Water project to cost $13.5M
WORTHINGTON -- The Lincoln-Pipestone Rural Water project is going to cost nearly $1 million more than first budgeted after additional work was written into the project.
In a report to Nobles County Commissioners Tuesday morning, Dennis Healy, LPRW chief executive officer, said supplemental funds will need to be secured to cover the added costs.
"There were four major items included in the original budget. Those four came in under budget by $2.7 million, so we decided to put more pipe in the ground," explained Healy. "At the time, it seemed like a logical thing to do, but we put too much work in that mainline project, and we didn't give ourselves the flexibility of adding or subtracting. We got the bids and found out we were over-budget.
"It's going to end up being a $13.5 million project instead of a $12.5 million project," Healy told commissioners.
Though LPRW board members considered rejecting all bids and putting out a new call, Healy said that would cost a lot of money and would likely jeopardize the good bids they received for the work.
There are now a couple of options.
The water system can issue revenue bonds with an interest rate of up to 7 percent, or seek Rural Development financing for general obligation bonds. Healy said Rural Development would also provide a $200,000 grant for the project.
The $800,000 that would need to be borrowed from Rural Development could be obtained at a 3.25 percent interest rate, Healy said.
Each of the counties in the system, however, must approve of the general obligation bonds.
Nobles County commissioners were the first to act on the request, approving on Tuesday the purchase of general obligation bonds contingent upon review by financial advisors and bond counsel and approval by legal counsel.
During his update, Healy also reported that favorable bids were received on the overall project. The Lismore booster building was estimated at $1.2 million and the low bid was $649,000, while the estimate on the water line project was $5.3 million and the low bid $4.5 million.
The entire project is broken into two separate budget streams -- the 2008-2010 project was funded with American Recovery and Reinvestment Act (economic stimulus) funds, and therefore could not be merged with the budget for the Jackson-Nobles project.
Healy also gave an update on the construction process. The water tower near Rushmore has been painted, and the tank should be raised in the next couple of weeks. The project to bring water to rural residents and some smaller communities in southwest Minnesota is progressing, and much of the work at this time is in Nobles County, Healy said.
Pipeline work is well under way after the bids were awarded little more than a week ago.
"We'll start doing actual hookups as we proceed," he said. "We're going to be doing a lot of work this summer."
The earliest rural water customers can expect to get hooked into the system will be Aug. 1, due to some delays with the project proceeding in Osceola County. LPRW has contracted to get water from May City, Iowa, for the next 40 years.
"They can give us enough water right now to flush pipes," said Healy. "After Aug. 1, they'll be able to supply all the water we need."
Also during his visit, Healy presented the LPRW audit information and discussed the appointment and reappointment of members to its board of directors. It is anticipated that redistricting will need to be done once the pipeline expansion project is complete.
In other action, the board:
- Received an update from county administrator Mel Ruppert on the potential to have nearly $500,000 in cuts handed down from the state this year. He said an additional $200,000 to $400,000 in state aid could be cut from Nobles County's revenues in 2011.
As a result of the information, commissioners set 5:30 p.m. June 15 for a special meeting to discuss the anticipated cuts and how it will affect departments in the county.
"If we don't have the money, we can't allocate it," said Commissioner Diane Thier. "I think we're going to have to look at some deep cuts."
- Approved the position description for a deputy human services director and will move forward with filling the job. The position was approved at a pay grade of 26, with an annual salary range of $57,970 to $76,835.
- Learned that Pipestone County has extended an offer for the new Human Services director position, and the candidate has accepted the job. The director shares time between Pipestone and Nobles counties.
- Approved the low bid of $208,545.20 from Triple A Striping of Rogers for pavement marking services this year. Three bids were received for the work, which was estimated at $200,000. The city of Worthington, along with Cottonwood, Jackson and Rock counties were included in the contract.
- Approved the closure of Nobles County State Aid Highways 11 and 30 within Ellsworth's city limits on June 12 for the Ellsworth Family Fun Days parade.
- Approved a request from the city of Rushmore for a diagonal parking plan in the business section of County State Aid Highway 27, which will be reconstructed this summer.
- Reviewed the highway department's annual report.