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Tonganoxie council directs staff to seek $1.35 million SRF amendment after bids exceed estimate
Summary
City staff will ask the Kansas Department of Health and Environment to increase a previously awarded SRF loan by about $1.35 million so the wastewater treatment plant expansion can proceed; council members signaled consensus after engineers said bids exceeded the original loan amount.
Tonganoxie City Council members on Oct. 6 gave staff direction to request an amendment to a Kansas Department of Health and Environment (KDHE) State Revolving Fund (SRF) loan after construction bids for the city’s wastewater treatment plant expansion came in higher than expected.
City Manager George Brakovich said the city previously received confirmation from KDHE that a $5,000,000 SRF loan for phase one of a two-phase project had been accepted, and that recent bids left the city about $1,350,000 short of the funds needed to award the contract. "What staff is asking for tonight is for you to provide direction to city staff to submit this letter, asking KDHE for an amendment," Brakovich said.
The project is on the city’s Capital Maintenance Improvement Plan and would roughly double daily capacity at the wastewater treatment plant. Daniel Monaco, the design engineer with BG Consulting, said the low bid was "just shy of $1,350,000" over the city’s prior loan amount and that the amendment request should include at least one bid alternate: repainting the existing clarifiers. "I would highly recommend that that is one thing that we would include," Monaco said.
KDHE staff told city officials the SRF program allows an amendment request under $1,500,000 to retain a previously offered interest rate. Brakovich told the council KDHE’s current rate is about 3.1% while the city’s locked-in rate is 2.48%, and that keeping the lower rate was a key reason to pursue the amendment. KDHE indicated a roughly 30-day turnaround on amendment requests; the city’s bids are valid for 60 days, officials said.
Public Works Director Heskett confirmed the clarifier-coating alternate is included in the additional amount staff plans to request, and councilmembers discussed financing alternatives in case the amendment were denied or delayed. Brakovich said the SRF loan is a 20-year construction loan with biannual principal payments and that interest is incurred only on amounts drawn during construction. The city’s financial advisor had evaluated temporary notes and internal fund balance options; staff noted temporary notes could take three to four months to issue and would bear higher interest.
Council members did not hold a formal vote on awarding the contract at the meeting. Instead, the council signaled consensus to proceed with the amendment request to KDHE so the city can move toward awarding the work if KDHE and bidders accommodate the timeline. The city manager and engineer said they will stay in regular contact with KDHE and the apparent low bidder to coordinate extensions if needed.
The discussion traced back to an application and KDHE award first recorded in July 2022; design review and KDHE engineering review subsequently lengthened the timeline, officials said. Staff said full bid tabulations and design documents are available in the meeting packet.
If KDHE approves the amendment within the stated timeframe and bidders honor their prices, staff said the city will be able to proceed to award and issue a notice to proceed without waiting for final loan agreement execution.
