to $1,518,667 which he noted ….
to $1,518,667 which he noted was still the lowest bid received.
“Do we have to take the low bid?” asked trustee Daniella Schauer.
Balsavich explained that as engineers they always recommend taking the lowest responsible bidder. He said it was up to the board to determine what responsible bidder meant.
If the village went with someone other than the low bidder, they would have to justify their decision. Balsavich said they reached out to references for Steen including Abbotsford, Schofield, Owen and Wausau where the firm completed projects satisfactorily.
Trustee Eric Klemetson questioned who is responsible if something is found later to have been incorrectly installed, such as a water shut off valve.
Balsavich said it would go to the contractor who would be ultimately responsible, but that the engineers who oversee the project would work on behalf of the village to ensure that things were made right.
“Workmanship doesn’t have a warranty time limit,” Balsavich said, noting that things like concrete may have a set warranty date, but that if something was installed improperly it is up to the contractor to make it right.
Trustees also approved a bid from Haas Sons for the replacement of a lift station located on Liberty Street and Count Highway A for a cost of $356,000. The engineering estimate for that project had been $230,000.
Balsavich noted the increase was due to volatility in the market as well as additions to the project that had been made after the initial projection was made.
Because sanitary sewer is gravity fed, lift stations are used to pump waste in low-lying areas to get them to the level of adjoining mains. The lift station in question was installed in 1972 and according to sewer plant operator Rick Golz, the station needs work and is already leaking. Village president Kurt Schwoch agreed saying putting any more into keeping the existing lift station working would be putting good money after bad.
While Balsavich noted they were higher than expected, he said all three bidders for the work were reputable firms that do this type of work on a regular basis. “Prices are coming in higher at this point,” he said.
The largest discussion centered around the proposed upgrades to the sewer treatment plant to meet stringent phosphorus reduction requirements. Two firms, MZ Construction and Spring Lake Construction, came with bids of $510,000 and $657,700. The engineering estimate for the project was $232,000.
Balsavich said he could not put a finger on why this project came in so much higher than the engineering estimate. It was also noted that of the three projects, this is the one that could potentially be put off to the future.
Golz agreed saying there may be changes coming and new systems being developed that could allow the village to get to the phosphorus levels at a lower cost. Trustee Clarence Klimpke cautioned against delaying the decision too long noting that it will likely cost more to do the work next year than it would to do it this year.
Schauer asked the literal million dollar question, “How are we going to afford it?”
Brian Reilly of Ehlers, Inc., the consulting firm hired by the village to assist in financing, appeared by phone and walked board members through options for how they could cover the approximately $3 million worth of project costs.
Reilly proposed a multi-tier approach to funding the project with a combination of tax-levy backed general obligation borrowing, water and sewer utility debt service and potential application of tax incremental finance district funds as well as federal stimulus grant.
In the village’s favor, they received a community development block grant (CDBG)which will cover about $1 million of the road project costs. Reilly said they would look at 20-year bonds for the remainder with the project’s annual general obligation debt service projected at being about $23,250.
This would translate to about 43 cents per $1,000 of value for a property in the village, equating to about $43 per year on a $100,000 home. Reilly said the water utility had the capacity to absorb its portion of the debt service payment for the water main work without needing to make a rate adjustment.
The bad news is that the village’s sewer rates would have to go up in order to cover the necessary borrowing for the lift station and plant upgrades. Last fall the village raised the rates by 15% and Reilly projected that the new rates would likely be enough to cover the current operations costs but not leave any room for additional projects.
He said there has not been enough time to determine how much actual revenue the recent increase will bring in. He conservatively projected needing another 46% to cover the additional debt service to do all the projects. Another piece of the financing pie is the potential for debt forgiveness through state clean water loans.
However, the amount of possible forgiveness is not known at this time, especially if the village were to choose not to do one of the projects.
Trustees were uncomfortable with the idea of setting the village residents up for a rate increase on top of the recent increase. “I feel we need to discuss this more,” Schauer said.
Balsavich said of the projects it was most critical to take action on the street work and the lift station and they could push off the sewer plant work.
Golz said the may be able to get by with a $40,000 or $50,000 investment in the plant to keep it in compliance.
“At some point you are going to have to do something with phosphorus,” Golz said. “Right now on phosphorus, I can get by,” he said.
Balsavich urged trustees to take action at the meeting rather than delaying it, noting that this time of year the contractors had multiple communities putting projects out to bid and needed to be able to lock in their schedules for the coming construction season.
In the end, trustees voted to award the low bidders the contracts for the road project and lift station project and tabled action on the treatment plant bid to revisit it at the February board meeting, which will be within the 60 day window for the board to accept or reject bids.
