Council approves CMAR to refine costs for Pilot Knoll park upgrades after staff flags failing water and sewer systems

A majority of the Highland Village City Council on Tuesday authorized the city manager to negotiate and execute a construction-manager-at-risk contract with Dean Construction to develop a guaranteed maximum price for the Pilot Knoll Park improvement project.

The move follows staff presentations saying the park's potable water and on-site sewer systems are failing and must be replaced — a condition that sharply increased the project's projected cost. Heather, finance director, said the city is “pricing the full water and sewer upgrade to be 3,600,000.0” and that a standalone water-only replacement would be about $1,200,000 while sanitary sewer service alone was estimated at roughly $2,000,000; with engineering and a modest inflation allowance staff showed a combined, escalated package near $3.6–3.7 million.

Why this matters: Parks staff described Pilot Knoll as a long-used revenue generator for the city that currently hosts RV sites, pavilions, a boat ramp and vendor concessions. Staff said both the sewer and potable water systems are at the end of their useful life; continuing to defer replacement risks recurring service shut‑downs and lost revenue. Council approved bringing on a CMAR to provide more precise bid‑level pricing and value‑engineering suggestions before the council commits to construction dollars.

Staff presentations and debate

Phil, a parks presenter, told the council that the water main serving the park is a 2-inch line constructed from mixed PVC classes and that the sewer lines were about 60 years old and “no longer working and functioning properly.” He said the city discovered an older leach system only after interviewing long‑time employees, and that repairs have been frequent. “Water and sewer need to be replaced regardless of anything else,” Phil said.

Staff laid out a phased master plan: a new gatehouse and entry experience, replacement of the main water line and septic/sewer infrastructure, improved vehicle and trail circulation, 16 small rental cabins in a Phase 1 footprint, upgraded boat‑ramp and docks, relocated slips and improved accessible launches, and upgrades to pavilions and restrooms. The design team and staff emphasized the water/sewer work is a prerequisite for cabins and other visitor‑facing amenities that require reliable potable water and sanitary service.

Financial assumptions and revenue models

Heather presented multiple occupancy and funding scenarios the city modeled with the current design assumptions. Staff used a 75% annual occupancy rate for the proposed cabins as a baseline (based on current RV occupancy patterns) and showed a long‑term projection that included debt service on park bonds; at 75% occupancy staff showed a positive revenue contribution (about $450,000 in annual cabin revenue in the early model) but the full, fully‑burdened package including utility upgrades and debt service produced long payback periods (staff displayed an 18‑year recovery scenario under one set of assumptions). In lower‑occupancy scenarios (64% and 50%) operating projections showed deficits in the early years.

Council members repeatedly pressed staff about two key uncertainties: (1) construction‑era lost revenue for the RV areas during utility work and (2) the extent to which the cabin structures, sitework and infrastructure could be value‑engineered to lower cost. Staff estimated RV revenue disruption would likely be scheduled for the lowest‑revenue months to reduce loss and said the temporary revenue loss was “less than 10%” in staff’s preliminary planning, but also acknowledged that percentage was not modeled into the current pro forma.

Grants and external approvals

Presenters said the city had applied successfully for Texas Parks and Wildlife grants and a boat‑ramp design grant; staff said the boat ramp design grant typically reimburses a high share of design costs and that the grant process helps qualify the project for a later construction grant. Staff also reported the park is on Corps of Engineers land under a long‑term lease and that USACE had approved concepts in principle; several design and archaeological approvals have already been completed.

Why the CMAR now

Staff recommended the city hire a CMAR to participate early in the design process so the contractor can provide realistic cost estimates at drawing milestones, propose construction‑friendly design changes and produce a GMP based on competitive trade pricing when design is sufficiently advanced. Toby, a Dean Construction representative, told the council that when a CMAR is involved early, “we start to value‑engineer before all the designs are set” and that his firm specializes in parks work and believes early contractor input reduces the risk of large overruns when projects are bid.

Council action

At the end of the discussion the council approved a resolution authorizing the city manager to negotiate and execute a CMAR contract with Dean Construction. Section 1 of the resolution, revised during the meeting, caps the contractor’s contract fee at no more than 3.5% for the construction phase fee and 8.5% for general‑condition fees. The motion to approve was made by Mayor Pro Tem Fiorenza and seconded by Councilman Feaster and passed 7–0.

What happens next

The CMAR will work with the city and the architect of record (Dunaway) on value engineering and will prepare budget estimates at subsequent design milestones. Staff said the CMAR phase is intended to produce more reliable figures (and a proposed GMP if council later chooses to proceed) so the council can decide which components — water/sewer, gatehouse, boat ramp, cabins or other elements — to fund and when to build them. If the council chooses not to proceed to construction after the CMAR preconstruction work, staff said the preconstruction effort will leave the city with refined design documents and clearer cost and schedule information to inform future choices.