The city of Lake Oswego isn’t necessarily back to square one following the ending of its partnership with EPCOR for the development of a new wastewater treatment plant, but it needs to find a new company to finish designs and, potentially, operate the plant.
The Lake Oswego City Council approved two resolutions at a meeting Tuesday, May 7 that will guide how it proceeds moving forward, including one that will alter the city’s project model.
The city needs a new treatment plant to meet environmental regulations and determined that building a new one would be more cost effective than renovating the current plant in the Foothills area. It had established a partnership with EPCOR — a Canadian company — to finance, design, build, operate and maintain the plant, but could not come to terms on a financial arrangement after EPCOR submitted a final offer of $674 million that exceeded expectations.
With council’s direction Tuesday, the city will pursue a slightly altered model where it will finance the project itself and rely on a project partner to design, build, operate and maintain the plant.
Assistant city manager Stefan Broadus said this option has advantages associated with the previous model, like the partner being invested in having a quality project, while eliminating the disadvantage that scuttled the prior iteration.
“All of those same advantages are present in the DBOM, minus the one element that caused the project to stall, which is the private equity model,” Broadus said.
EPCOR completed 90% of designs for the project and Broadus said the new project partner would either finish that work or make a case to the city that a different design would be preferable.
City councilors expressed some concern as to not wanting to repeat what happened with EPCOR and the city discussed potentially creating avenues within a potential contract so that it could exit the agreement if it didn’t feel confident in its operating partner.
“We need to protect ourselves significantly with whatever partner we go forward with, because none of us can go through that again,” City Councilor Aaron Rapf said at the meeting.
Broadus said there could be entities that are interested in a contract where there is risk of the city backing out, but that they would likely negotiate additional costs to the city at the front end.
“The bulk of the financial incentive for a company to do this project is the operations piece; it’s more than half of the value of this project,” he said.
The city also approved a contract of $880,000 with Carollo Engineering for owner advisory services related to this project.
Public financing will likely mean the city will need to increase or repeal its current debt limit of $250 million. In March, the city took on $16.5 million for the acquisition of properties where the new site is slated to go in Foothills.
The city of Portland, which owns and operates the current plant, is a partner with Lake Oswego on this project.
Most Popular
Comments / 0