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August 25, 2011 - 11:03pm

Council approves sewer plan for agri-park that could have big benefit for city ratepayers

The plans for growth are aggressive, even lofty, according to Batavia City Manager Jason Molino, but if GCEDC is successful in building the Genesee Valley Agri-Business Park to capacity, it could be a boon for Batavia's sewer system and the ratepayers who support it.

The increase in revenue could potentially allow the city to both lower rates -- already among the lowest sewer rates in Western New York -- and fund replacement of aging sewer lines.

Even though the agri-park is in the Town of Batavia, the sewer effluent flows at some point through the city to the city-operated wastewater plant. The town pays the city a fee to ship effluent from the town to the plant. Every thousand of gallons of effluent that flows to the plant will generate $2.81 for the city. (NOTE: Paragraph re-written to clarify the agreement between the town and the city.)

It would take only one O-AT-KA Milk Products-sized plant to make a huge difference, Molino said.

"If you were to see something like another O-AT-KA come in overnight, you could see a huge benefit," Molino said.

The city manager's remarks followed a special meeting of Batavia City Council where the council unanimously approved a plan to provide sewer service to the agri-business park (Councilman Bill Cox recused himself because of a potential conflict of interest).

The development of the park received a significant boost this spring when Alpina Products agreed to build a new yogurt factory on the site. Escrow on the sale of that parcel is expected to close Monday.

The sewer agreement between the city, Town of Batavia and the Genesee County Economic Development Center is key to closing the Alpina deal. 

It calls for the GCEDC, with a contribution from O-AT-KA, to use state grants to build a sewer system for the agri-business park and the O-AT-KA facility. The system would include two new pump stations -- one within the jurisdiction of the town and the other within city limits on O-AT-KA's property. The city and town would take possession of the completed pumps and sewer lines.

Just expanding capacity for O-AT-KA is a huge benefit to the city, Molino said.

"O-AT-KA is our biggest sewer user, our biggest water user," Molino said. "It is one of the largest employers in the county. It gets a larger sewer line to discharge into, so they’re not constrained anymore and they have the opportunity to grow. That infrastructure is coming to us free, no cost to the city users. The other thing is that Ellicott Street (sewer line) is going to be open now for greater growth. So we’ve got two opportunities there."

Some of the sewer lines in Batavia are up to 50 years old. 100 years old, many more are at least 50 years old. It's infrastructure that needs to be replaced pretty soon. And while the city has one of the most aggressive capital improvement projects for its sewer and water systems in the state, there is still a huge need to move quickly to replace old lines.

"To me, that’s really exciting (if the agri-park is successful), to be able to do sewer line after sewer line project, to replace aging infrastructure," Molino said. "That's really exciting."

During the council meeting, Steve Hyde, CEO of GCEDC (inset photo), told the council that the current gravity system on the Ellicott Street line, the one currently used by O-AT-KA, can only handle 500,000 gallons per year and O-AT-KA needs significantly more capacity to grow. The expansion will give O-AT-KA up to 2.5 million gallons per year of potential flow.

He said the agreement with Alpina is a huge step forward for the project and Genesee County.

"When is the last time we saw a major manufacturer come into the greater Batavia area?" Hyde said. "Maybe 40 or 50 years? We’ve seen a lot of them move out, but not too many move in. Maybe this is the start of something good for our community."

It could also be the basis for pushing forward consolidation between the town and city, one council member observed.

The joint agreement has the Town of Batavia buying sewer capacity from the city and reselling it to agri-park tenants.

The town and the city already have a joint agreement in place for processing effluent in the city's wastewater plant, but the agri-business park highlights the difference in sewer rates between the town and the city.

The town's rate is $5.35 per thousand gallons. If the city and town consolidated, town landowners, including agri-park tenants could potentially pay the city's current retail rate of $3.14 per thousand gallons.

An agri-business park plant producing 15,000 gallons per day would save nearly $12,000 annually paying the city's rate.

Regardless of the rate paid by agri-park tenants, the effluent is all flowing to the same treatment plant, and the quality and efficiency of that plant is the main reason city rates are so low, Molino said.

"That plant is a resource that I don’t think people understand," Molino said. "It’s a special plant. It’s 350 acres. It’s one of the largest lagoon plants east of the Mississippi. It doesn’t use chemical treatment. It’s natural treatment, so there’s no chemical cost. Only four people run it, seven days a week. You find me a sewer plant that has low labor costs like that, low treatment costs -- that's why our sewer rates are some of the lowest in Western New York."

Mark Potwora
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Howard maybe you can explain this....The town rate is 5.35 per gallon,the new agreement lowers that rate to 2.81 per gallon..sounds like a good deal for the town..I would think it would be better not consolidate..The city will lose money if they do, By giving out cheaper water rates.....are you sure its cost 5.35 a gallon for water and sewer,thats more than a gallon of gas.............

Timothy Hens
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Mark--sewer and water rates are usually quoted in rates per 1,000 gallons. I think the $2.81 referenced by Howard is the amount the City will make above and beyond what they charge their own rate payers. Essentially profit for the City. Some of that rate will go towards the maintenance of a new pump station on Cedar Street, so it's not pure profit. City should be able to use some of this amount to either increase its capital reserve for future sewer upgrades or it can choose to potentially lower rates to City residents.

Howard B. Owens
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Tim's right -- the rate I should quote is per 1K and I'll correct the story.

Beyond that, let me try to explain better.

City ratepayers pay $3.14 per thousand gallons.
Town ratepayers pay $5.35 per 1K.
For the agri-park, the town will buy capacity from the city at a wholesale rate of $2.81 per 1K and then sell it to agri-park tenants at the town rate of $5.35 per 1K.

Mark Potwora
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thanks Tim... $5.35 per gallon did seem like alot to pay......
Howard thanks for clearing that up..So than the town gets the water from the city cheaper than what the average city home pays....The town does make a good profit on the water they buy from the city...

Howard B. Owens
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Mark, makes since that the town would get a discount since they're buying at volume -- that's how wholesaling works.

And it's buying sewer capacity, not water.

And we don't know that they're making a profit. We don't know what the town's expenses are.

John Roach
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Mark, it's not per gallon, it's per thousand gallons. On top of that, it is money we would not have gotten otherwise and at no cost to us.

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