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Utility district awards Shipshewana West project contract; Announces proposed rate

Potential users in the Shipshewana West Sewer Project area could be seeing partial bills as early as January after the LaGrange County Regional Utility District Board awarded the project contract to Niblock Excavating Wednesday. The board also set an advertised user rate Wednesday of $68 per month for a single family home.

Niblock submitted the lowest of five bids that were opened during a special board session last Monday. The district had an engineer’s estimate for construction of $2,293,984.50.

Niblock, based out of Bristol, turned in a bid of $1,893,835.35. That total came in $400,149.15 below the engineer’s estimate.

HRP Construction from South Bend had the second lowest bid of $2,227,837.40.

Selge Construction Co. of Niles, Mich., submitted a bid of $2,628,692.25.

Rothenberger Company of Concord, Mich., submitted a bid of $2,740,364.13.

Balkema Excavating of Kalamazoo, Mich., turned in the highest bid at $3,286,840.

The bids were taken under advisement by the board and turned over to the project engineer, the district’s legal counsel, and the district’s financial advisor for review. They returned to the board at the special Wednesday session to recommend Niblock.

Niblock is recently completed the sewer and water hookup project for the district at the Fawn River Crossing system. The board was told that Niblock has also completed Rural Development projects in the past.

The board tackled the financing for the project next, with financial advisor Jeff Rowe of Umbaugh and Associates guiding the board through the numbers.

The complete project, with construction, right of way costs, engineering and other services, is expected to be $3.1 million. The district is expected to borrow 55 percent, $1,705,000, from Indiana Rural Development. The remaining 45 percent, $1,395,000, will be funded through a Rural Development grant. The bond rate was reported to be at 4.125 percent.

The financing structure will also allow the district to fully fund the reserve fund for the project, which is required by law. The upfront funding will mean that users will not have an additional amount on the bill that would have gone to fund the reserve amount.

Rowe told the board the project user rate calculated out to $68 per month per Equivalent Dwelling Unit (EDU).

Of that amount, $30.10 per month would go toward debt service to pay off the $1.7 million bond. The district will owe $88,700 per year on debt service.

 

 

 

 

 

The other $37.90 per month user fee would go toward operations and management of the system. That includes $15,435 annually to the Town of Shipshewana for the system, as well as an estimated annual treatment cost of $42,406 to the town. Also included in the monthly user fee is administrative costs the district expects to incur from that system area.

Users in the service area will begin to receive a 50 percent bill beginning with formalization of the project contract. Billing for that could begin just after the first of the year.

The project itself is expected to see substantial completion by mid to late August in 2012. Users would be billed the full rate of $68 per month for service in September, with their first full bills coming no later than October of next year.

A public hearing on the proposed rate is scheduled for 6 p.m. on Monday, Dec. 12, at the Wolfe Building in Shipshewana. A complete outline of the proposed rates for different users is part of a legal notice on page 8 of today’s LaGrange Standard.

In other business:

The board approved a revised legal services agreement for the project with legal counsel John Gastineau. The board had originally approved a not to exceed amount of $40,000 in legal fees and $2,000 for expenses relating to the project.

Gastineau told the board that while in the past he has taken pride in coming in under the agreed amount, “I just couldn’t do it with this one due to the litigation.” Gastineau told the board that the district has spent $50,000 to date on litigation over the last 2½ years. Rural Development required that the district revise the agreement, Gastineau told the board. The board approved raising the amount to $70,000 in legal fees and up to $5,000 in expenses relating to the project.

“The issues we’ve had with this project has cost $30,000 more in legal fees that’ll be passed along to users,” Board President Mike Sutter commented.

The board also approved an additional $20,000 in engineering fees that have resulted from additional work done by GAI Consultants, the engineering firm working on the project.