TRAVERSE CITY -- An independent review of Grand Traverse County's troubled septage plant concluded its project manager and design engineers repeatedly failed to use reasonable professional care when they planned its size and financing.
A report issued late Friday by engineering firm Prein & Newhof "shocked" some local officials by the sheer volume of "incompetence" they said the report documents.
Report details could lead to legal action against septage plant planners, local officials said.
"It just about makes you sick," said Blair Township Supervisor Pat Pahl, among a handful of local officials who last year called for a probe of septage plant planning and design. "When you look at all the things the attorney was supposed to do to look out for our interests and didn't, it just blows your mind."
Members of the county's Board of Public Works last year overcame reluctance from some county and township officials and hired Prein & Newhof. Their charge was to determine if professional negligence had been committed by Michael Houlihan, the former longtime county Board of Public Works' attorney who also served as septage plant project manager, and Gourdie-Fraser Inc., the plant's design firm.
Representatives for Houlihan and Gourdie-Fraser did not respond to calls for comment on report details.
'Compelling document'
Supervisors from five local townships -- East Bay, Acme, Peninsula, Garfield and Elmwood -- who guaranteed $7.8 million in bonds to build the plant will meet Monday to discuss the report. The meeting will be at 9 a.m. at the county's Department of Public Works office at 2650 LaFranier Road.
Members of the Elmwood Township Board of Trustees twice voted against the septage plant investigation. On Saturday, Elmwood Supervisor Jack Kelly said he now sees no reason the county shouldn't proceed with the next step: determining if Houlihan and Gourdie-Fraser may be liable for monetary damages.
"It's a compelling document and lays the facts out rather clearly, and at first glance the facts presented appear irrefutable," Kelly said.
"I definitely think we should pursue it and I definitely think we should go after damages," said East Bay Township Supervisor Glen Lile, a Board of Public Works member who also requested the investigation.
"Some of us took a lot of heat for pushing this through ... and I'm still really concerned why we had to go through a fight to get it," Lile added.
Lile and Pahl said they expected the report to reveal mistakes, but both voiced surprise at how Houlihan allegedly ignored contract language he wrote to compel performance by Gourdie-Fraser/Christman LLC, the firm that designed and built a plant that partially collapsed a month after it opened in 2005.
Houlihan on May 20, 2005, signed a certificate of substantial completion, releasing Gourdie-Fraser/Christman from penalties of $850 a day for not meeting an April 30, 2005, deadline.
Incomplete, defective construction
Prein & Newhof concluded Houlihan did not exercise reasonable professional care because he failed to seek professional advice regarding plant construction. An investigation after the June 2005 wall collapse determined much of the construction was incomplete or defective.
Two critical plant components weren't functioning properly when Houlihan signed off of the project, according to documents included with the certificate of substantial completion. In addition, adequate testing required under the contract was not performed.
"It is unlikely the aeration tanks (membrane tanks) were tested prior to the certificate of substantial completion or they would have collapsed then," wrote Thomas Newhof, the report's principal author. "Plant performance testing was commenced in 2007 and completed in June 2009. This should have been done prior to issuing the certificate of substantial completion."
The contract also required that the plant accept septage, holding tank waste and grease. It was not able to accept grease until 2007.
The report also said Houlihan, for 30 years the county BPW attorney, failed to exercise due care when he didn't validate volume projections created by Gourdie-Fraser in 2001.
Gourdie-Fraser had served as the county's engineer for decades when hired to determine the feasibility of a septage treatment facility.
Prein & Newhof said Gourdie-Fraser used two methods to estimate waste volume. Both were flawed. The first counted all septage tanks in the county and assumed they would be pumped once every three years, which led to a projection of 12 million gallons a year. But available professional literature recommended pumping frequency estimates of four to six years, figures that reduced septage volume by 25 to 50 percent.
"Although the 'method one' estimate was not used for later design and financing, the high volume estimate that resulted from 'method one' made 'method two' results appear to be conservative," Newhof wrote.
Gourdie-Fraser's second method to estimate septage flow included a survey of septage haulers that showed a volume of 9.7 million gallons in 2001, projected to hit 10.4 million gallons by 2005, when the plant would open.
Prein & Newhof used data collected in 2003 by the state Department of Environmental Quality to demonstrate that Gourdie-Fraser's 2001 survey used total waste collected by the haulers from both inside and out of Grand Traverse County. Only waste from Grand Traverse County and Elmwood Township is required to go to the plant.
If out-of-county waste had been subtracted from Gourdie-Fraser's estimates, septage flow would have been reduced to about 6 million gallons per year.
The report stated a good facility design would use high volume estimates, because the marginal cost of an oversized plant is "insignificant" compared to an undersized plant.
But a financing plan would use a lower volume estimate to avoid a shortfall in revenue, Newhof wrote.
Houlihan projections fall short $1.85 million
In 2006, the first year of full operation, the plant collected almost 5.3 million gallons worth $420,000, well below Houlihan's projections of 10.6 million gallons worth $1 million in revenue. From 2005 through 2008 actual revenue fell $1.85 million short of Houlihan's projections.
Houlihan presented his financial plan in late 2002 to the county's sewer and water committee, whose members then voted to hire Gourdie-Fraser to create specifications to seek construction bids.
The committee voted in 2004 to award the plant design and build contract to Gourdie-Fraser/Christman LLC, despite complaints from other firms that the county was on course to overbuild a plant that would not work.
Prein & Newhof concluded Gourdie-Fraser did not exercise reasonable professional care by overestimating septage volume for the financial plans, using those numbers from 2002 through 2005, and failing to validate the figures.
The report said Houlihan failed to exercise reasonable professional care because he didn't oversee and validate the volume estimates or the purpose for which they should be used.
Lile said the county and townships relied too heavily on Houlihan's and Gourdie-Fraser's expertise, and didn't factor in the notion that both stood to benefit financially if the project was approved.
"Who's going to tell you not to build it and take the money out of their own pocket?" Lile asked. "You had nobody looking out for the interests of the county and the five townships. Nobody."
