Sewer management company returns answers to city      

Contract negotiations set to begin

[JAN. 13, 2005]  Joe Miller, vice president of business development for Environmental Management Corporation, returned to speak to the council on Tuesday night. Miller met with the city sewer and finance committees to open discussion of sewer management and engineering contracts back in December.

At the committee meeting on Dec. 6, 2004, Miller explained that past contracts had simply been amended and re-signed up to now and had become cluttered. Since it seemed time to rewrite the contract, the company also proposed a couple of changes.

EMC would like to combine the engineering contract with the operation and management contract. The engineering contract has been renewable every four years and is up this April. The sewer plant operation and management contract has been renewed every five years and is up in April 2006.

During the November meeting, sewer committee chairman Benny Huskins questioned if EMC was meeting the Prevailing Wage Act with all its workers in Lincoln.

Miller said that EMC has many contracts like Lincoln's in Illinois and has examined the issue, gathered legal counsel and believes the company is not required to meet that standard for several reasons, but he said that he would gather the exact information why and return with it.

So, Miller returned to address the two questions that emerged during the November meeting:

• Why doesn't EMC have to pay all workers prevailing wage?
• How can the city combine the engineering and the sewage management contracts?

The Prevailing Wage Act has a couple of tiers, he said.

1. The act says that you need to be engaged in construction of a public works.
   We're doing operation and maintenance.
2. There is a public utility exemption.
   The city does not have to pay prevailing wage as a public entity. We're a private company operating on behalf of the city, which suggests the prevailing wage should not apply.

Just in case, Miller said, there is added language in the contract that says that if it is determined that EMC needs to pay prevailing wage, we'll pay it. It won't be the city's responsibility.

He said that, should EMC be mandated to begin paying prevailing wage, they would like a clause that would allow them to sit down with the city to discuss options at that time. The options would be numerous, including transferring employees back to the city and keeping EMC as managers or, not desired, but possibly even parting ways.

The second issue that Miller addressed was how the city could combine the engineering contract with the operation and maintenance contract. Currently the engineering contract is a four-year term that comes due this May 1. The sewer plant operation and maintenance contract is a five-year contract that is not due to renew until next year.

Miller acknowledged that there is a state statute that talks about contracts going with a mayor's term. However, there is what is called the "special fund rule." It says that a service funded by a proprietary fund, a fund that stands on its own like the sewer fund does, may go beyond the mayor's term. The sewer operation and maintenance are funded by the sewer fund.

On the other hand, the engineering contract is not under the sewer fund. Miller said the contract has language added that accommodates the different funding mechanisms. The contract will read, "We looked to the sewer fund to pay for our contract services, and if for some reason the sewer fund did not have the appropriate amount in it, or if the money were not appropriated, the city would have no obligation to pay our contract, and it would become null and void."

Bates said that he has reviewed the state statutes addressing contracts. He said that, generally speaking, where funding is through yearly appropriations, payment and contracts must be yearly, but there are exceptions for some maintenance-type services that allow for multiyear contracts. This is the type of service that fits that.

He said that the "special fund rule" and the language that EMC is proposing enables them to create a multiyear contract. The engineering will still be appropriated annually out of the general fund. But EMC will look for only the operation and maintenance costs to be met through the sewer fund to keep the contract.

Huskins said that he would prefer to renew the engineer's contract that is due this year for one additional year, until May 1, 2006, when the EMC contract is up. This gives the current mayor, if she is re-elected, or the next mayor and the future administrations, a chance to make their own decisions.

Finance committee chairman Verl Prather did not share the same view. He said, "Rather than go one year here and one year there with possibly lots of companies, I would like to stick with a company that does a good job and continues to show that they're going to do that."

Prather suggested that further discussion be held for a combined finance and sewage committee meeting that would begin the contract negotiations. Even though it is a committee meeting, Prather urged that all council members plan to attend.

The meeting is set for 6 p.m. on Jan. 25.

[Jan Youngquist]

Article on December meeting

• City begins work on sewer system contract
  EMC contract