Vader and Blue Array nearing sewer contract

Stephen Floyd

Vader and Blue Array are nearing a contract for wastewater treatment services as the fledgling company’s pilot program in the city is nearing an end.

Blue Array had originally agreed to a three-month pilot test of their technology at no charge to the city and, after more than a year of preparations and analyses, the test began last May. Since then, the sewer plant’s water quality has been brought back into compliance with Department of Ecology (DOE) discharge standards, after having consistently violated permit since 1988, according to the DOE web site.

Blue Array CEO and co-owner James Reilly told the Vader City Council during their Sept. 3 meeting the time had come to ask the city for compensation for services rendered, as the three-month test period had ended in July and his company had proven the effectiveness of their prototype.

Reilly’s initial request for compensation was $14,000 per month, including payment for August, stating the figure would reflect on the city’s value of the system in the eyes of investors, and would likely be reduced down as more cities contracted with Blue Array for services.

After holding a special meeting Sept. 12 to discuss their varied options, the City Council countered with an offer of $8,000 per month and a goal of seeking a grant through .09 funding to offset costs. Mayor Ken Smith said he believed the .09 funding option, available to cities for projects encouraging commercial and industrial development, would be viable to pursue as Toledo recently received $400,000 of such funds for the development of their sewer plant earlier this year.

Smith reported during the Sept. 17 council meeting Blue Array had accept the city’s counter offer and the issue was being brought before attorney Joe Rehberger for drafting into an official memorandum of understanding. Smith said a draft of the contract would likely be available by Friday and will be placed before the council promptly.

Smith admitted, however, funding from an .09 grant is not a sure thing and noted the council had other options to consider, as well. If outside funding was not available, officials had discussed the possibility of using funds set aside for capital improvement in the sewer/water budget, of which roughly $60,000 is currently available. City Clerk Jill Neilson said, while the city would be allowed to use capital improvement funds to help lower the initial cost of acquiring Blue Array’s services, it would not be practical to draw repeatedly from the fund to subsidize regular maintenance and operations.

An increase in sewer rates is also expected as a result of contracting with Blue Array, though any increases remain hypothetical and depends on potential revenue streams both for Vader and Blue Array. In the proposal approved by the council, payments to Blue Array starting in 2014 would be reduced to $6,500 per month, supported by an increase of $10 per month in sewer rates, bringing the rate to $63 per month. This was compared to an anticipated increase to $112 per month while the city was considering a traditional sewer system upgrade, at a cost of roughly $9 million, prior to the offer from Blue Array. No action, however, has yet been taken to increase sewer rates at this time, or in the future, and any such increases would have to be approved by the council.

It is expected the council will review the contract prepared by Rehberger at their Oct. 1 meeting. If Vader were to contract with Blue Array, it would be for their services only and not for the system itself, as DOE has told Vader the city would still need an amendment to their Facilities Plan, as well as an Engineering Report, before taking any action to acquire the system.

These requirements have been hotly contested by Reilly and Blue Array co-owner Victoria Jelderks, who have said their purpose in offering the system at no cost was to entirely eschew these steps, and they have implored DOE to document how state law requires plan amendments and engineering reports for a free system.

DOE Spokeswoman Linda Kent has said such requirements are in accordance with state procurement law (last revised Jan. 1) meant to ensure cities acquire goods and services according to the "highest ethical standards" (RCW 39.26.005) and to maintain transparency of government.

She added her department has yet to receive engineering data from Blue Array and is prepared to offer an opinion on its validity as a wastewater treatment option once such information is submitted for review.