It is nice to have a new Airport Terminal. It is nice to fix up the old Railroad Depot. And it is nice to take a ditch and beautify it with concrete and colored blocks. It would be nicer if the City had paid for those items and not gone into debt.
Each year the City has spent more and more tax money and then borrowed more and more. Now we have a problem. How will the City finance new projects? When will our investors say: "That is enough?"
In 1999 Moody's the company that rates the City Bonds had this to say about the debt: "The city's debt burden is still well above average. Nevertheless,debtlevels remain managable as the city's direct det burden remains a more moderate 3.7%." That is when the debt was at $45 million and on it's way up.
The City has many big items to finance yet this year. The Kimball Ave. project will add another $1.8 million and the Wastewater Treatment Plant project will add another $3.9 million and there will be others.
Tuesday night the City Commission voted to reject the Wastewater Treatment Plant Bids because they were higher than the Engineers estiments. The City and the Company will now have to come to an agreement on what will be done to get the price down to $3.9 million. Here is the memo:
BACKGROUND
On April 6, 1998, the City of Manhattan received an Administrative Order of Compliance from the United States Environmental Protection Agency (EPA) concerning violations of the Clean Water Act. The violations centered on past biosolids management practices. The Order of Compliance directed the City to come into full compliance with Biosolids requirements as outlined in 40 C. F. R. Part 503.
One of the requirements of the Administrative Order of Compliance is for the City to provide a plan including a schedule complete with dates and milestones for achieving and maintaining compliance with all provisions of 40 C. F. R. Part 503 for the remainder of 1998 and after calendar year 1998, including design and funding options, and a schedule for any construction that may be necessary to comply with 40 C. F. R. Part 503.
On December 21, 1999, the City Commission authorized the Mayor and City Clerk to enter into a contract with CH2M Hill, of Denver, Colorado, to perform the Water and Wastewater Facilities Plans and Cost of Services Study.
On May 8, 2000, the City’s consultant team for the Water and Wastewater Facilities Plans issued Technical Memorandum 2.C: Assessment of Water and Wastewater Systems.
On November 7, 2000, the City Commission authorized the Mayor and City Clerk to amend the Water and Wastewater Facilities Plans and Cost of Services Study contract with CH2M Hill, of Denver, Colorado, to include Amendment No. 1 for design phase services for short-term improvement projects for the water treatment facilities, wastewater treatment facilities and biosolids farm.
On July 17, 2001, the City Commission accepted the contract in the amount of $845,399.50 with CAS Construction, Inc. of Topeka, Kansas for the lining of the Biosolids Storage Lagoons. The Biosolids Storage Lagoons Lining Project was successfully completed on January 3, 2002.
In order for the City to fully meet its commitment to the EPA and KDHE, the remainder of the elements outlined in the City’s Long Term Work Plan need to be completed before the end of calendar year 2003. These elements are referred to collectively as the Short-Term Improvements to the Manhattan Wastewater Treatment Plant and Biosolids Farm Project. The improvements to the wastewater treatment plant include a new waste activated sludge pumping system; new dissolved air flotation (DAF) sludge pre-thickening system; new system of blowers and additional diffusers for the existing aerobic digesters; construction of a combined use building to house the DAF and blower equipment; new stabilized sludge pipeline; miscellaneous HVAC, electrical, and control improvements; and all associated piping and appurtenances. Improvements to the existing Biosolids Farm include a new dredge pumping system, biosolids feed pumping equipment; hose reel and big gun spraying system; construction of a new equipment storage building; miscellaneous electrical and control improvements; and all associated piping and appurtenances.
As was the case with the Biosolids Storage Lagoons Lining Project, the Short-Term Improvements to the Wastewater Treatment Plant and Biosolids Farm Project is funded through a low interest loan, which the City obtained through KDHE under the Kansas Water Pollution Control Revolving Fund (KWPCRF) Act for the wastewater treatment plant and biosolids improvement projects. On July 17, 2001, the City Commission approved the first reading of an Ordinance (# 6227) authorizing the execution of a loan agreement with KDHE under the Kansas Water Pollution Control Revolving Fund (KWPCRF) Act. On August 14, 2001, the City Commission approved the second reading of the loan agreement Ordinance.
DISCUSSION
The successful completion of the Short-Term Improvements to the Manhattan Wastewater Treatment Plant and Biosolids Farm Project is essential for the full compliance of the City with 40 C.F.R. Part 503 biosolids regulations in 2002 and future years. The importance of the project in meeting the commitments made by the City in its Long Term Work Plan to KDHE and EPA make it imperative that the City obtain the best and most cost effective construction firm.
Bids were solicited on the Short-Term Improvements to the Manhattan Wastewater Treatment Plant and Biosolids Farm Project. City Administration received three bids for the proposed project. The bids were opened on Wednesday, April 24, 2002. The lowest bid was from Walters-Morgan Construction of Manhattan, Kansas in the amount of $4,198,500 (Enclosure 1: Summary Bid Tabulation). However, the Engineer’s Estimate for the project was only $3,878,000.
According to the City’s Charter Ordinance Number 13, if all bids for a public improvement project are above the engineer’s estimate, then the City must reject all the bids (Section 3 of Enclosure 2). The City may then enter into negotiations with the lowest bidder and enter into a contract with the lowest bidder upon reaching mutually agreeable conditions for both the City and the lowest bidder.
The project engineer, CH2M HILL, has reviewed the three bids and determined that the lowest bid from Walters-Morgan Construction, is in conformance with the contract documents (Enclosure 3).
City Administration proposes that the City Commission authorize the City Administration to negotiate with the lowest bidder to try to reach an acceptable project agreement. If negotiations are successful, a contract will be brought back to the Commission for approval at a future meeting.
ALTERNATIVES
It appears the Commission has the following alternatives concerning the issue at hand. The Commission may:
1. Accept the Engineer’s Estimate in the amount of $3,878,000, reject all bids, and authorize City Administration to enter into negotiations with the lowest bidder, Walters-Morgan Construction of Manhattan, KS.
2. Accept the Engineer’s Estimate in the amount of $3,878,000, reject all three bids, and do not authorize City Administration to enter into negotiations with the lowest bidder.
3. Modify the request to meet the needs of the Commission.
4. Table the request.
RECOMMENDATION
City Administration recommends that the City Commission accept the Engineer’s
Estimate in the amount of $3,878,000, reject all bids, and authorize City
Administration to enter into negotiations with the lowest bidder, Walters-Morgan
Construction of Manhattan, KS, to attempt to reach a mutually agreeable
contract for the construction of the Wastewater Treatment Plant and Biosolids
Farm Short-Term Improvements Project.
City Cebt Comparison
City Population Budget Debt Street Payment
Lawrence 83,682 101,012,406 $96,500,000 Both
Salina 45,679 $52,017,744 $46,808,006 Specials
Hutchinson 40,737 $66,050,525 $30,175,000 Specials
Junciton City 18,886 $21,132,139 $16,210,000 Specials
Manhattan
1997 $42,627,789
1998 $43,109,093
1999 $52,055,432 $51,574,736
2000 46,770 $55,218,876 $53,610,750
2001 46,770 $59,111,294 $64,744,261
2002 46,770 $55,996,145 $66,620,968