Wednesday, October 10, 2007

Orange Beach puts hold on sewer service pledges

Originally Published by the Mobile Press Register

Amid delays in new plant construction, Orange Beach negotiating lease of lines north of waterway

Wednesday, October 10, 2007
By RYAN DEZEMBERStaff Reporter

ORANGE BEACH -- With its plans for a new sewage-treatment plant in limbo, the City Council on Monday voted unanimously to put a hold on promises of wastewater service to developers.
In addition, the council began negotiations to lease municipal sewerage north of the Intracoastal Waterway to a private company that is building a treatment plant north of Lillian.

Besides saving Orange Beach money in servicing lines well outside the city's limits and relieving some pressure on the aging municipal system, it would give Alabama Utility Services LLC's burgeoning Blackwater Wastewater Treatment Facility an initial customer base to build from, city officials said.

"They need capacity and we need relief," City Administrator Jeff Moon said. "It really works out well in the short term."

Most of the details in the lease agreement have yet to be worked out, but both sides are considering a three-year deal in which Pell City-based Alabama Utility Services would take control of all of Orange Beach's lines north of the Intracoastal Waterway, excluding customers along the Foley Beach Express.

Though the private company would collect money from customers on those lines, be responsible for repairs and have the ability to add customers and extend the lines, the city would still own the sewerage and would have control over how much the company charges customers, city officials said.

Orange Beach bills 817 customers in the area that the company would take over. Like those living within the city, residential sewer customers there pay $20 a month.

Mayor Pete Blalock said that because of the cost of maintaining lines outside the city limits, Orange Beach will probably have to slightly raise rates for outlying customers even if the lease is not approved.

Alabama Utility Services owner Chris Matthews said that the rate he seeks will have a lot to do with how much the city charges in the lease agreement, but that, "Our rates are going to be in that $30 to $40 window."

City officials said they'd probably seek $5 per customer per month from the company. That would net Orange Beach about $49,000 annually.

Orange Beach obtained the lines, which extend in places into Elberta and Foley, when the city cobbled together its municipal sewer system by buying multiple private concerns.

Blalock said that the council will insist on strict controls over the rates Matthews can charge from the onset and may force him to get the council's approval for any hike in excess of annual changes to the consumer price index, a common gauge of inflation.

On Monday, Matthews and his lawyers, which include former Baldwin County District Attorney and current Gulf Shores City Attorney David Whetstone, met with Orange Beach officials for about 1½ hours to go over the arrangement before handing it off to their lawyers to iron out particulars of the deal. Besides the monetary and regulatory issues, both sides need to figure out what happens to customers and pipes that are added to the lines under Matthews' management.
Orange Beach has its own plans for a new facility capable of treating up to 10 million gallons of sewage each day, up from the 5.5 million gallons the city's Canal Road plant can handle each day.
Though the money for that $20 million project was obtained through a 2006 bond issue, construction has been delayed more than 18 months because the federal government has taken issue with a land swap between Orange Beach and the state that would provide the city with the 40 acres required for the new plant.

Blalock said that federal regulators in Atlanta are working with Alabama to clear up paperwork that will enable the property swap and said that a resolution could come this week, but city officials are considering alternative sites.

In the meantime, the city will not promise sewer service to any developers for up to 180 days.

Projects in the pipeline at City Hall won't be effected by the moratorium and neither will those wishing to build single-family homes, Moon said.

They need capacity and we need relief. It really works out well in the short term.-- City Administrator Jeff Moon

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