Sewer Land Swap will proceed in Orange Beach

Orange Beach also restarts negotiations to lease Josephine area lines

Friday, November 16, 2007

By RYAN DEZEMBER Staff Reporter

ORANGE BEACH -- After a nearly 18-month delay, the city and Alabama conservation officials have set a date later this month to finalize a land swap that will allow construction of a new $20 million municipal sewer treatment plant, Mayor Pete Blalock said Tuesday.

The two sides plan to close the transaction Nov. 27, which will give Orange Beach 40 acres south of the city's current treatment facility on Canal Road while the state will get 46 acres of maritime forest to be added to the Gulf State Park.

The trade had been delayed first because of problems with appraisals used in the deal, and later because of a disagreement between the state and the federal government over whether the state land could leave Alabama's hands.

But Blalock said those issues have been resolved and the city, as soon as the swap is finalized, plans to begin building a plant that can treat 10 million gallons per day with the ability to be expanded to handle 15 million gallons daily. The current plant can treat 5.5 million gallons a day.
Last month, with the future of the new plant still up in the air, the City Council voted to stop promising wastewater treatment service to large developments for 180 days. The fear was that with the delays in building the new plant, the current facility might be overloaded by new condos and shopping centers.

Councilman Jeff Silvers said the city has contractors already lined up to clear the site, and that construction will likely take 18 months.

Also Tuesday, the city officials said that after putting the brakes on negotiations to lease its Josephine-area sewer lines to a private company, it would resume working out a short-term deal with Alabama Utility Services LLC.

Orange Beach now bills 817 customers in the area north of the Intracoastal Waterway that the company seeks to take over. Each of those customers is charged, like city residents, $20 per month.

The Pell City sewer company, which is building a treatment plant in the Lillian area, seeks to lease those lines from the city for the first few years it's open. That would not only give the company some business to start with, but it would provide the city's sewer system some relief until the new plant is finished, city officials have said.

The city would then be able to reclaim the lines when its plant is completed.

City Administrator Jeff Moon said that after the company's initial proposal last month, three council members expressed hesitancy to lease the lines because the company said that it would likely need to raise rates for existing customers.

Council members said a recent 68 percent rate hike by Baldwin County Sewer Service, a separate private provider, caused them some pause in dealing with a private company.
But Alabama Utility Services has now offered to keep rates level for existing customers while charging a separate city regulated rate to customers it hooks up to the lines, its lawyer David Whetstone said Tuesday.

"We can assure you that it would be in the $30 to $40 range, which I think is a very competitive rate," Whetstone said.

Whetstone, who is Gulf Shores' city attorney and a former Baldwin County district attorney, said the company will adhere to city building standards when adding on to the lines and would allow the council to regulate its rates for all customers.
"It will bring a new competitor to the area and I think a competitor is good for everyone," Whetstone said. "I think competition leads to lower prices."

Council members, without taking an official vote, gave City Attorney Wanda Cochran permission to restart negotiations with the sewer company.

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