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HomeMy WebLinkAbout09-21-1999 Meeting I ENGINEERING SERVICES SUBCOMNlITTEE Hendersonville Road Waterline CO.NINIITTEE ROOM - September 21, 1999 1:30 p.m. PRESENT: Bob Young, Mayor; B. Kuhlke, Chairman, U. Bridges, member; M. Hicks, Director Utilities; R. Oliver, Administrator; N. Morawski, Deputy Clerk of Commission. ABSENT: R. Colclough, member. ALSO PRESENT: S. Cooper, Augusta Chronicle, S. Eidson, Metro Spirit. NIr. Kuhlke: I would like to call the Engineering Services Subcommittee meeting to order. The purpose of this meeting is to discuss the Henderson Road Water line and also to discuss a possible agreement with the City of Hephzibah. NIr. Bridges represents that district and is probably more in tune to this than I am so I'm going to ask him to go ahead and lay it on the table ifhe would. I Mr. Bridges: The backup here reflects several economic factors. The third page is something that Ma.x worked up for me a while back which shows our cost to bill that Henderson Road line that Hephzibah wants to buy or trade. This shows the contractor cost as $204,259 and the material cost being $137,458. These amounts are inclusive of labor and materials. The next page over is what our cost will be; $75,775 would have been to run the water to the Blythe Recreational Center back from Melba Drive when we needed the water quickly for that project. We did not do that project, Hephzibah did that project and they have not billed us. They have not done anything as far as getting any monies back from that project. Mr. Kuhlke: Did we not have water available to that center before we started construction from Blythe? Mr. Hicks: No, sir, we did not. NIr. Kuhlke: We awarded a contract for that center JIld we didn't have any water'? Mr. Hicks: According to the Recreational Department their anticipation was to install a well if necessary, but no, sir, there was not a water line at that site when construction started. NIr. Bridges: The closest that we had water was up Highway One from the Landfill :md we had. plans to move that, build that project. That's one of the projects that keeps getting cut based on these water needs that corne up in other areas particularly the Tobacco Road area. I Mr. Oliver: And I think Parks and Recreation should pay for the water line. If you net them you would be taking the money from Utilities. Mr. Bridges: That's just some money out there that Hephzibah has not billed us for. They saved us that much money by doing it. The second one is their bill for the water that we've used based on when we had the water shortage, they are billing us for $14,490 and my understanding is that there may be a few thousand left out there. I Mr. Hicks: The $16,000 will cover it. It'll be a little less than that when they tally up the final amount between the date of that bill and the date we went off line. NIT. Bridges: Based on those numbers, if you look back on the front sheet, there are two scenarios there. The first one is what I think will be in the best interest of the City of Augusta. The second one will probably be the argument that Hephzibah will present. We have $200,000 for a contractor and it would cost us $75,000 to build it. We didn't do it; they did it and that should be deducted. The water bill should be deducted and that would leave them owing us 514,000 that we could negotiate with. What they are going to come back and say is, we don't want to pay labor for Henderson Road because you run the water line at $22.00 a foot and we run it at $5.00 a foot. We'll pay for the materials, deduct the $75,000, deduct the $14,000 and we'll owe them $47,000. My recommendation is we take option number one and present it to them and see where we go from there. Mr. Oliver: That's hard cash out of our pockets. Mr. Kuhlke: Let me see in understand it correctly. The number one scenario is we're paying Hephzibah for the water line to service the Blythe Recreation Center. Mr. Bridges: For the construction of it. I Mr. Kuhlke: But basically, let me ask this question, they're running this line a considerable distance and it would appear to me at some point, people are going to tap on to this line. In other words, they'll get additional revenue off that line at some point. I don't know what the development is here, but why should we pay for all of the line? Is that a reasonable offer? Mr. Bridges: They didn't have to run the line and had no plans to run the line. We're the ones that wanted it and needed it. NIr. Kuhlke: There was no water available from the Blythe lines or anything. NIT. Mavor: The line has alreadv been run? - - Mr. Bridges: Yes. Mr. Mayor: So now we're just talking how we're going to pay for it. I ~ I Nfr. Oliver: Now the other thing I would point out, Commissioner Bridges is that their $17.50 figure for that eight inch line, I believe that includes the material and labor, doesn't it, Ma.x? Mr. Hicks: It would. It would definitely have to. Mr. Oliver: If they're using the material and labor figure, I think we should use material and labor. Nfr. Kuhlke: Well, that's what I think Ulmer is saying NIT. Bridges: I'm just saying that if they have another way of looking at it they'll come back with it. NIT. Kuhlke: \Ve want to sell them that line anyway, do we not? Mr. Hicks: I have no quarrel with selling them that line. It will do them as much good or more than it would us in that it would loop their system down that particular road. Their system comes out with two prongs heading south and this Henderson Road is the one that it's connected to. So it would be very beneficial to them and right now we only have about four or five customers on it. I Mr. Kuhlke: So it's not going to hurt our system in any way in the potential for additional customers on that line. Mr. Hicks: Obviously, there would be some development out that way along Henderson Road, which is the reason they want it. But it really is closer in on their system than it is ours and it's more essential to their system than it is to ours if we look at looping the system and providing good pressure. NIr. Oliver: The looping I think is the biggest factor for the overall perspective. Mr. Kuhlke: So the only argument we have here is what we do in regards to that line they ran to the Blythe Center, right? Mr. Oliver: And clearly they will get water revenue from us on that. \Ve're selling it; they'll get the customers, and they'll get the revenue on the line they built out to us. Are they going to give us a line, is that the proposal on it? Mr. Kuhlke: No, they will keep the line. Mr. Oliver: If they are going to keep the line, then we need to get some kind of discount for the revenue that we're going to pay for water. I Mr. Bridges: Maybe we do need to get the line. Mr. Oliver: It would be a nightmare for us. NIT. Kuhlke: Is that totally out of our system anyway? Mr. Oliver: That's totally out of our system, we'll have to get the water from I them. NIT. Bridges: It won't be when we get that line run down Highway One. NIT. Hicks: Another way to look at this would be to see how much it actually cost them to extend that water line. We had at one time talked about that. As you remember, they did in fact buy all the materials and installed it. This is as if a contractor had installed it but what we could look at is say, well, let's look at the value of the materials and then let Hephzibah pick up the cost of installation as their portion of it. NIr. Kuhlke: In other words, compare our materials to their materials? NIr. Hicks: Well they actually have the materials. Now, we could do that, but you're jumping one other element there. NIr. Kuhlke: Well the way Ulmer's got it broken out is he has the contract price and material price. NIr. Hicks: If you were to really take the material price of $137,458 for the Henderson Road line and then use the material cost for that line that they ran, it would probably be around $30,000. I NIT. Bridges: I do know that it's a lot cheaper for them to run it in manpower and labor than us. It's about four times cheaper. Mr. Hicks: So if we said maybe $17,000, 518,000 that would be around 5120,458. Then when you knock off the $14,000 it would be about $106,000. You would be comparing roughly $14,000 versus $106,000, in that instance. We paid Blair Construction Company to put that in and it's money already spent. NIT. Oliver: My suggestion on the revenue side is to just use your formula of the three-year revenue. If we are going to put in a water line for a business for example, what we do is take what they will pay us over a three-year period, the projected water bill as 1 understand it, Max, and then subtract that from the cost of the line. l~nd the pUqJose of that is to say. We're going to recover this over a three-year period. I don't know if we want that line or not. Mr. Hicks: No. That will be another instance when we run the line down Highway One and then come down the Bath-Eddy Road to that comer. We would then tie in to them at that comer. That would be the logical thing to do, tie the systems together. I I I I NIr. Kuhlke: My first question is, do we want to sell them the Henderson Road line? Is the answer to that yes, more benefit to them? Mr. Oliver: I think it's more of a benefit to them than it is to us. NIT. Hicks: I would say yes. Mr. Kuhlke: The question of owing them some money for the water is a moot point. NIr. Oliver: That's in accordance with the agreement that was previously adopted. / Mr. Kuhlke: So, our recommendation back to the Engineering Services Committee is to ask the Administrator and the Director of W ater Works to negotiate with the city of Hephzibah for running the water line based either on a material cost basis, both from our side and their side. But, at the same time that we should factor in the three-year lapse as far as our cost basis goes and see what you can come back with to the Committee. Mr. Bridges: My only concern here is that even though we have certain costs out there, Hephzibah can run that line for less than $204,000. It's more beneficial to them than it is to us. I don't want to get the price we have to them up so high that they won't want it. Mr. Oliver: As a practical matter, they can't. And the reason I say that is with the state plan that was approved and signed off on by all the jurisdictions, it defines service area and that's not their service area so they are prohibited by law to do that. NIT. Oliver: I think we should go ahead and pay them for the water, just cut them a check and get that done, because there is an agreement already in place for that. With no further business to discuss, the meeting was adjourned. Nancy Morawski Deputy Clerk Ibb . HENDERSON ROAD SUB-COMMITTEE COMMITTEE ROOM - September 21, 1999 1:30 P. M. 1. Discussion of Henderson Road water line. 2. Discussion of an agreement with Hephzibah Water Department. t t