29 - Waste Water Treatment Plant Project Status Update

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ILI TO: Mayor, Mayor Pro Tem & City Council FROM: Grayson Path, City Manager Rob Vine, Assistant City Manager Doug Harris, Utilities Director SUBJECT: Waste Water Treatment Plant Project — Status Update DATE: July 25, 2022 BACKGROUND: On April 11, 2022, the City Council heard a status update and presentation on the Waste Water Treatment Plant (WWTP) Project. At that time, the plans had reached 90% completion. We have since then reached 100% design, TCEQ has approved our design, and we have issued a request for bids. This was a two-step process designed to narrow our list to qualified contractors, then accept bids from this shortlist of qualified contractors. Those bids are due at the end of August 2022. We have authorized an extension by request of some of the contractors which we believe will work in our favor of seeking better bids. In addition, we held a mandatory pre-bid meeting for contractors on Tuesday, July 12th at the WWTP. The meeting went very well. On Monday, June 20, 2022, several City Staff met with representatives from Garver Engineering, SAMCO Capital Financial Advisors, and McCall, Parkhurst & Horton Legal Counsel in Frisco, TX to discuss the status of the WWTP Project, specifically the economics at this time. As you are all aware, our nation has seen rampant price increases and material shortages this past year. Our project is expected to be impacted by this as well. STATUS OF ISSUE: When we started this project two years ago, we were estimating a total project cost of $60-$70 million. Because of arbitrage issues with the IRS, and to help ease our rate increases for the residents, we took out a $45 million bond as a "phase I" to get us started. To support this, we worked with our financial advisor and rate consultant to craft a strategic approach for rate increases using a stair step method to allow residents to acclimate to increases. The key is balancing our ability to "cash flow" which is our ability to raise enough revenue each year to meet the debt