bid), you will have a real number on the table.”

However, Hartwig, like HRG, said selling the system wasn’t the only option the city has.

“The city can sell the system, but the city can also continue to own and operate the system like it has for decades,” Hartwig said.

Hartwig, echoing information from HRG, said if the city elects not to sell the system, it then has some decisions it would need to make.

“Does the city create a sewer authority? Or, does it continue to run it like it has been?” Hartwig said.

If the city would decide to go the route of the sewer authority, then some more decisions would have to be made.

“Is the sewer authority independent of the city government and owns the system, hires the employees, and sends out the bills?” Hartwig said. “Or, is it a sewer authority for a financial purpose that leases the running of everything back to the city? Or, does the sewer authority lease it back to the city, but the city then enters into a management agreement with the authority who runs everything but the city approves the rates and the capital projects?”

Hartwig said the one thing that is certain is that no matter whether the city sells the system, keeps the system as is, or creates an authority, rates will have to go up.

“As HRG pointed out, the rates are a little on the low side,” Hartwig said. “They would need to go up -not so much from an operating expense point of view — but to meet the capital needs.”

It’s the capital (money for improvements of the system) that has led the city to investigate its option, Hartwig believes.

“From my perspective, it is at this point — and you are talking seriously about it because of the current condition of the system and primarily the amount of capital that needs to be put in the infrastructure in the next decade, decade-and-a-half,” Hartwig said.

Hartwig said some of the improvements have come about because of consent decrees, especially in the Park Road and Pace Hill Area, but that some of the capital improvements will be needed just because of the age of the system.

“There is going to have to be money spent on replacing or repairing the existing components,” Hartwig said. “The tanks at the plant, the North Side Pump Station upgrades that have been talked about, the South Pump station is going to need improvements as well as some of the smaller pump stations. Also, the infrastructure under the surfaces is either approaching or in some cases exceeded its useful life expectancy and will fail”

Hartwig said if the council chooses to sell the system, it must be careful with what it does with the money generated from the sale.

“You will receive a large sum of money,” Hartwig said. “You will have to exercise sound judgment and prudence with that money so that it would benefit the taxpayers of Oil City long term.”

Hartwig said he cautioned the council about the sound judgment and prudence because he has seen other municipalities blow through money made from the sale of an asset like the wastewater system and then end up having neither the money nor the asset long-term.

The council seems split on its initial thoughts concerning the sale of the system.

Councilman Dale Massie sees the sale as a way for the city to get out of debt.

“It can create a financial future for the city,” Massie said.

But Councilman Michael Poff cautioned of the pitfalls of selling of an asset like the wastewater system.

“Selling off an asset for a one-time hit is not a long-term solution,” Poff said. “The money generated is a finite sum. It will not last. We need to think about our children and our grandchildren. The company that buys it has a responsibility to make a profit not serve customers. There No. 1 measure will be profit, that is their job, to make a profit. And, it will be another monopoly. We are here to serve our citizens. I understand it looks good, but no, not at all.”

Councilman Ron Gustafson seemed to be somewhere in the middle.

“It’s a difficult thing,” Gustafson said. “We have a small customer base, and it’s hard for them to take it (the improvements) all on.”

Both Gustafson and Poff believed a better approach would be to work with our local municipalities to create an authority that serves all of them.

“A better approach is working with surrounding communities,” Gustafson said.

Poff replied that you find strength in working together.

City Manager Mark Schroyer said one of his concerns is that money generated from both the water and sewage systems, which are separate entities, is being used to fund the general fund.

“My major issue is we are drawing significant management fees from the water and sewer to run the general fund,” Schroyer said. “We might be okay for 10 years (with a sale) — but then what?”

No action was taken.

OIL CITY WATER CAN”T BE AFFECTED BY FRANKLIN WATER SYSTEM

Because of the recent problems in the Franklin water system, Schroyer asked Jason Herman, Director of Water Services, to address the council and the public.

“The two systems are not contacted in any way,” Herman said. “I can’t and won’t speak about what is going on in Franklin other than to wish them the best, but it is physically impossible for the two systems to be linked.”

OTHER BUSINESS

In other business the council:

• Hired Brandon Rosenberger as a new police officer. The department is now just one officer shy of a full roster of 16 (including the chief), according to police chief Robert Wenner, and he believes he will have another officer ready for the council to hire in the near future.“I want to thank you for allowing me to replenish the roster,” Wenner said.Rosenberger was born on an air force base in North Dakota and then moved to Ohio before moving to Pennsylvania. He recently graduated from the police academy at Mercyhurst.
• Appointed Jeff Wenner as the interim wastewater service director. Jeff Wenner has worked at the wastewater plant for 28 years.
• Approved a request from the Oil City Church of God to use Justus Park for its annual Easter Egg Hunt and Bike Giveaway from 12:30 p.m. until 2 p.m. March 24. Registration will be at 12:30 p.m. and the hunt will begin at 1 p.m. Last year, over 400 children registered for the event.
• Accepted the resignation of Lee Mehlburger from the Shade Tree Commission. A long-time member of the Commission, Mehlburger is moving out of the city, according to mayor Bill Moon.
• Gave permission to revise the 2015 CDBG contract activity funding. The fire truck activity was originally funded with $62,000 but a loan payment was recently made to First United National Bank in the amount of $61,534.61 leaving $465.39 in activity. That money will be moved to demolition activity increasing the demolition fund to $38,555.39. The fire truck activity will be closed.