Schools, city save on fuelPublished 9:39pm Tuesday, May 11, 2010
By JOHN EBY
Dowagiac Daily News
Before Dowagiac City Council approved Monday night a fuel purchase agreement with Dowagiac Union Schools, resident William Lorenz questioned the contract closely.
“I know it’s not a hot topic” in light of the chamber filled with foes of the tabled $500 utility deposit ordinance, “but I read the contract and shake my head. We’re going to give the schools $14,000 to put in a new pumping system. That’s an outright gift at a time when we’re talking increasing utility fees and deposits and we have deficits looking at us.”
Lorenz said residents would expect to then reap savings on bulk fuel purchases in tandem with the district, but faulted City Manager Kevin Anderson for presenting no data to that effect.
“In an industrial setting, the manager would be required to present what’s commonly called a cost-benefit analysis,” Lorenz said, “and an ROI,” or return on investment.
“How can the council decide if this is a good deal for the city or not when there’s no information on expected savings?”
Lorenz also took issue with the contract itself.
“It calls for the city to share in the expenses of maintaining the pump,” he said, “and to pay for costs for preparing bills. Those are wide-open, fuzzy requirements that frankly are loopholes in the contract that leave us open to some unexpected, nasty surprises. I think it’s poorly written. The general principle I learned in contracting is keep it simple, rather than have fuzzy agreements on sharing costs. We should have a definite agreement that says we will pay the cost of the fuel, plus a fixed fee, whether it’s so much a month for maintaining the equipment or a surcharge of a penny a gallon.”
“We’ve already done an ROI,” Mayor Donald Lyons responded. “I want you to know before you leave here that we’re not as dumb as we look.”
“I think you owe it to the council and to the citizens to present those numbers,” Lorenz said.
“We’re not disagreeing,” Lyons said.
Anderson said there would be a 20-month payback, a 28-cent-per-gallon savings from the bulk buy, or more than $7,000 annual savings.
Lorenz hadn’t intended to comment on the utility deposit ordinance, but he said, “The mayor’s stated goal is to make the City of Dowagiac a better place to live. When I look at this ordinance, I think it will do the opposite. It will encourage new renters to find other places to live. That’s my problem with the ordinance.”
Lorenz said averaging the cost to all city utility customers would amount to about $10 each per year, or a dollar a month.
“You’ve got to decide whether putting in these extra utility fees is worth the cost to the city,” he said.