Brownwood City Council voted unanimously to award a $6,497,630 contract to Gracon Construction Inc. of Mesquite, Texas, for improvements at the city’s wastewater treatment plant and to allow the city manager to sign the contact and related documents during their regular meeting Tuesday morning.
The city originally planned to fund the project with the issuance of Certificates of Obligations through the Texas Water Development Board (TWDB), in the amount of $3,440,000, which were authorized in November 2012 by the council. These funds have been used for engineering fees for the supplemental water treatment plant engineering fees (which was recently abandoned) and the wastewater treatment plant (WWTP) rehabilitation along with other projects (Slayden left station, pumps for the WWTP, and FEMA map revision). There is currently $2,654,000 remaining for construction in the WWTP rehab project, according to City Manager Emily Crawford.
On May 20, 2015, the council authorized additional rehab project improvements totaling $2,317,000 to the WWTP ($1,505,000), the Roanoke water storage tank ($680,000) and lift station repairs ($132,000). City officials anticipated that these projects would be funded through the COs with the bond payments covered through increases in the city’s water base rate and sewer rate. The sewer rate increase was estimated to be 11¢ per 100 cu. ft. This gave a total of $4,159,000 available for construction of WWTP improvements.
Gracon’s bid, the low of two received, was $2,339,000 more than the funds available for the project, so the city now has to find financing for the unexpected difference.According to Crawford, the bid for the WWTP rehab project was unexpectedly high, not as a result of over engineering the project, but due to market conditions.
“The unexpected high bid was not attributed to the project itself, but to the current market conditions. Many cities are undergoing water and wastewater improvement projects that they put off during more difficult economic times,” said Crawford. “Contractors are in short supply due to the amount of work available. In addition, general inflation has occurred since 2012 when the project was originally budgeted and TWDB funds were borrowed.”
Council members were in agreement that the projects could not be delayed, that they must be done in order to continue quality water and sewer services for citizens. Mayor Stephen Haynes explained his opinion of the situation and costs.
“Generally speaking, it’s more than twice the cost of the new fire station, more than the baseball parks, twice the cost of the soccer fields,” explained Haynes. “$6 million is an extraordinary amount of money to spend and that concerns me. It concerns me to have to spend that much money; however, I don’t think we have any alternative.”
He went on to explain that the city cannot delay the project. That these services are the most expensive services provided by the city to its citizens and that they are essential services.
“We can’t avoid this, we can put off road construction, we can put off those types of infrastructure improvements but we cannot put off providing sewer and water. It’s just expensive. I don’t particularly want to do it, but I don’t think that we necessarily have any choice. It is just a function that we have to provide. We did the best we could; we sent out for bids and got the best prices we could. Generally speaking, if we put it off for another six months to a year, we will be spending even more money,” said Haynes. “In the big picture, you can’t put off the improvements that you need to do. All the services that we provide to the citizens are important. I am making the comments because I want the citizens to know that we don’t take spending this money lightly. If we had an alternative we would jump on it.”
Haynes explained that much of the equipment being replaced is obsolete; having only a 25-30 year useful life and that it has to be replaced every 25-30 years because of this. Councilman Larry Mathis agreed and explained that as a new council member he has toured many city facilities. He stated that he appreciated the city staff that has been working diligently at the WWTP plant to make do with the aging equipment.
“Were it not for a really incredible group of people working there (at the WWTP), particularly dedicated to what they do, this would have come up a long time ago, they have made do and patched together, literally with baling wire, about as best you can do for a long period of time,” said Mathis. “I don’t know how much longer they can hold that thing together, so it is a nonissue, regardless, they have done the very best they can under the circumstances.”
A bid has not been awarded for the Roanoke water storage tank; however, city officials state that the kind of improvements needed on the tank are more easily estimated than that of the WWTP improvements and bid amounts are expected to be close to the projected cost, according to city officials.
Council considered financing options which would raise water and sewer rates slightly either in a full increase of 7.7% or a graduated rate increase over two years (3.7% the first year and 4.2% the second year). Neither option was voted on Tuesday and will be considered at a council meeting later this month. If for some reason desirable financing was not obtainable, the city would have to pay for the project out of reserve funds. City of Brownwood Finance Director stated that the city is nowhere near the debt capacity and that this scenario is not expected.
The city’s financial advisor, First Southwest, has advised city officials that it would not cost as much to borrow these funds as originally anticipated. The interest rate and terms being projected will allow the city to fund payments over two years instead of three and will less the city over a full percentage point.
The construction, according to Crawford, will take about one year from the notice to proceed to completion. Hearn Engineering has checked the references and qualifications of each bidder. Inspection of the project will be a combination of the engineer and the city staff, said Crawford.
