With the plans for the new water treatment plant at Auburn Lake Trails still up in the air, the board of the Georgetown Divide Public Utility District voted not to award a contract to retrofit the plant at a special meeting Tuesday night.
Two months ago GDPUD staff put the plant retrofit out to bid. However, the bids were only good for 60 days and were due to expire on Sept. 25. In the interim, consulting engineer Webb Owen was hired to recommend cost-saving ideas for the plant and Interim General Manager Gary Hoffmann was directed to review those recommendations with Operations Manager Kelly Shively as well as Psomas Engineering, the firm that designed the plant.
At Tuesday’s meeting, Hoffmann reported on those discussions. He said Psomas proposed changes that could save the district even more money than proposed by Owen, but they needed until the end of the week to detail what they would be. Psomas was also asked to provide an estimate of what the design changes would cost since they could negate any construction savings.
The topic of how to pay for the plant, regardless of its cost, was also reviewed.
Hoffmann reported that a loan for more than the original $5 million sought from the U.S. Department of Agriculture (USDA) could be financed for up to 40 years at 3.5 percent interest, but a new application and a successful Prop. 218 process would have to be initiated.
A loan from the California Department of Public Health (CDPH) could be financed for 20 years but at an interest rate of only 1.78 percent. Hoffman added that if the district were to put up 20 to 25 percent of the funding for the new plant, the interest rate for a state loan could drop to zero.
In discussing the possibility of state financing, Hoffmann said in order to qualify for a loan three conditions had to be met by the district. The first was to receive an invitation from CDPH to submit an application. That condition had already been met. The second was the CDPH district engineer had to approve the final plans and specifications for the project before the bidding process was conducted and construction initiated. While the plans have been submitted to CDPH, he said, they have not, as yet, been approved. The third was the project needed an environmental clearance from the CDPH Environmental Review Unit and presently the project didn’t have such a clearance.
Hoffmann said that because the district went out to bid before receiving state approval, there was no assurance it could get state funding. As far as funding from the USDA, if the district wanted more than the $5 million initially applied for, it would require approval of a new application and a successful Prop. 218 process.
Hoffmann said the low bidder on the project — Auburn Constructors — had already indicated its willingness to extend the bid period for a short period of time. They also supported the idea of bridge financing whereby the district would go to a private lender and get temporary financing until long-term financing became available. Hoffmann reminded the board that bridge financing only works if the district is approved for a state or federal loan.
Based on the information presented, Hoffmann went on to recommend that the board decline to award the contract to the lowest bidder and allow all bids to expire.
On a 5-0 vote, the board agreed with the recommendation.
The board will take up the response from Psomas at its next regular board meeting on Oct. 8 at 9 a.m. at district headquarters.
Contact Dawn Hodson at 530-344-5071 or [email protected] Follow @DHodsonMtDemo on Twitter.