Public Works recommends the authorization of an amendment to the wastewater operations agreement between the City of Sugar Land and Brazos River Authority for a one-year increase to the Consumer Price Index compensation from 2.5% to 5.2% in FY24. 

The Brazos River Authority (BRA) operates and maintains all four of the City’s wastewater treatment plants (WWTPs). BRA has provided contract operations services for the North and South WWTPs on behalf of the City since 2005. The Greatwood and New Territory WWTPs were added to the Wastewater Operations Agreement (Agreement) when it was competitively bid in late 2017 following the annexation of those MUDs.

The City is currently in year five of the Agreement with BRA that began on October 1, 2018, which includes an initial term of five years, with an option to extend for two additional three-year terms.

Compensation for the Agreement consists of two categories: Base Services and Additional Services. Base Services include all labor, laboratory analysis, preventive maintenance and repairs, equipment, and supplies necessary to operate the facilities. Additional Services include the actual costs for disinfection chemicals (sodium hypochlorite and sodium bisulfite), sludge hauling and disposal, any unplanned maintenance greater than $3,000, and capital improvement projects. Note that services and materials for Additional Services do not include any mark-ups and are billed to the City at cost. The following table summarizes this fiscal year’s budget by category:

The Agreement allows for an annual compensation adjustment equal to the Consumer Price Index (CPI) as determined by the US Department of Labor – Houston, The Woodlands, and Sugar Land statistical area published in February. This adjustment only applies to the Base Services and allows up to a 2.5% change. Historically, the CPI has been less than 2.5% and has averaged 1.3% for the life of the Agreement from FY18 to FY22. FY23 was the exception, with a CPI of 7.8%. 

In February 2023, the published CPI was 5.2%. Staff is recommending a second amendment to the BRA Agreement to allow a one-year adjustment to the Base Services fee equal to the 5.2% CPI.  The table below compares the budget required to provide compensation at 2.5% CPI and 5.2% CPI. This amendment will increase the base services fee by $55,648 in FY24, which would be effective beginning October 1, 2023. Funds are available in the FY24 Utility Fund.

This request was reviewed with the Council Finance/Audit Committee at their September 7, 2023, meeting.

BRA has provided reliable and cost-effective operations of the City’s wastewater facilities for almost 20 years. The objective of both city staff and BRA is to maintain our current wastewater service levels and ensure the welfare and safety of our community. For this reason, Public Works recommends the authorization of an amendment to the wastewater operations agreement between the City of Sugar Land and Brazos River Authority for a one-year increase to the annual Consumer Price Index compensation from 2.5% to 5.2% for FY24.