BEEVILLE – The Beeville City Council is trying to determine the most cost effective way to renovate the city’s aging wastewater treatment plant on Cook Road.
During its May 12 meeting, City Manager John Benson told the council that LNV Inc. estimated it would take $14.5 million to complete the project. However, the city only has $8.3 million for the project, including $7 million from a bond sale approved by voters last year.
Richard Gibbens, business development manager for Performance Services, proposed a performance contract as the answer to the funding shortfall.
“The issue that we had was design-bid construction,” he said. “That process is a traditional process for building or repairing or upgrading infrastructure or buildings, wastewater treatment plants ... There’s nothing wrong with that process; it does tend to be longer and more expensive than a process called design-build. And a performance contract is really just a design-build contract with the energy savings component that goes along with that.”
In a design-build arrangement, the designer works directly with the builder, Gibbens said. This prevents cost overruns.
“Design-build eliminates that problem because the construction people that are doing it and the guy that’s designing it, the engineers, are working together from Day 1. So the engineer isn’t designing something that the guy can’t build,” Gibbens said.
The construction company can then accurately estimate the cost of materials and build the project as it was designed, he said. Furthermore, in a design-build arrangement, both the time and costs associated with completing such a project often are reduced by a third.
Gibbens said money also would be saved by Performance partnering with Inframark, which operates and maintains the city’s water infrastructure.
“There’s a lot of things that Ryan (Quigley, regional manager with Inframark) and his guys can do, right now, that don’t require engineering work,” he said. “I don’t need to pay an engineer; I don’t need to pay LNV; I don’t need to pay my engineers; I don’t need to pay any engineers to replace a motor ... for an example.”
The remaining $6.2 million needed to be borrowed for the project would be repaid with the savings to be generated by the current contract Performance has with the city, which includes lighting and the new smart water meters that the company is set to begin installing this summer. Gibbens estimates Beeville could borrow the money at an interest rate of 3.65 percent.
“If we capture that cash flow, which the state allows you to do, you can use those future flows to make up the difference between what is required at the wastewater treatment plant and the monies that are available,” Gibbens said.
Councilman Ford Patton said, “I wonder if the city approached the people we usually deal with to the see what it would take to do a traditional bond issue. I’m reasonably certain it’s going to be less. So why would we want to pay more to finance the project if we can indeed do it for less, if that is the case?”
Mayor Francisco Dominguez said that if the city opted to go for a bond issue, it would be November at the earliest before voters would be able to weigh in on the matter.
Gibbens said issuing certificates of obligation, which would not require an election, is another option for Beeville. He also said that if the project – which is estimated to take 24 months to complete – ends up costing less than what is anticipated, the city can spend the remaining funds on other infrastructure projects or the money can be deposited back into the general fund.
“Our goal is to do the improvements to the wastewater treatment plant so you’re good for the next 20 years,” Gibbens said.
Quigley said that during the current fiscal year, the city has exceeded its maintenance budget for the wastewater plant by $132,000. In addition to problems such as parts failing due to corrosion, he said the plant is at 66-percent capacity. However, it can be expanded.
City Manager John Benson said. “This process allows us to do some of the improvements more quickly and sooner.”
The council took no action on the proposal, but set plans to vote on the matter at its May 26 meeting.