Fort Walton Beach Council agenda — 06-12-2007 workshop agenda — reading text

water and sewer Mayor - excuse me just a second Mr. Hofstad. Mr. Hartwell? Jim Hartwell - yes sir, if I may, you were saying we don' t have the capability in-house, is that training or equipment, or both? Page 4 of 11  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - I think it's the amount of line because in addition to laying pipe we still have our regular routine, our daily routine projects. We can schedule those 1100 and 1200 feet of line replacement projects but when your talking 18" (?) pipe, which is what this water line was, I'm not so certain that we have the capacity to do that, we can lay small segments but you' re talking three miles of pipe, sub- acquiesce crossing, doing a bore up under Cinco Bayou, we do not have that capability; doing jack and bore under major intersections, we do not have that capability. If we have a run of pipe in a right- of-way, yes sir we can do that as long as we can do a road cut,it's just some of that type, that work we just don' t have the capability of doing it, we don' t have the equipment to do it. Jim Hartwell- what I was trying to get around to is, on some of these if you don' t have the equipment if perhaps if there is enough savings would it be worth picking up the equipment, purchasing the equipment and then using it for later, would it still be a cost savings or is it just not feasible? John Hofstad - I think if it was an issue where we had to do this from time to time, you got to figure this is the largest capital venture that we' ve undertaken in the City in a long time and really and truly we' re not going to have the need, once we' ve installed this redundant line from north to south, I'm not going to have the need to install that size ofline again. So I guess what I'm getting at is I don' t think it is cost feasible for us to buy that equipment for no more work than we would be doing. Again, getting back to our location, geographically we' ve found out that if you' re in Escambia County you' re going to get a lot better price for major infrastructure work than we' re going to get here in Fort Walton Beach 45 miles away. And our contractors are telling us this; they' re kind of naming their price. If you' re in the Tallahassee, Panama City market you can get fairly favorable pricing, if you' re in the Pensacola, Mobile market you can get fairly favorable pricing but we' re kind of in no- mans land and not all of the major contractors will venture over here to do work when there' s all kind of work in southern Mississippi and Louisiana coast and the Mobile area. I've put in here just a cost to kind of give you an idea what we' re talking about. When we bid the 18" water transmission main project in April of 06' our cost for a 30" jack and bore for our transmission projects was $ 750 a linear foot. A project bid here recently in Escambia County for 66" jack and bore, over twice the size for $ 500 a linear foot, a significant savings. Also the destructive weather patterns in the northern Gulf of Mexico really have, from what we' re hearing, has substantially limited the ability to hire cheap labor, it's just not here, it' s following the work and the work is west of here. Also the enormous amount of construction in foreign countries has seriously depleted the world' s supply of raw materials, there is more construction going on in China alone than anywhere else in the world, and that is a severe draw on the needed raw materials, the irons, plastics, and cement. Our current 2005 Utility Bond activity report, of the $ 9. 8 million we' ve had some additions to that from accrued interest and also some accrued (?) and impact fee collections and that account is currently around $ 10.4 before we draw the project expense out, it's grown to about $ 10. 99 million. Once we pull out our expenses to date that leaves us roughly a remaining balance of $5. 6 million and we still have not completely closed out all of our water projects so there is going to be even more of a draw on that before we actually get to the wastewater plant renovation project. That' s our big concern right now is that construction cost has substantially skyrocketed from our original estimate. Our original estimate was somewhere around $ 5. 1 million, since February of 05' we' ve had, we' ve found some significant deterioration in our sludge handling facilities. When we went through our consulting engineering and review of that project in late 03', 04' timeframe we were not seeing significant metal loss in our sludge handling facilities. In the three years since we did that initial analysis we now are experiencing some failures, some structural failures with the steel on that facility to the point that I don' t feel comfortable allowing some of my personnel up on it. Page 5 of 1l  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - We' ve limited that access to just emergencies and typically we' ll contract that out if I have some significant issues that we need to address. But it's a, I assure you, a significant safety concern. Our sludge digesters contain methane gas. I believe here in the last year or two there was an explosion at a facility in the St. Augustine/Jacksonville area and resulted in two deaths. So it is significant to the point that we feel like we need to address it now and we need to include it in our renovation project. I estimate it has probably added a couple million to the overall project costs. We also have the pending litigation relating to the facilities DEP Operating Permit. We don' t know how that's going to go. I'm optimistic that we' re going to win out in that suit and it will be behind us, but you don' t know until you bring it forward and Administrative Law Judge might not see it our way which might mean additional improvements from a stormwater management perspective at the facility. We just don' t know now, but our latest construction estimates are in excess of $10 million. So the project has doubled in size from February 05' and a lot of that is related to, again, the issues I spoke about on the previous slide, the materials costs, the cost of concrete, which I believe we provided some additional documentation in the staff report to highlight that. That completes my presentation Mayor and I'll certainly do my best to answer any questions you have. Mayor - thank you sir, question for, OK, we' ll start with Mr. Holmes. Mike Holmes - Mr. Hofstad, are we approaching the time to, or the opportunity to talk to the County about buying some of their capacity with their wastewater treatment plant that they' re putting up. And I'm also thinking about the issues we may have with the government on our spray field lands. John Hofstad - you' re absolutely right, the spray field issue is the great unknown right now. We' re hearing that there is potentially going to be, well there already is in some instances with the County, a move to capture fair market value for that property. I believe it was last year I put together a brief report on what we might expect for that. If you use similar math to what the County used in assessing their fees we could be faced with in excess of $250, 000. 00 a year in fair market value fees just to maintain our spray field. I spoke with the Mayor about it, we' ve met with representatives from Eglin. We' re not done pursuing alternate means to maintain our spray field operation that don' t include fair market fees but we just don' t know what that is going to be right now. Currently our lease expires in 2010 so we got a little bit of time to address it. Back to the County, I have talked to Jeff Littrell, the County' s Water and Sewer Director. I do intend to sit down with him here in the next few weeks and discuss their plan. They' re looking at a capital cost of somewhere in excess of $60 million for their facility. We did talk prior to going into the design phase for our project going to the Bond market. We sat down with the County and discussed the possibility of buying capacity in their facility, buying the capacity that we would need to serve our residents. At the time that cost was more than what we anticipated paying for our treatment facility, our renovation work. I would estimate, based on the gallonage for their facility, the planned capacity for their facility and the estimated cost that we probably would still be in excess of what it would cost us to renovate our plant to buy capacity into that facility. But we can still talk the option of maybe a large user fee if that is the direction of Council but I can assure you we' re probably going to pay a premium over what County residents pay much like we do in our water system. Mayor - Mr. Miller Virgil Miller - what' s happened to the reserve, we still have it so it' s available also? Page 6 of 11  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - yes sir Virgil Miller - because I didn' t see it on your fInal view graft John Hofstad - I think that was, and I'm sure the City Manager will correct me if I'm wrong, but that was part of the Bond documentation, we had to keep so much in reserve and I believe if we had to utilize those funds there is a method for doing that. City Manager - one of the things that we' ve talked to the Bond Counsel about, and I think Lisa has also been on the table to talk to them about, is converting the reserve fund, that $ 720,000. 00 that' s a bond requirement that we have to have that money or you can do a surety, an insurance policy of some sort, it's converting that reserve fund to cash for this particular project and taking out an insurance policy. So we will, when we start to look at ways to fund the treatment plant and these additional expenditures, we' ll come back to you with a whole plan about that. Dennis Reeves - John what's the timeframe on that lawsuit, when are we going to wind that down? Because that' s kind of holding us up. John Hofstad - actually, the attorney would to be able to better tell you that Dennis Reeves - I just didn' t know when it was coming up City Attorney - we have met this past week with DEP representatives again and got Ms. Brownless fully on board with it. We have to give a status report to the Administrative Law Judge by the end of July and probably with the week of us giving him that status report we will be set for hearing again. We anticipate though now that our hearing is going to be a three or four day hearing and with the experts that also met with last week it's going to be a pretty extensive undertaking. After we have that hearing, which I fully expect will be in September, we' ll probably have maybe two to four weeks before we get a decision from the Judge. Dennis Reeves - well because it seems like the longer it drags out if we do ultimately have to continue to upgrade our own situation out there then it's just going to cost us more dollars to get that underway and every month that passes it's getting more and more expensive. Now we' re ten million, next year it might twelve or thirteen million. John Hofstad - I couldn' t agree with you more. I would like nothing better than to expedite the process but we' re kind of at the mercy of Dennis Reeves - I understand, that' s all I've got. Mayor - anyone else? Dr. Pullen Dr. Pullen - thank you John. I asked these questions because we have new members on this Council and I would have a deep concern about our wastewater treatment facility because as this was initially presented to us, to me that was the most critical thing we had going was to get that, our wastewater treatment plant modernized before the old one fails. And I was not aware of, I didn' t know where we were on that because it's still