Title
Approval of Budget Revision 2022-28 for the Construction of the White Rock Wastewater Treatment Facility Pending Finance through the Clean Water State Revolving Fund
Recommended Action
I move that the Board of Public Utilities endorse Budget Revision 2022-28 as summarized on attachment A, pending financing through the Clean Water State Revolving Fund via Ordinance 712, and forward to Council with a recommendation for approval. I further move that attachment A be made a part of the minutes of this meeting.
Utilities Manager and Staff Recommendation
The Utilities Manager and staff recommend approval of the motion as presented.
Body
The Department of Public Utilities is requesting approval of Budget Revision 2022-28 for the construction of the new White Rock Wastewater Treatment Facility.
The Clean Water State Revolving Loan #CWSRF 083 was executed on April 12, 2019, to fund the design and construction of the project. The design contract was executed on July 31, 2019, in the amount of $2,199,144 (including NMGRT). The remaining funds in the loan for construction is $14,800,856 (which is the current approved budget for the project.) Upon completion of design in May 2021, the engineer's construction estimate for the project was $16,173,717 (including NMGRT) which when combined with the design costs was $1,384,387 over the $17,000,000 loan. Prior to issuing the bid, staff’s plan to fund the shortfall between the established budget and Engineer’s Estimate was to seek $1.1 Million in County ARPA Funds that County Council tentatively approved DPU to request and fund the remaining balance with reserves.
This year, DPU is experiencing significant cost overruns on other utility projects due to the COVID-19 pandemic. Impacts causing material shortages and supply chain delays have led to significant cost increases. Bid results well exceeded the engineer’s estimate and budget authority for the project. Ordinance 712, which was approved by Council on November 9, 2021, to increase the loan amount to a maximum of $30 million while maintaining the original interest rate at 2.38%. $30 million is a worst-case scenario for the purpose of establishing adequate budget authority by ordinance and avoids delays by having to revise the ordinance again in the future. The final loan amount will be established by the final actual costs for both design and construction. Ordinance 712 and the amended loan documents will be finalized on December 9, 2021.
We are seeking Board approval to increase budget authority for this project by $15,199,144. This revision in conjunction with current budget authority brings total budget authority to $30,000,000 for the design and construction of this facility. Upon Board approval this $15,199,144 revision will be presented to Council for approval on December 14, 2021.
Alternatives
If these funds are not approved the project delayed, which could result in increased costs for the budget based on current trends and market fluctuations. The existing project funding and current wastewater reserve funds are not sufficient to build a replacement wastewater treatment facility.
Fiscal and Staff Impact
There are approximately $14.8M in current budgets for this project, budget revision 2022-28 would increase budget by $15,199,144, bringing total FY 2022 budget to $30M for this project. The project intent is to finance the entire cost to design and construct the project. If progress is not made to bring the wastewater plant into compliance with the EPA discharge permit limits, there is a potential to incur fines from EPA. Given this is a plant replacement, there are no additional staff impacts.
Increase of $45,394 to FY21 approved budgets.
Attachments
A - Budget Revision 2022-28