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Lower than expected: UEP costs estimated at $102.7 million

By Staff | Jul 18, 2013

The long-awaited Southwest 6&7 Utilities Expansion Project phase should come in under what was originally anticipated thanks to the competitive bidding process, according to city staff.

Paul Clinghan, utilities extension manager, told city council at a special meeting Wednesday that the bidding went better than expected, with all but one project having at least four contractors bid within 10 percent of the winning bid, as well as the low two bidders within 1 percent of each other.

Clinghan said the result is a potentially lower cost for property owners in the Southwest 6&7 area.

“That helps beat the 2008 numbers, although that was a different time and delivery method,” Clinghan said. “That’s the idea of a competitive bid. We also did some value engineering that helped bring down the cost.”

The brings the expected total cost to $102.7 million, down from the $104 million estimated last year, including all miscellaneous costs and contingencies, which Clinghan hopes could bring the final price tag down further.

“If everything goes well during construction, we will hopefully be giving money back, just like the refunds,” Clinghan said.

The lower overall cost estimate was good news, officials said.

“We had the same people bidding. We had the competition we needed to keep prices down,” said Mayor John Sullivan, among those who have questioned both expansion costs and the timing of the project in a still-down economy.

Few people attended the meeting, but that could be the calm before the storm for what could be an emotional special meeting at 4:30 p.m. next Wednesday when the public will get its first chance at input when the initial assessment resolution is unveiled.

The price per parcel numbers have yet to be determined. In 2009, before council voted to halt the expansion into the same neighborhoods, the tally was around $20,000 per standard building site – $10,792 in assessments to pay for pipes and other infrastructure, plus another $6,750 in impact fees for the “impact” of new customers on the city’s water and sewer plants. Homeowners converting from well and septic also face additional costs for hookup to the system and disconnecting the septic system.

One thing that could affect the numbers to the negative is the interest rates on upcoming loans for the project, which are 1.98 percent and 2.12 percent for the clean water and drinking water, respectively.

“We’re signing the $40 million (clean water) and $16 million (drinking water) before Oct. 1. When we sign those other loans after Oct. 1, it’s quarterly,” Clinghan said. “Nobody can predict what happens in six months, so the rate could go up, or go down.”

Also discussed were the three ways users could pay for the project; in a lump sum, over one year, or over the span of 20 years. Sullivan said he has heard from a resident that she could lose her home as a result of the UEP.

“I don’t want to see anyone lose their home because of a utility project such as older people on a fixed income,” Sullivan said.

City Manager John Szerlag suggested those people file for the hardship assistance program, where those who qualify would be able to work with the city.

After next week’s initial assessment resolution will be the introduction of the SRF debt ordinance on Aug. 5, an assessment update on Aug. 14, and the final assessment resolution, the approval of the SRF debt ordinances and resolution, and for Szerlag to sign off on the loans and contracts on Aug. 21.