As the Levelland City Council continues to weigh their financial options to fund a new wastewater treatment plant, the group awarded a contractor bid to MH Civil Constructors, Inc.
The bid from MH Civil Constructors, Inc. is one of two bids received for the project and the lowest in the amount of $26,265,000. The second bid was received from Brown-McKee, Inc. from Lubbock in the amount of $32,818,965.
City Manager James Fisher stated Parkhill had reviewed the bids received and provided a bid award recommendation in favor of MH Civil Constructors, Inc.
Looking at the current status in regard to the wastewater treatment plant, there is a construction contingency of 5% or $1,313,250. Fisher stated the contingency number does not sit well with him as costs continue to increase rather than decrease.
“We are in very uncertain times right now more so than ever,” said Fisher.
Moving forward, the City has already paid roughly $2 million in engineering design and bidding services.
Engineering construction services were $965,000 with plans from Parkhill to reduce that cost by $232,000 for a total of $733,000.
Currently, the total project cost is $30,878,250. As it stands, the City is needing $7 million to cover the entirety of the project.
With projects that are needing to be addressed such as the SCADA System ($1 million), discussions between the Council and City Staff have leaned towards funding the project internally.
Fisher added that staff has been looking closely at the water and wastewater system improvement fees.
“I feel very confident that we can fund these items out of those two funds and take care of this internally,” said Fisher. “We may have to borrow from the wastewater fund to fund the water side but that can be done easily in internal accounting to pay that back.”
Previous discussions included the financing of the fire department roof which is needing to be redone. Following discussions with the Council and staff the project was removed from the possibility of financing as there was concern of the life of the bond outliving the roof.
There are also plans of building a new animal services facility which was previously proposed for $6 million but has now been lowered to $4 million. The City is currently working to prepare an RFP or Request for Proposal.
Fisher has asked Hilltop Securities Rep. Jason Hughes to consider financing options and also consider a tax levy for the first three years of the project which would allow the City two years for construction and then a year of operating.
Fisher says this would allow some of the burden to be placed on their debt service side regarding property taxes.
“We're looking at different ways on how we can finance this,” said Fisher. “I do not want to have to adjust or raise the wastewater improvement fee any more than we already have, but we might have to adjust that fee; raise it to cover some of this new debt.”
With the Council approving a bid during their May 5 meeting, Fisher feels that there will now be an opportunity to discuss any cost savings with the contractor.
“This gives us the opportunity to sit down with the contractor to see if we can find some additional areas for cost savings,” said Fisher. “I'm not an expert in this, but I've looked at this bid and I see very few places where we can really cut some things. I don't want to put us in a position where down the road we're paying three times the cost because we are trying to save money today.”
Hitting a financial crossroad, Fisher explained to the Council that there are a handful of projects that need to start. One of those is addressing the 2023 Master Plan for the infrastructure of the city.
“Having to make these adjustments or this plant is going to delay that,” said Fisher.
In regard to various projects that have been presented, Fisher stated staff is having to look very closely at where they can move dollars to take care of those projects.
“It concerns the employees, and I've already had some employees ask me if they're going to lose raises for the next so many years,” said Fisher. “I'm doing everything I can to avoid that issue if we possibly can. We have to take care of our employees.
“I know the council knows that and I appreciate everything the council does to take care of us here, but it's going to be very tight for a while.”
Additional pressure from the community was highlighted by Fisher as property tax values became available.
“A lot of people’s values went up and they equate that to their taxes going up and that's not necessarily the case,” said Fisher. “There will be pressure from the community if the overall values are up, they're going to expect their tax rate to drop significantly. We'll do everything we can to be fiscally responsible, but we also have certain responsibilities to our community in providing services that everybody expects.”
Fisher hopes to keep the projected adjustment of $7 million from spiking given the unknowns and a 5% contingency.
“We have no choice. We have to move forward with this plant,” said Fisher. “Right now, I'm hoping we can keep it at that number. It is going to be a tough sledding keeping this project within numbers, keeping this project on time and moving forward because even some of the things we may have projected in bids may get affected by what’s going on in the economy.”
Moving forward in the process, the City Staff will begin having discussions with their financial advisor about the issuance of Certificates of Obligation (COs) for an additional $7 million.
“In the meantime, we need to find every creative, viable and fiscally responsible option to find out how we pay those without burdening the taxpayers,” said Fisher.
Mayor Breann Buxkemper stated she had been digging into the projected plan for the past 25 days.
“I haven't had one person tell me in six months it's going to be cheaper and that we should wait,” said Buxkemper. “I'd sure love to have some breathing room… but sadly I don't think we have it.
“I want to say it…we're not going to build this facility and take on more debt on the backs of our employees. I'm not going to support that and I'm not going to vote that they don't get raises for the next 3-4 years because of this wastewater treatment plan. This isn't their fault; we have to support them, and we have to continue supporting them as we move forward. I don't want that fear circulating, rumors are poison and would just like to stop that right now.”
The Council agreed with the comments of Buxkemper. Councilman Stueart emphasized that the City and the Council are pro-employee and shared his appreciation for the City employees.