Wastewater plant bids came in $3 million higher

By Barbara Brown
The North Branch council is debating whether to sell an $11 million bond to pay for improvements to the cityís wastewater treatment center.
Originally, engineers with the cityís contracted firm, WSB Associates, estimated the cost of the project at about $8 million.
When bid requests were returned from four contractors, they all had price tags of more than $10 million for the project.
At the cityís most recent work session, June 5, the council was briefed on the situation and presented three bonding options by City Finance Director Dave Stutelberg.
Stutelberg told the council it could bond for the original estimate of $7.8 million and use $2 million out of the fund that collects sewer access charges (SAC), which builders pay to hook into the cityís sewer system.
That option would lead to a doubling of the monthly rate for 3,000 gallons minimum users from $9.36 to $17.18.
It also would mean a monthly rate increase per 1,000 gallons for average residential users from $3.12 to $5.73 per 1,000 gallons by 2014 which adds up to about $20.28 to $37.22 for the estimated average bill for a three- or four- person household.
However, using that bonding option would force the council to decide how to shrink the scope of the project and possibly cut back on how big the plant could be; possibly setting itself up to have to borrow more money just a few years from now for another expansion.
Another option offered was to bond for $9.8 million and take $2 million from the SAC fund.
That option would drive up base rates per 1,000 gallons for residential customers from $3.12 to $7.23 by 2014; which means an average bill for 6,500 gallons could go up from $20.28 now to $46.98.
The option most of the council agreed with during discussions at the work session was to bond for $11 million and not take any money from SAC fund balance.
Stutelberg told the council that option would keep a buffer amount in the account for incidentals that may happen in other parts of the sewer system over the coming years. He said it also would help keep rate increases lower.
The $11 million option would show a base rate increase from $3.12 to $6.63 in 2014 and an average bill would grow from $20.28 now to about $43.11 in 2014.
The rate increases for minimum users would be $9.36 now to $19.90 in 2014.
WSB Engineer Jason Benson said he was a little surprised when he opened the bids, but after some research, he said it made sense because the cost of ductile iron pipe went up about 15 percent in the last three weeks.
He said the project plan has thousands of feet of iron piping and thousands of fittings in it.
The council is expected to decide on which financing option it wants at its June 23 meeting.

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