Friday, April 19, 2024
The city of Granbury is faced with paying an additional $5 million to $6 million for wastewater treatment infrastructure because of pandemic-related issues and permitting delays for a second wastewater treatment plant.
When presenting the news to the City Council at its regular meeting on April 19, Assistant City Manager Rick Crownover said it was “one of the most difficult” agenda items he had ever had to present.
An explanation of the situation and why a new work agreement was needed came from Crownover, City Manager Chris Coffman, Chris Hay with Enprotec/Hibbs & Todd, and Pete Bailey with Pepper Lawson Waterworks, LLC.
On Feb. 19, 2019, the council authorized Coffman to negotiate an agreement and subsequent associated agreements with Pepper Lawson to serve as the Construction Manager at Risk for Phase 1 of the city’s Wastewater System Improvements project.
The agreement that was executed carried an estimated contract price of $27 million for improvements to the wastewater treatment plant on the south side of town and a new, second plant planned for Old Granbury Road on the east side of town.
Several things happened after the city entered into that agreement and they played a role in unexpected price increases.
Bailey explained that the Texas Water Development Board changed its procedural rules, which significantly slowed down the process for Construction Manager at Risk jobs.
He said that the city’s project went to contract in March 2019 but, “We didn’t receive a notice to proceed to construct until a year later.”
Bailey said that because of the new water board rules, his company went almost all of 2019 without getting paid, which had a $5 million to $6 million impact on the company.
“We were a little nervous,” he said, but added that the company was “able to work through all that.”
Bailey stated that the project got underway in March 2020, but soon “we’re directly in the teeth of COVID.”
The availability of materials became a problem and labor costs increased.
He said that the price of piping has more than doubled.
Coffman noted that the city usually buys C-900 piping at $8 per foot but that the cost is now $38 per foot.
“Everything’s just astronomical,” the manager said.
The reason the proposed second wastewater treatment plant factors into the price increase is because the agreements had basically been a package deal. Coffman said that the city was going to save money through the sharing of fees between contractors.
The Texas Commission on Environmental Quality has not issued a permit for the proposed plant because area residents and business owners are opposed to that location.
TCEQ commissioners referred the matter to the State Office of Administrative Hearings for a contested case hearing before administrative law judges.
The case has been heard and two judges are expected to soon make a recommendation to TCEQ. Commissioners are not required to follow the judges’ recommendation when deciding whether to issue a permit.
A decision by TCEQ is expected sometime this summer, though opponents believe it will be fall.
The delay resulted last year in a city-wide development moratorium imposed by the council due to the existing wastewater treatment plant being at capacity.
At the April 19 council meeting when the cost increases were discussed, Coffman told the council that he and city staff had some ideas for how to fund the new WWTP but that he would discuss those plans with them in executive session.
The council voted unanimously to adopt a resolution authorizing Pepper Lawson Waterworks, LLC to proceed with the scope of construction services. It replaced the original one and applies only to the existing WWTP.
Coffman said that the “bottom line” is that an almost $20 million agreement became a $25 million agreement that covers one WWTP but not both.
He said that since $27 million was earmarked for the project, about $1.7 million will be left to use for a WWTP on the east side of town.
