-- to get out. And even with that, we could have percent increases a year without even 18 being able to make this decision. 19
Yeah. This was in the area of trying to say that we wouldn't be stuck with a facility that was not economical to run in the long term, that we could say, Okay, we're not tied into this operation, we can walk. We can pay and walk. 154 6/3/08 - FINANCE - BILLS 080495 and 080498
Okay. The last question I have is sort of a threshold question. I think I know the answer. Part of this discussion has been are we saving this, are we saving that, is the Controller right, is the Water Department right, are they both wrong and it might be a lot more because of gas costs and things. Would we be looking at this project even if it were a break-even? It seems to me we would be and that this would be presented to us as a break-even. It's nice to have projected savings, but we know how they could slip away, because I know there's other issues. I don't represent this area, but there were strong odor issues down there and I know that's why it was shut down from the composting last year, and everybody heard all about that. But would we be presenting this cost neutral just as we're presenting with savings? DEPUTY
That was my strong guess. Thank you for being so straightforward with that.
Thank you, Madam Chair. Just the method that Councilman O'Neill mentioned, anaerobic digestion something, does increasing the current process to 140 to 150 degrees decrease the volume of sludge that would leave the facility and, if so, by how much?
The volume of sludge that leaves the facility compared to the originally produced at the plants is something on the order of one-third of the total solids are converted to a gas. So two-thirds is leaving the plant. There's a five or ten percent increase in that one-third if you go to a process that is higher temperature, so-called advanced digestion. You can get higher 156 6/3/08 - FINANCE - BILLS 080495 and 080498 destruction and, therefore, more gas production.
Five or ten percent additional reduction, in that order, yes.
Even though there's more evaporation just of the water from the sludge because of the increased heat, it's only five or ten percent?
There is more gas being produced and there's, therefore, less solids leaving the plant.
Okay. But some of the gas is H2O. Are you including that in the calculation of the sludge material that's going to be transferred? 157 6/3/08 - FINANCE - BILLS 080495 and 080498
Some of the gases are H2O. Some of it is water, right? Or are those the gases you're referring to?
Got it. Now, the City is paying Synagro to develop and manage the plant, and presumably that's at a margin that Synagro thinks it can make a profit on. It's less than our cost, but I understand under the contract that the pellet profits or the sale of the pellets is entirely a profit to Synagro. Do we get any compensation for the transfer of our solids now and was that calculated into the cost-benefit analysis here?
Sir, I'll try to 158 6/3/08 - FINANCE - BILLS 080495 and 080498 answer that. That indeed was debated by staff over whether or not the Department should seek some type of a formula that if Synagro was indeed making money, there would be some cost sharing. We considered the merits of that and we ultimately decided to put the entire risk of product disposal or marketing with them because of the very real concern that in any one year there may be lost revenues and not able to move the product either through transportation issues or other issues. And this is a technique which has been used elsewhere at other large cities such as New York, but also some have used a cost-sharing as well. What we didn't want Synagro doing, because we're looking for sustainability, we didn't want them modifying their marketing to try to reduce the costs they would pay to the City. We wanted them to have the sustainable outlets. That was the most important thing, that that was assured. 159 6/3/08 - FINANCE - BILLS 080495 and 080498
Right now there is outlets for pellets. I mentioned golf courses, fertilizer blenders, but some of those, sir, are distant markets. For example, ten years ago I would have told you that the Florida citrus market would take all of the product that Philadelphia would produce. That's no longer the case, because we now have Tampa producing a product. West Palm Beach is going to have a new facility and the like. So you have to consider the competition. But, as I said earlier, I do firmly believe that many of these pellet products are going to be fuels because they have high BTU value and they're equivalent to a coal.
How much are they worth as a fuel that's burnt, and can we use it to power the plant instead of pay -- to recycle the material right here rather than burn natural gas? 160 6/3/08 - FINANCE - BILLS 080495 and 080498
Yeah. I'd like to expand on that, if I could. Synagro markets 45 percent of all the heat-dried pellets that are marketed in the country. It's about 150,000 tons of pellets a year. And we have a mix of fertilizer markets and recently, about three years ago, we started with the fuel market. Right at this point in time, the demand for the product is increasing because two things. There's a big push for renewable energy sources. Both electric -- coal-burning electric companies and cement companies have to show some renewable energy production. They're mandated. The pellets have the same fuel value as soft coal. So the demand is that fuel has gone up. However, we still get more money for the fuel as a fertilizer, and that demand has 161 6/3/08 - FINANCE - BILLS 080495 and 080498 recently increased because regular chemical fertilizer uses a lot of fuel to be manufactured. So fertilizer costs for farmers have recently skyrocketed. And so we typically sell at a discount to fertilizer costs. So right now the demand is pretty strong. But there's ups and downs over a 20-year period.
We sell, but sometimes at a loss. For example -- and we have contracts both ways, where we split the revenue and where we bring it all in. Sometimes we may sell it for $20 but it may cost us 30 to get there.
Okay. So is it the testimony here today from the Water Department that we, the City of Philadelphia, has no responsibility with respect to pellet disposal, et cetera? If they have to go store the pellets somewhere else, they'll do that and it won't be on City of Philadelphia 162 6/3/08 - FINANCE - BILLS 080495 and 080498 property? DEPUTY
Yes. We have no upside on the sale of the product, Councilman, and no risk or liability on the financial side.
Okay. And also Councilman O'Neill pointed out that provision in the contract, that the only place basically that we could take the plant back if we gave them back their cap ex, if there's huge price disparities. I'm just curious what that does for us if the cost of running the plant is 15 percent higher because it's now the only 16 place we have to treat the sewage. In 17 other words, like we're trapping 18 ourselves in this situation where, yes, 19 we can take it back, but we have no other 20 way to treat the sewage except for the way that they put in there. (Applause.)
Perhaps after I talk, Barry or Ms. Cutler would, but our contract only allows that clause really 163 6/3/08 - FINANCE - BILLS 080495 and 080498 to kick in. We can't just come through and say, Hey, it's costing us more, you got to pay us more. There is gas and there's some kind of change in law, but other than those two things, we can't pass through added costs to the City. It's those two things.
Okay. And that brings me to my, I'm sure you'll be happy to hear, my final question. What is Plan B if Synagro decides the project is unprofitable and pulls out and says, We're walking away, we're going bankrupt, this has become way too expensive for us. In fact, all over our 600 municipal facilities all over the country, we can't afford to do this anymore and we are going bankrupt, out of business, and we now have a very expensive process that was constructed there. We end up taking it back. What is Plan B for the City if we're left holding the bag and they go out of business? Is there a letter of credit or a bond that ensures that we'll 164 6/3/08 - FINANCE - BILLS 080495 and 080498 be able to run this cheaper? I'd like to get that on the record.
There are several protections in the contract. One, we have to provide a construction bond, an annual performance bond, a parent guarantee, and we are going to be doing tax-exempt bonds and our lenders have required the contract for them to have step-in rights. So if, for example, Synagro is bankrupt and we're not performing, the bank can substitute another company to come in and run it for us.
But if it's an unprofitable process, that's a meaningless provision, and the construction bond is just for the construction of the facility. So if the operating costs are so expensive that they put your industry or your company out of business, then the City is left holding the bag with a very expensive plant to run and there's no letter of 165 6/3/08 - FINANCE - BILLS 080495 and 080498 credit to cover our operating expenses or to cover -- I understand annual performance bond, but that's one year, not all the years that we're going to be left treating sewage with the plant you leave behind. It seems to me that the City could really be left, if this turns out not to work in ten years, becomes expensive, we're stuck with a very expensive plant and we're holding the bag and there's nothing we can do about it. (Applause.)
Councilman, one of the things about this contract is that we are not stuck with an expensive plant, that the liability associated with the cost of this facility, all the borrowing that's done, will be the Philadelphia Biosolids Services and Synagro. So that is one of the best things about this contract, is that we have not accepted the responsibility for this technology in terms of the capital costs. When we looked at what kinds of 166 6/3/08 - FINANCE - BILLS 080495 and 080498 protections we would need, I think it's going to be pretty clear to us for a long time before a system like this fails that we're going to be needing to find alternatives to this, if it's energy or whatever it is that makes this an expensive plant. One of the reasons, again, why we thought Synagro was a good partner for this project was because of the breadth of their operations in terms of the different kinds of biosolids disposition disposal operations that they're involved with. But Synagro could go away, we understand that, and I think like any business, we have to be looking ahead at what is -- what can affect the operation of this facility. One of the reasons -- and there's been talk off and on about why it is that we only have one proposal for this project, and one of the reasons for that was that the other vendor that qualified for this project, a company called U.S. Filter, came very close to 167 6/3/08 - FINANCE - BILLS 080495 and 080498 submitting their proposal to us, but ultimately in the end refused to submit a proposal that the City didn't back the financing and capital costs. The City felt that that was not a wise idea, and that was really one of the big distinctions between U.S. Filter and Synagro, was Synagro's -- their willingness to step forward and say, We are financially responsible for this $70 million facility.
Okay. Finally, so they're going to construct it and that's sort of limiting our downside, is what you're saying. Is this being constructed in such a way that if this technology or if this process doesn't end up working, can we go back to our old processes, because that equipment and everything will still be there and maintained, or are we now stuck with this process once we take back the plant or once they -- once somebody goes bankrupt and we end up with the only -- we have to 168 6/3/08 - FINANCE - BILLS 080495 and 080498 treat the sewage somewhere and the pipes all lead there.
It was touched on earlier that the construction of this facility is essentially the back end onto an existing facility.
Thank you, Madam Chair. Ms. Racey, before I get to some of the specifics that we need done before we can go to a final vote on this regarding business contracting, still on the issue of diversity, can you tell me why there are no workforce utilization goals in here with regard to the construction work?
We typically leave 169 6/3/08 - FINANCE - BILLS 080495 and 080498 that to the general contractor --
This is a design -- the contract is a little different because it's a design/build/own/operate. So it's not something that there's an already existing design and we're bidding out to a GC.
And I understand you did a lot of due diligence in terms of finding qualified firms that would bring some diversity to the project. I need that broken down a little bit more. More specifically, I need it broken down in terms of African-American businesses, Latino businesses, Asian businesses, 170 6/3/08 - FINANCE - BILLS 080495 and 080498 Philadelphia-based businesses, the same model we use for the City now per the Charter amendment and subsequent ordinance. But in addition to that, in terms of an economic opportunity plan, it should be workforce goals in terms of construction work. The diversity should be reflected in that portion of the project as well.
Yeah. I'm sorry. I'm not familiar with that, but we don't have any issue. We intend to construct union using the Philly trades and they have a standard set of work rules, so... DEPUTY
Councilman, are you looking for a specific commitment? Is that what you're looking to do here?
I'm looking for what is standard for us in City Council in terms of an economic opportunity plan policy that's consistent with what we do across the board when we approve projects. Basically, we want 171 6/3/08 - FINANCE - BILLS 080495 and 080498 diversity to be reflected in both the business contracting and in the workforce utilization, in the building of it. DEPUTY
Thank you, Madam Chair. (Off-the-record discussion between Committee members.)
What we're going to do now is just ask you to not leave. We have more questions, but there are two community groups that have to testify. They have to go. We want them to come testify. We will have you come back or we will have the union testify and then we'll have you come back to respond. We'd like to have the Southwest CDC come forward. (Witnesses approached witness table.) 172 6/3/08 - FINANCE - BILLS 080495 and 080498
I guess it's afternoon now, isn't it? Good afternoon and thank you so much for your patience, but certainly you got a wealth of information from the testimony this morning. I hope it has been helpful. Would you identify yourself for the record, please.
I'm Donna Henry, the Executive Director at the Southwest Community Development Corporation.
And I'm Edith Dixon. I'm the Community Organizer under the NAC office at Southwest CDC.
Southwest CDC supports Bill Nos. 080495, 080498 and 080499. Southwest Philadelphia has more than its fair share of pollutants. While 173 6/3/08 - FINANCE - BILLS 080495 and 080498 we understand that jobs come with the pollution, those jobs are not being held by many Southwest residents. At times, mostly in the past, there was an awful stench coming from the existing Biosolids Recycling Center in Southwest, and we understand that bad odors aren't necessarily dangerous to our health. Southwest CDC has concerns about potential effects to the health of Southwest residents, but has confidence that the Water Department will monitor levels of pathogens, aspergillus fungi and heavy metals, such as arsenic and cadmium, to ensure that they are safe. Southwest CDC has heard presentations held by the Water Department employees affected by the proposed change and has weighed the information against how it will affect the residents of Southwest Philadelphia. Southwest CDC has attended several Eastwick PAC meetings where Synagro representatives joined Water 174 6/3/08 - FINANCE - BILLS 080495 and 080498 Department employees in discussing the plant operations and address the concerns of the community. Southwest CDC supports the Southwest Philadelphia environmental activists who have researched the new process and determined that the noxious emissions will be reduced, decreasing or eliminating the unpleasant odors that drift across Southwest Philadelphia. Southwest CDC supports the process that will create Class A biosolids, which can be reused without known health threats. After visiting a comparative plant to understand the process, Southwest Philadelphia residents, environmental activists shared their views and were impressed with the process and final product. Southwest CDC also supports the process that will reduce truck traffic in and around Southwest Philadelphia and the pollution that comes with them. We understand this action will be minor 175 6/3/08 - FINANCE - BILLS 080495 and 080498 compared with all trucks coming and going throughout Southwest, but it is a step in the right direction.
We're concerned about the health of the people who live in Southwest --
Yes. Edith Dixon. I'm the Community Organizer at Southwest CDC. We are concerned about the people who live in Southwest and who are affected by the pollutants in the air, water and soil. There are toxic chemicals that are brought in by rail and, of course, the airport is in Southwest Philadelphia. According to the Pennsylvania Department of Health, people who live in that area have consistently 176 6/3/08 - FINANCE - BILLS 080495 and 080498 suffered from a higher incidence of cancer and respiratory illnesses. For example, Southwest CDC runs an after-school program at the Patterson Elementary School. That's at 70th and Buist. There are 85 children in that program. Of that number, more than half suffer from asthma or another respiratory illness. The school is about a mile from that plant. Now, I don't think you have to be a scientist to pass through that area by car, overhead in a plane or just sit in Eastwick downwind of the filtration plant to know that the smell coming from that plant is unhealthy. It poses risks to the children in the area more so than anyone else. And I think that's basically what I wanted to get across, that everyone should be concerned about what's going on at the plant currently. I know that the smell has been -- there's been a reduction in the smell in the last two 177 6/3/08 - FINANCE - BILLS 080495 and 080498 years, but even workers at the plant should be concerned I think about what they're taking in while they're there. Thank you.
Thank you very much. Any questions on behalf of the Committee? (No response.)
Thank you very much. How many community meetings have you had regarding this process?
How many community meetings have you had regarding this issue?
How many community meetings have you had regarding this issue?
It's hard to say. Most of the meetings have come at the 178 6/3/08 - FINANCE - BILLS 080495 and 080498 Eastwick PAC. I've attended three meetings where Synagro has been there giving testimony and telling about their process, and I believe that's about how many I've attended, three, at the PAC, but I know that they've been to the PAC. Members of the Eastwick PAC have visited Synagro plants. This has been ongoing for about two years, I believe.
Ms. Henry, how many meetings have you had with the unions regarding this issue?
We've had discussions with the Sunoco Community Advisory Panel where community activists, particularly those interested in environmental health of the residents of Southwest, there was discussion about the process. People who had visited the plants passed around a jar full of pellets for others to see, and they spoke on behalf of Synagro and the process and how it would be a cleaner, safer process for the residents of Southwest. 179 6/3/08 - FINANCE - BILLS 080495 and 080498 Water Department workers attended the Southwest Business Partnership meeting that Southwest CDC organizes for businesses in Southwest Philadelphia, particularly those in Eastwick, and they explained their concerns about job losses. So we've taken those meetings and the information that was provided into consideration when coming up with our testimony today.
The Chair recognizes Penrose Area Civic Association. Are they still here? (Witnesses approached witness table.)
Good morning, Madam Chairwoman and members of the Committee. My name is Robert Stewart and I represent the Penrose Area Civic Association in Southwest Philadelphia. Let me start by saying that our 180 6/3/08 - FINANCE - BILLS 080495 and 080498 community group recognizes the position of the union and understands their issues, but we as the most affected residents to the Philadelphia Water Department's waste treatment center have issues beyond that of the union. Over the years, residents of the area have had to put up with the odors emitting from this facility that most people find when they enter the City either driving over the George Platt Bridge or the Girard Point Bridge or by passing the Philadelphia International Airport. Unfortunately, these odors have been known as the "welcome to Philadelphia" sign. These odors have been unbearable for many years. On Thursday, May 29th, we had a community meeting with the Water Department and Synagro, both of whom gave our community group the presentations of what the proposal is for the new building and site and how it affects the community. The Water 181 6/3/08 - FINANCE - BILLS 080495 and 080498 Department showed our group why they chose Synagro to head their project, since Synagro was the most experienced managing firm in the biosolids processing and their commitment to continue the technology in the processing of biosolids. Our group felt that this project -- I'm sorry. Our group felt that the Water Department found the most qualified company to head this project. They also explained in detail why the technology of heat drying and pelletization of the waste is the best way to reduce the odors that we have had to live with over the years. The only other method would include what we already lived with, and that would be composting and mixing the compost with lime. This would reduce the odors, but not stop the odors. Synagro has agreed to work with the neighbors and community and have agreed to monthly meetings with us to discuss any problems the community may 182 6/3/08 - FINANCE - BILLS 080495 and 080498 have with their facility or operations if this project is permitted to go forward. At the conclusion of our community meeting, we had offered petitions to be signed for and against this project. I want to report that everyone in attendance signed in favor of this project. No one opposed the project. And I have copies of the petitions and our sign-in sheets to be handed up.
It is for these reasons the community does not object to this project and welcomes this type of improvement for the betterment of the community and environment. Furthermore, we believe the use would have no adverse impact on the health, safety or welfare or traffic issues of our community. If all companies coming into the community would sit down and work out their differences the way Philadelphia Water Department and Synagro have done with 183 6/3/08 - FINANCE - BILLS 080495 and 080498 this project, it would be a lot easier welcoming businesses into communities. And I want to thank you for giving the opportunity for us to come and let the community's voice be heard. Thank you.
Thank you very much. This will be entered into the record. Next we have Mr. Jim Gilliam, Business Agent for Local 394. (Applause.)
And Mike Keough, Shop Steward, Local 394. (Applause.) (Witnesses approached witness table.)
Would you please identify yourself for the record and proceed with your testimony.
Good afternoon. My name is Jeff Gilliam and I am the Business Agent for Water Department employees, Local 394. 184 6/3/08 - FINANCE - BILLS 080495 and 080498
Why don't we just wait. As you testify, then you can introduce yourself, please.
Great. No 6 problem. Before I get started, Madam Chairwoman Tasco, I just wanted to say for the record we have zero consultant dollars here at this table. Just good, old-fashioned Water Department employees. Good afternoon, Chairwoman Tasco, Vice-Chairwoman Blackwell and members of the Finance Committee. Thank you for this opportunity to testify today. Again, my name is Jeff Gilliam and I am the Business Agent for Local 394. With me here today are members of Local 394 who work at the Water Department's Biosolids Recycling Center, BRC. I want to start off by saying that Local 394 and District Council 33 are not opposed to making improvements at BRC. In fact, Local 394 has worked with 185 6/3/08 - FINANCE - BILLS 080495 and 080498 the City many times in the past to make necessary improvements in service delivery, and the results have saved the City millions of dollars in costs. I also want to say that all of the members of Local 394 are taxpayers and City residents. We live in the City, vote in every election and are very committed to this City, both as citizens and City employees. Local 394 members, like the ones here in Council Chambers today, have won numerous prestigious national awards for the work that we do for the citizens of Philadelphia, and we are very proud of our accomplishments. My message to you today is, the proposal under consideration in this hearing today has been proposed to City Council already in your last session. There is nothing new in this proposal. It is the same old lies, the same old propaganda that the Water Department has been pushing for the past four to five 186 6/3/08 - FINANCE - BILLS 080495 and 080498 years. The numbers still don't work. The arguments are still the same manufactured logic that has been disproved in the past. It is time for us to go in a new direction. Our Mayor has stated it's a new day, time for a new way. Well, that day should start today. In spite of what you may have heard or read in newspapers, Local 394 was never included in the process of developing this proposal when it was first put together. We have been excluded from the current process as well. The fact of the matter is that if the Water Department had honored the RGI language in our contract, which is Redefining Government Initiative, we wouldn't even be sitting here today. But the Water Department has continued to treat Local 394 like a problem stepchild instead of a partner in developing a 187 6/3/08 - FINANCE - BILLS 080495 and 080498 policy that would actually work for the citizens and ratepayers of Philadelphia. Local 394 has a long history of working cooperatively with the Water Department. In the past, Local 394 sat down with the management of the Distribution Unit of the Water Department and worked out a winter schedule that has saved the Department at least $1 million for the last ten years. This was money that the Department used to pay to contractors, who would then do such poor work that our Local 349 members would have to go back at even more cost and fix the problems the contractors created. Back in the mid '90s during the Rendell Administration, we also worked with the Water Department to save $15 to $16 million in costs at the very same BRC facility we are talking about today. Our concerns with the current proposal to give control of BRC to a private contractor owned by the 188 6/3/08 - FINANCE - BILLS 080495 and 080498 Synagro/Carlisle Group are based on the fact that the RFP process used to generate this proposal was deeply flawed and Local 394 was deliberately kept out of the discussions as the RFP was being developed. The result was a proposal that we have already testified against in past City Council sessions because we believe it does not benefit the City, the citizens in the immediate area or our union. For the past few years, the Water Department has been promoting privatization as the best option for the City.
Their claims have been based on statements about the need to reduce costs and the aesthetic and environmental impacts on surrounding communities that originate in the operations at BRC. Most of the reasons being cited for promoting this proposal is either no 24 longer an issue, unsupportable with facts or simply false, and we are here today to 189 6/3/08 - FINANCE - BILLS 080495 and 080498 present testimony that supports our position. I would like to remind the members of the Finance Committee that Local 394 is categorically opposed to any attempts to privatize the positions of our members. We hold this position because we know that our members perform vital public services that are best delivered by the highly trained and qualified employees of the Water Department, not a company like Synagro. We also believe the City has an obligation to the citizens and taxpayers to fulfill its mission to provide basic City services in the most efficient manner possible. With that in mind, we believe that there are a number of flaws with the proposal under consideration in this hearing that go far beyond our immediate concerns about protecting the jobs of our members. 190 6/3/08 - FINANCE - BILLS 080495 and 080498 Now, I would like for you to hear from some of our own BRC experts who can tell you speaking from their experience and knowledge why the Synagro/Carlisle Group deal just doesn't add up.
Good afternoon, Chairwoman Tasco and members of the Finance Committee. My name is Michael Keough. I'm a 20-year employee of the Biosolids Recycling Center and the Shop Steward. Thank you for the opportunity today to testify against Bill Nos. 080495, 498 and 499. The purpose of my testimony today is to put in the record relevant pollution and energy data that will prove the operation of the proposed pelletizer will result in potential total pollution levels that actually exceed BRC current emissions, along with the risk of higher energy costs. Now, would you please allow me to familiarize Council with a few 191 6/3/08 - FINANCE - BILLS 080495 and 080498 pollution terms. The term "potential to emit" refers to the estimate of an operation's potential to emit pollutions as if it was operating at 100 percent capacity, 7 hours a day, seven days a week. The term 8 "estimated actual emissions" refers to 9 the calculation of emissions using actual 10 operating parameters. And the term 11 "criteria pollutants" refer to the six 12 common pollutants that the EPA uses as 13 indicators of air quality. These six 14 pollutants are ozone, nitrogen oxide, 15 sulfur dioxide, particulate matter, lead 16 and carbon monoxide. 17 The only pollution data that 18 the Water Department wanted to discuss 19 was outdated VOC and odor 20 representations. If the Department 21 wanted to shoot straight with Council and 22 the public, they would have illustrated 23 the VOC reductions relative to the 24 substantial increase in other criteria pollutants. Of course, though, this 192 6/3/08 - FINANCE - BILLS 080495 and 080498 would not have supported their position that contract operations will result in air quality improvements. The BRC during compost operations had the potential to emit a total of 112 tons of criteria pollutants per year. This included truck emissions. Actual BRC compost emissions were really in the range of 70 tons per year, and our current has actual emissions of about 42 tons per year. This includes truck traffic. Actual site emissions are really around 28 tons. Now, the estimated actual emissions for the proposed contract operations with the pelletizer are about 83 tons per year, including truck traffic. Seventy-eight tons of the emissions are at the stack. That's nearly 20 percent more than the compost operations and nearly 200 percent more in total actual emissions of BRC's current operating mode. Now, if you would, I'd like you 193 6/3/08 - FINANCE - BILLS 080495 and 080498 to please focus attention on Exhibit-2A. And I'm sorry I forgot to put numbers. It's about ten pages away from where I'm at now. Exhibit-2 is a graphical comparison of total emissions produced by BRC compost operations compared to estimated emission levels of the current operation and proposed contract operations. This comparison was compiled with data from PSB's (sic) "Technical Proposal for the PWD Biosolids Recycling Center" dated November 24, 2004, as well as data from the Department of Transportation Federal Highway Administration website. As you can see, there's a difference in the total emission generated by each scenario. The total at the top of the column reflects both plant and truck emissions combined. Notice the total estimated actual emissions generated is about 42 tons per year as compared to 70 tons per year for compost 194 6/3/08 - FINANCE - BILLS 080495 and 080498 operations and 83 tons per year for Class A contract operations. The Department and PSB both tout environmental benefits that may result from 7,000 truck trip reduction per year. However, they both neglect to fully discuss how this reduction will be achieved. The BRC currently must transport about 200,000 tons of material annually. The Department will project PSB will transport about 60,000 tons annually after the pelletizer is built. Ten thousand truck trips down to 3,000.
But in order for PSB to reduce the weight of the material handled from 200,000 to 60,000 tons, they must burn nearly 510 billion BTUs of natural gas. Of course, when PSB burns that quantity of fossil fuel, there will be a substantial increase in the amount of nitrogen oxide, particulate matter and carbon monoxide emitted. These additional emissions will cause the contract operations Class A period 195 6/3/08 - FINANCE - BILLS 080495 and 080498 emissions to be higher and slightly more than 40 tons per year. This equates to over 28,000 50-mile truck trips per year. And that would be about a net increase of 21,000 50-mile trips annually. Keep in mind, this is not disbursed over a 50-mile path. It will be localized at the stack of the pelletizer directly adjacent to the Platt Bridge in South Philly. The Department has overestimated the significance of odor and emissions at BRC as one of its criteria for requesting contract operations of the plant. The BRC has always operated with the philosophy of continuous improvement and has implemented practices to reduce odors. Before 1995, during the time when the plant smelled its worse, the site had 19 identified sources of odors. With the cooperation of the Department, current BRC operations has resulted in only four identified sources of odors, a 196 6/3/08 - FINANCE - BILLS 080495 and 080498 79 percent reduction of 1995 levels. These reductions in odors have been achieved without major capital investment through existing disposal contracts and improved handling practices. The union and the Department both agree that a reduction in the amount of VOCs emitted from BRC will benefit local air quality. However, the purported benefits of the proposed contract operations reduction in VOCs would be negated by the fact that the proposed pelletized operations will cause the amount of criteria pollutants emitted to increase substantially. BRC has achieved the reductions of VOCs without increasing emissions of any other pollutant, whereby enabling AMS to renew BRC Title V permitting, and I call for a new odor study to be done at BRC. Again, total estimated actual emissions, including transportation during current operations, minus 197 6/3/08 - FINANCE - BILLS 080495 and 080498 composting, will only be 42 tons per year. However, estimated actual total emissions during the Class A period of contract operations will be nearly 83 tons per year. If everyone's environmental concerns focused on one pollutant item, it would be easy to support this position. But if you're going to analyze objectively, you must take all parameters into account when you do this. It is clear that the proposed contract operations of BRC will actually worsen current air quality. Our current operating mode vastly improves the current pollution situation and does so in a cost-effective manner. If we are truly serious about this topic, this 25-year deal with Synagro needs to be more seriously scrutinized and compared to our most current program and other emerging technologies. Synagro's pellet plant, said simply, is a giant energy hog. It 198 6/3/08 - FINANCE - BILLS 080495 and 080498 will use, at PWD's expense, $6 to $7 million worth of natural gas to drive biosolids into pellets and have a smoke stack that will emit an enormous amount of greenhouse gases. This past April, Philadelphia hosted the wastewater industry's annual biosolids conference. Biosolids experts from around the country and, for that matter, around the world met in our Convention Center to discuss the direction of the industry. The hot topic at this conference very appropriately, an evaluation of carbon footprint for the various proven technologies to process and dispose of biosolids and how we can uncap the potential energy value of biosolids to reduce our carbon footprint.
Interestingly enough, all of our different techniques used today to treat and dispose biosolids, the worst carbon footprint and the worst of a long list of proven programs was pellet plants, the same pellet plant that 199 6/3/08 - FINANCE - BILLS 080495 and 080498 Synagro is proposing for Philadelphia for the next years. Even landfills were 4 considered greener than pellet plants. 5 If you are serious about the City's 6 carbon footprint, you must read the 7 technical papers that were presented at 8 the conference. 9 Here's a CD of the conference. 10 If anybody is interested, I'll make you a 11 copy and deliver it to you as soon as 12 possible. Just let me know. 13 Another important topic at the 14 conference was new emerging technologies 15 to actually get energy out of biosolids. 16 Yes, biosolids actually have an energy 17 value, as Synagro attested to. With the 18 price of oil exploding, it is said that 19 it was only a matter of time before 20 investors would be pouring money into 21 developing these technologies. 22 Already the Water Department 23 has gotten proposals for venture 24 capitalists to experiment with 25 gasification and to use enhanced 200 6/3/08 - FINANCE - BILLS 080495 and 080498 digestion to produce more usable methane gas. It was evident from the conference proceedings that the whole new wave of new energy-producing technologies was just around the corner and how can this City possibly consider a 25-year deal to build an energy hog such as Synagro's pelletizer when it was clear to me that the biosolids industry is so close to actually producing renewable energy for our country. So the question now becomes, what should we be doing with our biosolids? Everything I have learned from my years of working at the plant and from the conference points to having a diversified program. As any good financial planner will tell you, diversification reduces your overall risk. This has been and still is what I see happening at many departments' biosolids plants today. We send our biosolids to farms in Pennsylvania, Maryland and we also help reclaim old 201 6/3/08 - FINANCE - BILLS 080495 and 080498 strip mines in Pennsylvania. We also use a landfill. When the decision was recently made to eliminate our biosolids composting operations and the 60 jobs to go with it for what I'm convinced been a perceived odor issue, the managers involved in the operation didn't just increase the amount sent to other farm programs and landfill, they created a new program to spread on farms in Virginia. These big commercial farms in Virginia will use our biosolids to grow corn, corn that will likely go into ethanol production. Our biosolids are being used to produce ethanol. It can't get any greener than this, and the cost of this program is much less than landfill. So today we send biosolids to farms in Pennsylvania, Maryland and now Virginia. We also send material to help reclaim old strip mines in Pennsylvania where we help the landowners plant trees and grow meadows on land that can best be described as moonscapes. And, finally, 202 6/3/08 - FINANCE - BILLS 080495 and 080498 we use a landfill to dispose of our biosolids when the farms are covered with crops or snow. What I didn't know until the biosolids conference was that landfills are becoming energy producers and, therefore, have a better carbon footprint than pellet plants. The waste management landfill we use today mixes our biosolids with trash and collects the methane gas from the rotting material to generate electricity. This sure seems like a good thing to be done if we truly want to become an energy-independent country. So just to recap, today we have very green, diversified programs for getting rid of our biosolids that reduce risk, reduce cost and is very sustainable. So why would we want to build a pellet plant that's anti-green or, as we call it, an energy hog? Why is the City willing to take the risk at the rising price of natural gas?
Everyone in this room needs to know 203 6/3/08 - FINANCE - BILLS 080495 and 080498 that all utility costs, natural gas, water and electricity, for the operation and proposed Synagro pellet plant are passed directly through to the Water Department for payment. How can the Water Commissioner claim that this contract with Synagro has little risk? Does he not know the price for natural gas has gone up more than 60 percent since January? Does he know that since this contract was pushed through the Water Department four years ago the price of natural gas has doubled? This should really worry Councilmembers and the citizens of this city. And I've attached bar charts for natural gas futures with that. There is one last thing that I would like to make. Synagro and the Water Department would like you to make -- to make you believe that the price of diesel fuel used in the trucks that haul our biosolids to the farms are of the same order of magnitude as the 204 6/3/08 - FINANCE - BILLS 080495 and 080498 natural gas used to run the pelletizer. The truth is, the amount of diesel fuel needed to transport our biosolids is only a small fraction of the equivalent amount of natural gas needed to make pellets. In the end, those 60 or 70 thousand tons of pellets still need to be driven where and how far? The math is very simple. 200,000 tons divided by tons per load 12 is 10,000 truck loads. The average load 13 for Fiscal '05 (sic) goes about 145 14 miles, and this means the truck will 15 travel 1,455,000 miles. At eight miles a 16 gallon, they will use in total 181,875 17 gallons of diesel. The cost of diesel is 18 $5 a gallon. That's $900,000. 19 Synagro's pellet plant reduces 20 the tons of biosolids by 70 percent. 21 Their diesel costs, assuming they will 22 travel the same distance to dispose of the pellets, is $270,000. So they save the Department $600,000 in diesel. But this pellet plant will use 85 therms of 205 6/3/08 - FINANCE - BILLS 080495 and 080498 energy per dry ton to reduce the tons. So 66,000 annual dry tons of biosolids multiplied by 85 therms is 5,610,000 therms or 561,000 decatherms. With today's price being approximately $11 per decatherm, the cost of the energy used to dry biosolids is $6,171,000. To compare apples to apples, the City currently pays $900,000 for diesel to move their biosolids, and Synagro will use $270,000 worth of diesel to move their pellets, but the Water Department is on the hook for $6,171,000 in natural gas to reduce that volume. The Department is paying $5,541,000 more for energy. The Water Department should stop the spin to make this project look like an energy savor when it's obviously not. Just to heat the dryer and dispose of the biosolids uses $6 million of energy, and the Water Department today is using $900,000 to run the current 206 6/3/08 - FINANCE - BILLS 080495 and 080498 disposal programs. So you tell me, which program exposes the Department to greater risk from higher energy costs? Now, very quickly, I'd like to introduce details regarding the manner in which another community addressed their biosolids management concerns. The nationally recognized Orange County Sanitary District produces approximately 650 tons of Class B biosolids per day -- and that is similar to Philadelphia -- their disposition through combined land application, composting and landfill contracts. In December 2003, Orange County compiled its long-range biosolids management plan, which emphasized the immediate needs for diversification of biosolids products, markets and contractors. A comprehensive procurement effort was initiated and an expert in the RFP process was hired to ensure the process was fair and open and that the process would be handled in a manner that 207 6/3/08 - FINANCE - BILLS 080495 and 080498 would pass public scrutiny.
On July 29, 2004, Orange County released five separate RFPs, each soliciting proposals to manage 200 tons per day through five separate technologies; namely, energy production, off-site thermal drying for pellets, on-site thermal drying for pellets, heat drying with processed soils, and manufacture of compost products. More than 80 RFPs were issued to potential vendors. Nine proposals were received, including at least one proposal for each RFP. Four of the nine proposals were considered viable and headed to a head-to-head evaluation, which was initiated at that time, and the best final offers were received on January 10th of 2005. Our question for City Council is this: How is it that Orange County was able to solicit nine bids for only 200 tons, but the Philadelphia Water Department was only able to solicit one 208 6/3/08 - FINANCE - BILLS 080495 and 080498 bid for 600 tons? Thank you. )
Good afternoon, Chairwoman Tasco and members of the Finance Committee. My name is Jose Ramos. I am a 19-year veteran of the Department, all of them at the BRC unit. I want to thank you for the opportunity today to testify against Bill 12 Nos. 080495 and 080498. The purpose of my testimony today is to put on the record critical information that exposes the Department's true agenda, and, that is, to privatize at any cost. This became evident during the prior testimony on November 30th of last year. During the Department's testimony that day, it was stated that biosolids management is not a core function of the Department. But the fact is that the Department has handled biosolids since they first became a by-product of the secondary treatment process that was introduced back in the 209 6/3/08 - FINANCE - BILLS 080495 and 080498 1950s. The Department has a proud history of innovation and leading the development of cutting-edge technologies and responding successfully to any challenge. Today, however, the current Department administration has refused to accept ordinary challenges in managing the City's biosolids. Instead, they have focused all of their effort on finding a company that would allow them to avoid this responsibility, but at a hefty premium to the ratepayer. Removing responsibility for biosolids management does not eliminate the risk, however. Removing responsibility equals convenience for the Department, but convenience costs money, convenience for the Department that costs huge amount of money paid for by the ratepayer. This proposal is the only method currently available to the 210 6/3/08 - FINANCE - BILLS 080495 and 080498 Department that will achieve their true goal, and, that is, to trade responsibility for an added cost to the ratepayer. That's you and me. When key assumptions on the Department's cost analysis are replaced with more objective and realistic projections, the proposed contract's best case is clearly more expensive than if we were to simply continue operating as we are now. For instance, the Department naively downplays the volatility of natural gas. The Department is projecting that natural gas will actually go down in price in five years. How is that believable? Just yesterday PGW announced a 15 percent rate increase. I think we can all agree that this projection might not be realistic considering PECO also announced a 20 percent rate increase. The Department's planning basis appears to have been to privatize first 211 6/3/08 - FINANCE - BILLS 080495 and 080498 and then to see if we can make it appear cost effective to City Council. A careful examination of the Department's cost analysis by our own City Controller, as previously mentioned, has revealed that several of the Department's assumptions are very unlikely, possibly even intentionally skewed. They have assigned a worst possible case scenario for continued operations while assigning a pie-in-the-sky scenario for contract operations. This has been done not because these scenarios are likely, rather because they support the Department's position. The Department has provided multiple scenarios with very different numbers. Which one is accurate? Their projections have been a moving target that makes it nearly impossible to nail down their exact costs. Add to that the lack of stakeholder involvement as well as the lack of an independent environmental impact study, which I think 212 6/3/08 - FINANCE - BILLS 080495 and 080498 is very important. It makes it clear that the Department is being less than forthright with you, members of Council, and you are the elected representatives of the community. The Department has also testified to the rapidly escalating landfill costs. While these costs have increased, they are far from rapidly escalating. Competition continues to keep these costs reasonable.
And, of course, the Department fails to mention that landfills are increasingly becoming energy producers with methane as being a valuable renewable energy source. The original reasons given by the Department for privatization no 20 longer exist. There are no odors coming from the site outside that fence line. Composting has been gone for over a year now. The site will be in compliance with AMS regulations if those officials were unbiased. Even the proposed contract 213 6/3/08 - FINANCE - BILLS 080495 and 080498 calls for a separate air permit for the proposed drying facility, separate from the Southwest treatment plant. If the BRC were to get its own air permit today, it wouldn't be considered a major source for Title V permitting, because it no 8 longer meets the threshold to be considered a major source of those emissions. Site aesthetics have already improved dramatically. You would not know it from the ten-year-old photograph that they used in their presentation. Their PowerPoint uses old information. They try to paint an ugly picture when in fact the situation is totally different. They would have you believe that the entire site is covered with semi-dried human waste. Of course, this is demonstrably false. The site is nearly empty compared to what those photographs looked like ten years ago when the composting was in full capacity. We agree that our city needs a 214 6/3/08 - FINANCE - BILLS 080495 and 080498 long-term biosolids management plan. However, we vehemently disagree with the Department's philosophy. Again, with the basic philosophy that the Water Department has no business managing biosolids, that began their flawed RFP process. In a thorough and effective planning model, all stakeholders will be involved from the beginning rather than after the Department, with their ulterior motives, decides what's good for us and demands that we take it. An effective planning process will ensure that well-thought-out RFPs will be advanced, proposals that could be supported by all stakeholders instead of just those in power. At this point, I'd like to turn it back to Jeff. )
As you can see from the evidence that we have brought to your attention, the Synagro/Carlisle Group proposal is more expensive for the 215 6/3/08 - FINANCE - BILLS 080495 and 080498 City than other alternatives. It addresses supposed problems that have already been solved. Their technology is becoming obsolete, and due to the fact that Synagro wants an exclusive deal, the City will have no other options for the treatment and disposal of biosolids if Synagro's operations go off line. Local 394 has been researching other alternatives that meet the City's needs in terms of cost and efficiency and still offer our members job security. We have met with a number of companies with non-competing, mutually beneficial technologies which we believe are superior to Synagro's technology and can meet the City's needs at a much lower projected cost. These companies offer solutions that we believe are superior to the current proposal. None of the alternatives we have found were able to respond to the RFP that generated this current proposal being circulated by the Water Department 216 6/3/08 - FINANCE - BILLS 080495 and 080498 because the RFP was specifically designed to eliminate most potential bidders from consideration. Since then, the Water Department has made it clear that they are only considering and promoting the Synagro/Carlisle Group's proposal. The other companies have the ability to offer technologies that will present viable alternatives to privatizing the BRC operations that could turn this vital city service into a profit center for the City. You have heard from Local 394 and the members of our union who are the people on the front line delivering service to the citizens and taxpayers of the City at the BRC facility. I am here to ask you to vote against the Synagro/Carlisle Group proposal. Let's end this charade once and for all and tell the Water Department to go back to the drawing board and do what they have refused to do up to this point 217 6/3/08 - FINANCE - BILLS 080495 and 080498 in time, work with Local 394 in a cooperative manner to come up with solutions that work better for the City and its citizens than this flawed and problematic scheme. (Applause.)
Specifically, I would respectfully ask City Council to request that the Water Department do two things. No. 1, instruct the Water Department to sit down with Local 394 and take advantage of the expertise our members bring to the table. This follows past precedents that by working with Local 394, together we can develop new alternatives that will be less costly and more efficient. No. 2, and most important, tell the Water Department to come up with a new and more expansive RFP that will allow the City to benefit from more advanced and more cost-efficient technologies that are currently on the 218 6/3/08 - FINANCE - BILLS 080495 and 080498 market. (Applause.)
The Synagro/Carlisle Group proposal, if you were to accept it today and they started before the end of the year, would still have a period of five years where nothing will change. The only change will be that this proposal before you now will cost the City much more than it is currently spending. The City can easily afford the time we are asking to come up with a better set of alternatives. In conclusion, I would just like to remind this Committee and the rest of City Council that the members of Local 394, AFSCME District Council 33 are not just union members. We are also taxpayers and ratepayers and our so-called vested interest in this issue is greater than our role as union members. (Applause.) 219 6/3/08 - FINANCE - BILLS 080495 and 080498
We've invested in this city because we love Philadelphia. I'm going to say this again. We've invested in this city because we love Philadelphia. (Applause.)
And that is why we choose to live here. The very services we provide to our fellow citizens are part of the reason why we live here, we play here, we love here and we stay here. (Applause.)
That is why we take this issue and any proposal that we think would harm the City as much as this one very seriously. Thank you for hearing our concerns and listening to the information we have brought before you about other alternatives and that our union believes would be better for the city that we love. Philadelphia only works because we do. 220 6/3/08 - FINANCE - BILLS 080495 and 080498 (Applause.) (Standing ovation.)
Good afternoon, Madam Chair and to Committee. I come before you on two issues. You will note that there was no reference in testimony --
Sherman Harris. I'm sorry. There was no reference in the testimony from Local 394 as to jobs. The reason being that the job issue is a collective bargaining issue, period. First of all, the Water Department has testified how they're not going to lay us off, and we appreciate that they're honoring our contract, but it is in our contract. We've never come to Council about jobs. We've come as respectable citizens of the City as well as taxpayers. We've come as committee members. 221 6/3/08 - FINANCE - BILLS 080495 and 080498 The job issue, first of all, states in RGI that they can't lay us off during contracting out. That's not an issue. We appreciate them honoring that. The other part of the job issue for us, though, is as a shell game. They tell you that 60 people at BRC will not be laid off. There are at least 250 positions in the Water Department that's not being filled, and you can have any aide walk out this door and call any Water Department head right now and they'll tell you that the rule is that we're not hiring or filling positions pending the outcome of this proposal before City Council now that's been going on for four years, one. But on that, even if they decide -- they win this and they moved us out of here, we still are going to lose 60 jobs through attrition. We don't lose those people, but we never fill 60 jobs that are sitting there waiting to be filled. So we still lose the 60 222 6/3/08 - FINANCE - BILLS 080495 and 080498 positions no matter how you look at it. Just by race, the 60 people working are going to lose their jobs. There's 60 jobs we never fill. So our bargaining positions lose 60 jobs no matter how you do it. So for them to tell you there's no job loss, it's a lie. It's a shell game they've been playing. We've been saying this since the last Council meeting, Council term. We said it before. There's still 60 positions that will not be filled if Synagro comes in. So that's a joke. (Applause.)
During the last Council session, we testified -- and I think it was Councilman O'Neill that brought it up -- that no matter how you look at it, if they're going to save the 60 positions, it's still part of the budget. So that's a savings that when they're doing the calculating on our side, they add that cost to our numbers, but they take it away off of the proposal 223 6/3/08 - FINANCE - BILLS 080495 and 080498 side. The money is going to still cost the Department whatever it costs them for 60 positions. It doesn't go away. So that money is not being saved. So moving us saves no money for the Department, and for them to say that is a falsehood. The other issue for us is that the de-watering are our bargaining unit jobs and do not believe that it costs Council anybody to give Synagro the right to come in that we will not fight for these jobs. These are bargaining unit jobs that we will not give away with ease. So there's all kinds of issues still going on concerning their jobs. We didn't bring these to you, because that wasn't our concern. We are capable of handling our business on the job side. And I know that you know we will. The point for us is that we're citizens, we're taxpayers, and there was some community testimony, by the way -- excuse me. That's another point. I'm a 224 6/3/08 - FINANCE - BILLS 080495 and 080498 resident of that community. I'm an Eastwick resident. I'm part of the Eastwick PAC. For the South Philadelphia group to come in and the Penrose group to come in, who we've reached out to on numerous occasions to talk to, have refused to talk to us, and to testify on behalf of Eastwick PAC is a slap in the face. I go to the meetings. I live in the neighborhood, as well as some of the other people that deal with this situation. There's been a change. The Eastwick PAC, if we had a thought, we would have brought them with us. They support our position, and our position is basically to go back to the table and find other alternatives. Nobody is here to say don't do anything. We're all here to say that we want to work with the Water Department, but they refuse to. They're a lure to our past proposal, I think it was in '96, when we had the same issue come up on 225 6/3/08 - FINANCE - BILLS 080495 and 080498 different terms. We were told in '96 that if we didn't change our plant, we had to sell the plant and get rid of all the jobs. We sat down. I being there as the maintenance supervisor. We sat down, along with Mike and a few other people, and we talked to the Department. They talked to us, and we came to some agreement. Now, if you read -- in the packet, there's a reference to the article that was done by the Inquirer. We didn't agree at first to sit down and talk to them, but we did, and it became innovative. And since then, we've always worked with the Department. For some reason, I say it every time I talk, this Administration has refused to talk to us, and we find that a slap in the face. Thank you. (Applause.)
Thank you. 226 6/3/08 - FINANCE - BILLS 080495 and 080498 The Chair recognizes Councilman O'Neill.
I just want to have questions for the Water Department when this group finishes.
When we talked about this I think in the last term, you said you had alternatives to this proposal, but you never brought any of them to us. Do you have alternatives to this proposal?
The last session, the union said that you all had alternative projects to this project, but to my knowledge, I have not seen any alternatives. Do you have alternatives to this project?
Yes, ma'am. We're looking at off-site composting, plasma 227 6/3/08 - FINANCE - BILLS 080495 and 080498 arc technology, a process called biomass. And then we still have an energy component that we're working on.
In terms of, I guess, in all fairness, what is it that you're working on?
Instead of using tons of natural gas to dry our sludge, we are trying to find ways to make energy from our processes. We're talking to companies that are in the business. I use, for example, our biomass company that we've spoke to has numerous facilities around the country, military bases. They even do Disney World. These are viable options that we haven't been able to get on the floor. The energy component, we're 228 6/3/08 - FINANCE - BILLS 080495 and 080498 still working with that. We're looking at doing a biodiesel plant with drying our sludge, using that as energy, to make biodiesel. The off-site composting facility is basically a program that we could take our Class B biosolids to. They would take it, make a Class A product and market it. The plasma arc technology is new technology, and I still don't fully understand it. We've just recently -- they've just recently reached out to us, and I find it interesting and hopefully something can be developed from that. Another issue that comes up is some of the companies that we've approached will not really talk to us because Synagro is still on the table, and as long as Synagro is on the table, some of these larger players are shying away. Once the RFP process becomes transparent for a better term, there will be other processes knocking on the door.
Thank you. 229 6/3/08 - FINANCE - BILLS 080495 and 080498 Councilman Green.
One quick question. Thank you all for your testimony. I found it raised a lot of questions that I guess we can put back to the Water Department. I'm curious to know if you've raised these exact figures and information with the Water Department previously yourself.
Because what you're saying essentially in your testimony if you boil it down is, they're not telling the truth.
I've always found that we were fighting a moving target. If we could discredit a financial statement, another financial statement was issued. 230 6/3/08 - FINANCE - BILLS 080495 and 080498
Okay. But you have discussed all these issues with them and so they should be aware of them and be able to give us answers to the --
No, sir, that's not true. We've been asking to sit down and meet since the last time we've met last year. That's when biomass came in. Plasma arc we were talking to. And they haven't talked to us.
Okay. So what was the one technology that you mentioned in response to Councilwoman Tasco's question that you said is in current use today?
Thank you. I'm going to want to hear from Mr. Donovan on that. And, finally, if you could just comment on this chart that was provided 231 6/3/08 - FINANCE - BILLS 080495 and 080498 by Synagro. I'll bring it to you myself.
Also, while he's looking over the chart, Chairwoman Tasco, just to add, we here being the union, we don't feel wholly that it was our responsibility to go out and solicit companies to come in to form a public-private partnership with us or to make a bid for a City service. We feel as though if the Water Department had put out the correct RFP which was all inclusive for all technologies out there, then we would have had more than just one bidder on this particular proposal. The reason why we talked to other companies and tried to develop new alternatives, because we didn't want to come to you and seem like, Well, they were saying they're just concerned about their 60 jobs. Well, of course. We're union. We're always going to be concerned about jobs and we're always going to be opposed to privatization, but we did due diligence to show City Council and this Committee 232 6/3/08 - FINANCE - BILLS 080495 and 080498 and the City and the Mayor that there are other alternatives out there other than this one that is currently being, for sake of a better term, shoved down our throats. So that's why we presented these proposals. (Applause.)
And for them to say that what has the union done, well, we've done a lot if they would have sat down and talked to us like they say they have, but they haven't. And we've given up a lot. Since 1995 at BRC alone, we've lost 190 jobs. So we were willing to sacrifice 195 positions to keep 60 or whatever the number is out there. I'd say we sacrificed a lot on our end. What has the Water Department done to sacrifice on their end to talk to us to keep the 60 positions that we have out there? And just for the record, we're budgeted for 68 positions at BRC and we're down to 60 by mandate from the Commissioners. 233 6/3/08 - FINANCE - BILLS 080495 and 080498
Thank you very much. Certainly I would like to thank you, all of you, for your testimony, and I would like to note that when we chaired this Committee, we had these many debates and questions on these issues, and it appears that every time we have a hearing, we're always left with more questions than are answered. I mean, we talked today about the Controller, about the gas company, about many issues that weren't answered, and I note that for those especially new members on this Committee who say Synagro won't stay, they threatened for the last several years they were going to leave, from our first hearing until now. So that's not a legitimate issue. I would only hope that my colleagues would realize that we have a lot of questions on this issue that 234 6/3/08 - FINANCE - BILLS 080495 and 080498 remain unanswered, and I hope you will consider that as you deliberate about these hearings today. Thank you again.
In response to Councilman Green, on the sixth page of Exhibit-2 at the bottom, there's a chart.
This is our Exhibit-2. It's the sixth page. I'm sorry I didn't do a good enough job marking that. Correct. Go six more pages and it's marked -- at the bottom there's numbers. It's -9.
These are air numbers that were generated through a 235 6/3/08 - FINANCE - BILLS 080495 and 080498 PBS&J air study that was done at BRC that I was personally involved with. You will see the existing PTE. That was based on compost numbers. And as you have on your baseline compost, you will see the numbers don't match.
Thank you. Before the Water Department returns, we have a John Paxton (sic) and a Steven Thompson. And then we'll have the Water Department return. (Witnesses approached witness table.)
Good afternoon. 236 6/3/08 - FINANCE - BILLS 080495 and 080498
Good afternoon. My name is John Peyton. I'm a resident of Southwest Philadelphia. Notwithstanding the questions, important questions, that the Council asked the Synagro group this morning and also some of the very important issues that the union raised, as a resident of the area, what I'm concerned with basically is the safety, the health and environmental concerns. There's constantly a stench in that area. It's constantly there. You have a lot of truck traffic that's moving through the area constantly. It involves -- it's a risk to our kids in the area. And those are the things that some of the residents, including myself, are concerned with. Not to say that the issues raised this morning by both the union and Councilmembers are important issues. What I would say is that Council -- this issue needs to be pursued 237 6/3/08 - FINANCE - BILLS 080495 and 080498 to some result, and I think it would make a better situation for all, including the community itself and Philadelphia as a whole. Thank you.
Thank you very much for your testimony. Mr. Thompson.
Yes. How are you doing? I'm Steven Thompson. I'm here on behalf of the Eastwick community. It's where I live. Actually, I'm not far from where that plant is and the waste. We have to suffer with that every day. So like what Mr. Peyton was saying, I want to see the issue resolved where it's beneficial for both sides, for the community, us that live there, as well as the Water workers. Because what happens is, we're out there doing our lawns or just out there, the kids are playing, this stench is coming through all day long. It's really strong, because I live really close to it, right 238 6/3/08 - FINANCE - BILLS 080495 and 080498 off of Island Avenue. But I'm also a major part of the community, because I work with Penrose, over at Penrose as a volunteer as well with the students. We have that stench comes over to there on 78th Street as well when the kids are outside playing. So it's really a bad odor. We have it like almost daily. So, I mean, really, I'm just asking if Council could find some kind of way to resolve this issue to help both sides, the community, the people for our health reasons, because we don't know what type of effect it's having on us or our children in the long run. So I really would appreciate it. Thank you.
Thank you very much for your testimony. Any questions or comments?
I just want to thank the gentlemen for coming in to testify. Apparently you've 239 6/3/08 - FINANCE - BILLS 080495 and 080498 been here since early this morning.
And you have been very patient. So thank you for coming in.
Thank you for your patience. Now we ask the Water Department to come return to the table. (Witnesses approached witness table.)
Yes, Madam Chair. This is not a part of the Committee's request for rebuttal after the union's testimony. This is a separate issue. 240 6/3/08 - FINANCE - BILLS 080495 and 080498 The five years -- this is going back to earlier testimony and some questions I had. The five-year period where Synagro under the contract will do the same thing the Water Department is doing now at the site and the savings are built in and the financing and everything else, can somebody calculate for me the five-year savings to the Water Department during the period where Synagro will be doing the work instead of the Water Department that's currently going on there now? COMMISSIONER BRUNWASSER: I believe right now we're calculating that at about four and a half million per year during the interim period.
So the savings of four and a half million dollars per year during the interim period is about the same as the City Controller's estimate of savings during the entire period of the contract per year if you average it out? 241 6/3/08 - FINANCE - BILLS 080495 and 080498 COMMISSIONER BRUNWASSER: I guess so.
Okay. It occurs to me that if you're saving a hundred million dollars just by bringing Synagro in to do the same thing we're doing now and if you save a hundred million dollars going through this whole 25-year contract with the buildout and everything else with the pellets and the risk of higher costs and everything else with energy that was stated and is pretty obvious -- I think even your attorneys talked about it -- that there's at least a possibility that the building never gets finished and we keep Synagro there doing the same thing that the Water Department is doing and we're saving a lot of money, four and a half million dollars a year, a hundred million plus over years. 23 What protections does the City 24 have, that the City Council now have, 25 because the City Administration in the 242 6/3/08 - FINANCE - BILLS 080495 and 080498 future, another Administration may decide that's a better way to go. The plant is not working. Let's not buy the plant back, because that isn't our only option. We'll just continue with the current process down there with Synagro in it and we're still saving a lot of money. How are we protecting the citizens and the Council from that kind of thing happening as opposed to what we all expect to happen based on the testimony today in front of us, that the plant will get built and that the savings with the building will basically be the same as the savings without the building in the next five years?
Well, the project is based on constructing the facility, and the interim period is designed as a period of time for construction. That's the main purpose of that interim period. And there is in the contract a five-year limit on the -- if they don't build the project within five years, they're in 243 6/3/08 - FINANCE - BILLS 080495 and 080498 default, and there are some other milestones in the contract which require Synagro to have its financing in place or requires it to have its air permits approved. So there are steps along the way that will let us know how Synagro is doing in terms of moving forward with the project. If it isn't built within five years, then they're in default and we can terminate the contract.
Well, there's just a difference between the termination of this contract, Synagro's operation of the plant and circumstances changing to the point where the same thing that's going on there now winds up going on again and with significant savings to the City if Synagro is doing it or a company like Synagro. What protections are there that if something doesn't turn out as well as the Water Department hopes it will with the plant -- and there's many 244 6/3/08 - FINANCE - BILLS 080495 and 080498 possibilities of that happening. Synagro going under. I mean, we've had bigger companies than Synagro go bust in this country just recently -- and that this will go back to being a municipal operation and not a private operation, which would save us money, but, again, would just be replacing public jobs with private jobs, which we're doing for the first five years anyway. I'm just looking for that -- is there anything that will provide that kind of protection beyond just the default language? Because that still doesn't prevent people working for Synagro or some other private vendor doing the same work the Water Department is doing now with the same process.
I think we have to go back to what the objectives were of the project, and really the odors and the Class A material were the two primary motivators for this project. And obviously cost is a very big issue, 245 6/3/08 - FINANCE - BILLS 080495 and 080498 particularly if the costs were to exceed what we anticipate we would be paying if we were continuing the same operation. So the contract was structured around building the facility such that the -- and the anticipated time period for building the facility is really three years and not five years. The five years was a contractual arrangement with Synagro to give them some additional time in the event that there were bumps along the way, and they felt that five years was a period that they could make that absolute commitment to that if they hadn't built the facility.
See, you're talking about the contract with Synagro, and I understand that. You're halfway through the building. Synagro decides we got to renegotiate this. There's no more -- I'll just use an example, because they've come up to that. The market has just fallen apart for pellets or natural gas is beyond 246 6/3/08 - FINANCE - BILLS 080495 and 080498 anybody's expectation price-wise. Instead of continuing the construction of this project, we'd like to just go back to what we were doing, and it was profitable for us, it was profitable for you. And what I'm getting at is, the very people that are sitting here are usually affected by that discussion, because the discussion wouldn't be about returning our employees to do the same thing. It would be a discussion and negotiation between Synagro and the City over doing the current thing, because something changed. I mean, gas costs can change. The pellet market can change. I guess there could be other things. But I'm just saying, what are the protections that these people have that if for some reason this plant either doesn't get finished, gets built and becomes a white elephant that they will get the jobs back doing the same thing if it's going on there now? 247 6/3/08 - FINANCE - BILLS 080495 and 080498 I don't think that's too much to ask in terms of something that's reasonable, and I don't think from what you say it's anywhere in the documents now, and I don't think it's that much to expect the City, Water Department, Administration to be able to put in writing, that if for some reason -- it doesn't just have to be after the five-year period. It could be any time during the contract -- that this will go back if it's the same process as we're using today, it will go back to a municipal operation. DEPUTY
Councilman, Rina Cutler. I am not sure that it is a good thing to decide today what the alternatives might be tomorrow. There is certainly risk on any contract the City would ever put out that the vendor we're going to do business with is not going to exist five years from now. There's also the -- I mean, there are a lot of "what 248 6/3/08 - FINANCE - BILLS 080495 and 080498 if's" and I think --
Well, no. 6 You're talking about a couple. What if the pellet market goes out, what if --
No, no. 9 There could be many reasons for that, but the absolute "what if" that I'm asking is if a private company, Synagro or another one, winds up doing the same thing that's going on there now, for whatever reason -- and you can name more possible "what if" reasons than I have, but there's really only one end of the day that I'm concerned about, that they wind up doing what we're doing now, except they're doing it instead of us, all because of this process and there was nothing put in there to protect the workers getting those jobs back. That's all. DEPUTY
I guess from my perspective, I think there is 249 6/3/08 - FINANCE - BILLS 080495 and 080498 little or no chance that they will do in their plant what we currently do in our facility. I think the technology is very different. I think the ability to change the marketplace, I totally agree, but I do not believe that what they will do in the new facility in any way resembles what we currently do, what the process --
So it really isn't difficult to put that language in the document then? Because if the "what if" is not going to happen, it's a protection that we're not too concerned about ever having to enforce.
Councilman, the reason that I wanted to go back to the beginning of what the objectives were is because this is not a contract with Philadelphia Biosolids Services to do whatever. It's a contract to build this particular facility. And if this facility doesn't get built, then beyond that five-year period I don't believe that the Water Department has 250 6/3/08 - FINANCE - BILLS 080495 and 080498 authorization to be in that contract. DEPUTY
No. I'm sorry. That's not the question. So let me make sure I understand it. We are contracting to build the facility with very specific type technology.
Right, but you're also contracting for the first five years to do the same thing we're doing there now. DEPUTY
And many things can change during those five years that -- DEPUTY
Oh, so your concern is on the front end of that, Councilman?
Or during construction or when the building may become a white elephant because of something out of our foresight today. DEPUTY
I don't know that the Water Department would or 251 6/3/08 - FINANCE - BILLS 080495 and 080498 could or should go back to the current status quo. I think five years from now just as five years before now --
It's not a question of whether they should, Rina. It's if they do, what -- we would be in the position where we have private employees doing what otherwise City employees would be doing. I'm not saying we should. DEPUTY
So I just want to make sure I understand what you're asking. You're saying if at any point from day one on, either during construction or during operation, the technology reverts to the current process that the City uses to get rid of its biosolids, would we in fact bring our employees back to do that work; is that --
That's 252 6/3/08 - FINANCE - BILLS 080495 and 080498 correct. DEPUTY
I don't see why we wouldn't, because we don't expect that to occur.
Okay. I'm sure you don't, and I wasn't suggesting that there's a master plan out there. DEPUTY
Okay. That's fine. We'll need an amendment to that effect, I'm sure. DEPUTY