This is a printer-friendly version of an article from Zip06.com.
12/13/2018 11:00 PMNearly 200 people packed into the Guilford Community Center on Dec. 13 to vote on a $3.1 million special appropriation for the water main extension to Mulberry Point, Tuttles Point, and Long Cove. Despite the size of the appropriation that could more than double each homeowner’s projected cost assessment, the vote passed easily, keeping the project moving forward.
The water main extension project, which is being undertaken to address unsafe levels of salt (from seawater incursion) and coliform bacteria (from insufficient septic capacity) in Mulberry Point, Tuttles Point, and Long Cove, has had its share of recent challenges—construction bids came in well above budget, and even then the low bidder dropped out, leading the town to send the project out to bid for a second time. The town now has a new low bidder, but the overall project cost is going to jump significantly, from a planned $3.4 million to $6.5 million.
For the project to move forward, the town had to find a way to cover that $3.1 million difference.
When the project was headed initially to referendum, the town applied for Drinking Water Revolving Funds through the Clean Water Fund, a low-interest loan from the State of Connecticut that in 2012 became available for the project, contingent upon a successful referendum. The town anticipates receiving up to $3,443,000 from that fund. The money comes in the form of a loan rather than a bond that the 145 assessed homeowners would pay back at a two-percent interest rate over the 20-year life of the loan.
The town was always going to have to advance funds to apply for the Clean Water Fund and with the fund application due before the end of the year, the town had to move quickly.
To qualify for the loan, essentially the town has to show that has the authorization to spend the total cost of the project—$6.5 million—because, while assessed homeowners truly pay for the project, homeowners can’t start paying until the project is complete and exact assessments can be sent out. The town pays the project bills as work happens and then homeowners reimburse the town through their assessments.
In short, it means that the town had to approve a $3.1 million special appropriation to get the total authorization up to $6.5 million—and 167 people cast a vote on the special town meeting to do just that. The appropriation was approved after little debate with 162 “Yes” votes to 5 “No” votes.
How We Got Here
The water main extension project was approved at referendum on May 31, 2017, with an expected cost of $3.4 million, garnering 1,004 “Yes” votes to 122 “No” votes. Prior to the referendum, the town announced that, of the 145 homes in the area that could be served by the water main, 83 percent of residents signed formal commitment letters to connect with the main, well exceeding the necessary commitment level and pushing the project forward.
Residents in the service area will pay all expenses for the project, including initial soft costs. In January, the town signed a service agreement with the Connecticut Water Company (CWC) that outlined the financial rate of contribution from CWC. The rate of contribution from CWC is dependent upon the percentage of the 145 homeowners in the area who commit to the project. With an 83 percent commitment rate demonstrated by residents who sent the water company signed commitment letters and financial deposits, CWC will contribute $1.5 million.
At the time, the total project budget was roughly $3.4 million, so after the CWC contribution, homeowners who are direct beneficiaries of the water main extension would pay the remaining $1.9 million project costs.
The town had hired engineering and construction management team Wright-Pierce, completed the state permitting process, and put the project out to bid for a contractor in early summer. The bids varied dramatically; even the low bid was $1.2 million over budget.
At the time, the town went with the low bidder and then looked to grants to help cover the difference. However, the low bidder dropped out and the town opted to go back out to bid this fall with the hope of getting a better number.
“We thought it was most appropriate to send it back out to bid,” said First Selectman Matt Hoey. “We did so several weeks ago and I think we had five bids this time around, but they were all much closer to each other, which signified that they are probably more accurate. At this point we have identified a low bidder who is about $2.6 million more expensive than the low bidder the first time around.”
Costs and Concerns
The total project cost of $6.5 million is partially offset by a state grant, a contribution from the CWC, and a Clean Water subsidy, but even with those funds, the per household assessment for the 145 homes in the service area will jump significantly.
When the project was first approved at referendum, it was—and continues to be—understood that no taxpayer money would be put toward this project. Grants, funding programs, contributions, and homeowner assessments would cover all costs.
In the budget approved at referendum, the total cost per unit was $11,731. Now the town says it is looking at a worst-case scenario of $28,848 total cost per unit. The new figure includes all soft costs to date, a significant project contingency, and the three solid external funding sources.
However, while Hoey said he can’t make promises, he reminded residents that before the first low bidder dropped out, the town secured $1.25 million in state funding. When the low bidder dropped and the town was without a formal contract, the state dropped the grant down to $450,000, but said the town could come back and ask for more once a new contract was signed.
“What I will tell you is we—myself, State Representative Sean Scanlon [D-98], the Board of Selectmen—we will work to bridge the gap between where we are currently in terms of funding for this project to diminish the impact on those who as being assessed,” he said.
Hoey said officials have already reached out to state and federal legislators to explore all funding opportunities. Hoey also said the town has a strong case in asking for funding for a clean water project because this is a public health issue.
“I give you the commitment that like the first time when we realized there was a problem, this administration and your state and federal delegation will be working to secure additional funding,” he said. “There is also the opportunity that because we have 18 months until the conclusion of this project, there is the possibility that there might be more state grant programs available over that period of time. No promises but things like that do happen.”
Despite the cost increase, residents in the service area who attended the meeting have been waiting a long time for clean water and made it clear they were not about to give up now. Resident Sue Robbins thanked all those—neighbors, town officials, and state official—who had over the years supported residents’ efforts to make this project a reality.
“Many of you know this has been a long endeavor, it hasn’t been easy,” she said. “My husband said the other day that he thinks of this project and says it is the perseverance project and he is right. We have had to go through a lot of hurdles and it has been a long process and we have had a lot of help along the way… We are this close to getting the shovel in the ground this winter and having fresh water and clean safe water for not only us but for our future generations.”
With the appropriation approved, the Board of Selectmen is expected to award the new construction contract for the project on Monday, Dec. 17. Check back for updates.