Item O5
Revised 2/95
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: January 17.2001
Division:
County Administrator
Bulk Item: Yes
No-X....
Department: County Administrator
AGENDA ITEM WORDING:
Conceptual approval of an agreement, with Key West Utilities to accept sewage directly from the
Monroe County Detention Facility on Stock Island,
ITEM BACKGROUND:
In early 1994, the County completed construction of the federal court ordered detention facility on
Stock Island. Part of that facility contains an operating sewage treatment plant large enough to handle
the wastewater treatment necessary for that facility. Monroe County is responsible for all operating
costs for the wastewater treatment operation at the detention facility. Key West Utilities is the
operator of the sewage treatment facility on Stock Island and has proposed to take over the
responsibility for accepting detention facility's sewage at its plant as parl of its expansion program.
After months of negotiation, it appears as though implementing this arrangement with Key West
Utilities and decommissioning the plant at the detention facility is in the County's ftnancial and long-
range interest.
PREVIOUS REVEL ANT BOCC ACTION:
Development of the detention facility and sewage treatrnent plant.
STAFF RECOMMENDATIONS:
Approval of conceptual arrangement and instruction to staff to conclude a contractual arrangement for
final approval by the Board of County Commissioners.
TOTAL COST: ,There will be anticipated savings
as per the attached document.
COST TO COUNTY:
BUDGETED: Yes
No
REVENUE PRODUCING: Yes
No X
AMOUNT PER MONTH_ Year
APPROVED BY: County Atty _
OMB/Purchasing _Risk Management _
DIVISION DIRECTOR APPROVAL:
'~~
James L. Roberts
DOCUMENT A TION:
Included lL
To Follow_
Not Required
DISPOSITION:
AGENDA ITEM#~5
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DISCUSSION OF PROPOSED ARRANGEMENT BElWEEN
MONROE COUNTY AND KEY WEST UTILITIES
BACKGROUND
In early 1994, the Board of COmIty Commissioners completed development of a
federally ordered new detention facility on Stock Island. The state of the art facility
included an onsite sanitary wastewater treatment plant which was designed to serve the
needs of the existing facility plus some potential expansion in the future. With the
development of that facility, there came the responsibility for the annual operating costs,
liability for environmental issues, and future upgrades.
Since the facility became operational, the County has lived up to its
responsibilities in this regard. Through the utilization of some staff time but mostly
through contractual arrangements, the County has maintained and operated the sewage
treatment plant.
Earlier this year, the Administration was approached by Key West Utilities, the
provider of sewage treatment services on Stock Island, with a proposal to accept sewage
from the detention facility and to treat it at a cost saving to the County. The motivations
are obviously the ability to obtain revenue from the treatment of additional sewage,
within the plant's rated capacity, and the ability to utilize gray water at the golf course,
thereby saving the expense of purchasing water at Florida Keys Aqueduct Authority
rates.
The original proposal did not provide substantial savings for the County.
Subsequent discussions have led to the present proposal which appears to provide long
term cost savings as well as other benefits.
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THE PROPOSAL
From the County's perspective, the overall goals are to reduce costs and to reduce
future obligations and liabilities. In that regard, there is a table attached to this narrative
which compares the existing Monroe County situation with the proposed agreement with
Key West Utilities.
OUf present cost for operating the wastewater treatment system at the detention
facility is approximately $178,000 per year. This includes a contract with the company
that takes on the major responsibilities of operating and rnaintaining the plant. In
addition, there are costs fOf electric, chemicals, engineering for recurring permitting
obligations, general repairs, and some water purchases. Under the proposed agreement,
those expenses would be eliminated since the wastewater treatment facility at the
detention center would no longer be operational. Sewage would flow directly to Key
West Utilities treatment plant. The operating expenses proposed by Key West Utilities
are approximately $106,000 per year, or approximately $72,000 saving per year in
operating costs, at current costs.
It would be wonderful if life were that simple. However, just as in the case of the
proposed Key Largo treatment plant, there will be a connection fee. Since the Key West
Utilities plant is a privately owned operation, the Florida Public Service Commission has
the responsibility of overseeing the fee structure. The cost to connect to the Key Wcst
Utility plant, as approved by the FPSC, is $2,700 per unit. Based on an average daily
flow of 83,000 gallons and 205 gallons per unit, we have 405 units. Therefore, the
connection fee is $1,093,500.
The County would have great difficulty in identifying the source of funds
imrnediately for that purpose. Therefore, we have negotiated that amount to be paid in
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three payments. If the Board of County Commissioners approves this arrangement,
funds from infrastructure sales tax could be utilized and an amendrnent to that budget
would be needed. Even though the arrangement is to have the amount paid in three
installments, there is no interest involved. In addition, Key West Utilities has agreed to
pay for a lift station if needed, a lateral sewer line, and the water reuse line which could
cost $60,000 or more. Further, they have agreed to pay engineering costs up to $10,000
for decommissioning the existing plant. If only the savings in the annual operating costs
are considered when comparing to the connection fee, there would be a break-even point
at approximately 15 years.
The Board of County Commissioners is reminded that the state and the Sheriff are
funding an addition to the County detention facility, a juvenile justice facility. This
facility can not hook up to the present treatment plant at the detention facility lmtil the
existing plant is upgraded to advanced wastewater treatment levels (which would
normally not be required until 2010). Although the cost of the plant upgrade
(approximately $250,000) would be the responsibility of the Department of Juvenile
Justice, they have not expressed any desire to fund the upgrade. However, if the sewage
was sent to the Key West Utilities plant, the Department of Juvenile Justice has agreed to
pay the $135,000 connection fee. It would be the County's responsibility after that, as
part of the operating cost, to pay about $10,900 per year in usage fees. A review of the
table below will show the overall impact for the County.
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MONROE COUNTY ANNUAL COSTS
UNDER PROPOSED AGREEMENT
$106,000 operating cost for detention facility operations
11.000 Department of Juvenile Justice usage fee
$1 17,000/year
$1 78.000/year current cost
$ 61 ,OOO/year operating savings
$1,093,500 connection costs to be paid by County over three installments, no interest
18 years for cost recovery, not considering increases in cost (inflation), necessary plant
upgrade by 2010, environmental liability
There are, however, other considerations. Most notable among them is the need
to do an upgrade to the existing wastewater plant at the detention facility by 2010.
CH2MHILL estimates that will cost approximately $250,000. If this $250,000 is
considered a capital savings under the Key West Utilities' proposal, the analysis is as
follows:
$1,093.500 connection fee
- $ 250.000 capital savings
$ 843,500 capital cost
$61,OOO/year operational savings
14 year break even
Also, since the plant utilizes a deep injection well system. there are always
concerns about liability as a result of malfunctioning and environmental issues that could
haunt the County in the future. There is also no way of knowing what regulations the
state and federal government will impose in the future concerning wastewater treatment.
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Staff has had general discussions with staff at the Florida Keys Aqueduct
Authority. There is discussion occurring between the Authority and Key West Utilities
concerning the possibility of a sale of Key West Utilities to the Authority. There is
always the thought that there might be lower connection fees in dealing with the
Authority. After discussing the issue, it does not appear as though there will be anything
lower than the $2,700 identified above. It also appears as though, if the County wishes to
become involved in this agreement, it is a better deal than what might come forth if the
Aqueduct were to purchase Key West Utilities.
It is recommended to the Board of COWlty Commissioners to approvc this
arrangement conceptually. If that is the case, staff will finalize details to be placed in a
contract and have it reviewed by our financial advisor and bond counsel to be sure there
is no negative impact upon the outstanding bonds on the detention facility that run
through Fiscal Year 2004.
The advantages of this arrangement to the County are:
. Annual operating savings of approximately $60,000 per year plus inflation in the
future. These costs are paid from County-wide taxation.
. Removal of the need to upgrade the treatment plant at a cost of approximately
$250,000 by 2010.
. Significant reduction in environmental responsibility and pollution liability concerns.
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Monroe County Detention Facility
Wastewater Treatment
Contract wIDavis Water Analysis
Electric = $800/month
Chemicals/sludge = $l,loo/month
PermittinglEngineering (every 5 yrs) $3,100/5
Repairs by P.W.
Water to maintain level of reuse tanks
Monthly Fee = $605.62
Usage Fee = $2.92/loo0gal x 83,ooOgal/day
= $7,876.42/mo
Water to operate: 32,OOOgal/day @ $.40/1000gal
Annual Total
Costs
Existing
(Remains Me)
Proposed
(Connect to KW Utility)
152,900/yr
9,600/yr
13,200/yr
620/yr
1,200/yr
370/yr
7,267/yr
94,517/yr
4, 672/yr
$177,890
$106,456
1,093,500*
Connection Fee: $2,700/ERC,205gal/ERC,
83,OOOgal/day, 405 ERe
Lift station & lateral sewer line
Water reuse line
Decommissioning Existing Plant
0**
0**
?***
Dept. of Juvenile Justice (011) Plant Upgrade 250,000(Min)
DJJ Connection Fee; $2,700/ERC, 205ga1lERC,
10,200 gal/day, 50 ERC
DJ] Usage Fee: $2.92/1000gal x 1O,200gallday
135,000
10,8711yr
*To be paid in three payments of $364,500
**Cost paid for by KW Utility
***KW Utility will pay up to $10,000 in Engineering fees. Cost to physically remove
plant to be determined,
Notc: DJ] would be responsible to pay for plant upgrade and their connection fee.
MC would be responsible to pay for DJ] usage fee as part of the Me Detenlion
Facility operations.
RECEIVED
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JAN J 0 2001
COUNTY ADMINISTRATOR
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KEY WEST RESORT UTllJTIES CORP.
P.O. BOX 2125
6630 FRONT STREET
IaY WEST. FLORIDA 33045
November 8, 2000
VIA FACSIMILE:
305-191-4544
James Roberts
Monrcx: COffmy Administrator
Stock Island
Key West. Florida 33040
RE: W ASTIWA UR TatATMENT PLANT MONROE COUNTY DETENTION CENTER
Dear Mr. Roberts:
It was good to meet with you and Dave Koppel regarding the Monroe County Detention
Centers wastewater flow on October 27, 2000. At that meeting we discussed connecting the
Center [0 the K.W. Resort Utilities Corp. WasteWater Treaunent Plant and discussed the
following items:
1. The capacity reservations fees to be paid by the County to K.W, Reson Utilities
Corp.;
n. The County's needs for reuse water to operate the Center's toilets. and the
H.V.A.C. System;
iii. The lift gtarion at the Center and the continued operation and maintenance of said
lift station; and
iv. The decomnusSloning of the current plant.
The capacity reservation fees (ERe), set by the Florida Public Service Commission are
$2,700.00 for each 205 gallons per day of wastewater treated by the utility. Premised upon the
existing approximate 83,000 gallons per day average usage that would equal 405 ERe's for a
payment of $1.093,500.00. You have requested that the utility consider allowing Monroe
County to pay that over a period of time The utility company would agree to allow the County
to pay !his capacity reservation fee over 3 payments. The first payment of $364,500.00 to be
paid upon COIUlccuon to the system. the second payment of $364,500.00 on the first anniversary
of connection, and the third payment of $364.500.00 on the second anniversary of connection.
These charges woul<! not bare interest. I Dote that the detention center is considering expanding
and to the extent there is any expansion the additional capacity reservation fees could also be
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Jim Ilobcns
November 8. 2000
Page 2
paid 1/3 upon connection, 113 one year later. and the balance one year after that without interest.
This proposal IS only open for acceptance until March I, 2001.
In connection with the Counties approximate 32,000 gallon per day requirement for reuse
water, the Utility would provide a reuse tine directly to the existing tank at the jail at the utility
company's expense. The fee: for reuse watCf would be the same fee that the golf course cWTcntly
is paying for reU3e water or 40 cents pet thousand gallons.
The jail cunently utilizes a lift station to pump wastewater to the cum:nt treatment plant
located On the jail property. The utility company would assume tbe obligation of maintaining
and opera~.ng this lift station and the county would allow the utility company to utiJi~e the lift
station to transmit the COlUlty w$tewater to the utility company. At first we thought that the
utiliI)' company would connect into tbe Sunset Marina wastewater treatment line adjacent to the
center but another alternative cOlUlection point would be to run down Jooior CoOege Road pass
the County administration buildings and utilize the County's pump station at the Animal Shelter
and then nm along the golf course to the utility company's force main on the golf ,ourse at U.s.
One and Cross Street. But in any event we would maintain the lift station and operate the lift
station subject to the granting of an easement to the utility company to do so.
Finally we would also look iuto decommissioning the current Plant and would agree TO
pay all the engineering cost for decommissioning the Plant up to $10,000.00. This amount
should handle all engineerins costs. We have also looked into the disposal of the current plant
and have requested proposals to remove the current plant from its location.
We look forward to hearinc from you.
Sincerely yoQrS,
WLS/jf
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