Highland Village council authorizes CMAR for Pilot Knoll project after debate over $3.6M utility needs and cabin economics

The Highland Village City Council on June 10 authorized the city manager to negotiate and execute a construction-manager-at-risk (CMAR) contract with Dean Construction to develop a guaranteed maximum price for the Pilot Knoll Park improvement project, including boat-ramp work and a proposed cabin program.

The move follows months of design work, grant awards from Texas Parks & Wildlife and a Park Board-driven master plan. The council debated the scope and rising cost estimates — including a newly identified need to replace failing water and sewer systems at the park — before approving the CMAR contract (motion by Mayor Pro Tem Virenza, second by Councilman Feaster; vote 7-0).

The council was told that key buried utilities at Pilot Knoll date from the 1960s and 1970s and are failing, forcing the city to budget for significant infrastructure work regardless of whether cabins are built. Finance Director Heather (identified in presentation as finance director) told council the full water-and-sewer replacement is priced at about $3,600,000 (water-only roughly $1,200,000; sanitary sewer about $2,200,000) including a 5% inflation allowance and roughly $348,000 for engineering. Heather also said earlier feasibility estimates prepared in 2021 had been far lower (about $430,000) and that updated regulation and the need to avoid discharging to older pump stations increased scope and cost.

Architectural and parks staff presented the project master plan that includes a new gatehouse, relocated and accessible boat dock, 16 rental cabins (phase 1), expanded trails, restroom upgrades and improved ADA circulation. Staff said the cabins were included in grant submissions and helped secure awards: the city placed a design grant for the boat ramp and a local park grant from Texas Parks & Wildlife (grant terms discussed were roughly an 80/20 split on design funding for the boat ramp).

City staff and consultants ran financial scenarios tied to cabin occupancy. Staff presented a model using 75% annual occupancy (based on RV-site trends) that projected roughly $450,000 in annual revenue from cabins; lower occupancy scenarios (64%, 50%) produced substantially smaller or negative net results after operating and debt-service costs. Council members repeatedly cautioned that the revenue projections rely on assumptions that could be optimistic, and several asked for a side-by-side “apples-to-apples” set of scenarios showing cabins vs. no cabins and the full utility cost impact.

Contractor representatives from Dean Construction — including Toby, who described the company’s parks-focused CMAR work — said the CMAR approach would let the city bring a contractor into the late design process to value-engineer, provide early cost opinions, and then deliver a guaranteed maximum price (GMP) once trade pricing is developed. Dean said its proposal splits fees as an 8.5% general-conditions fee and a 3.5% construction-phase fee (about a 12% total CMAR fee by the city’s RFQ response) and that the firm was not charging a preconstruction fee for budget development.

Council asked that the resolution authorizing the CMAR contract reflect the firm’s percentage fees rather than a fixed dollar figure; staff revised the resolution during the meeting to require the construction-manager fee not to exceed 3.5% on construction-phase fees and not to exceed 8.5% on general-condition fees. With that change the measure passed 7-0.

Council members asked for clear, updated cost and revenue models before committing to construction. Multiple members urged staff to (1) keep the design and bidding process transparent, (2) present a line-by-line financial model showing the margin required to reach earlier revenue goals, and (3) pursue grant flexibility if cabins are not built. Staff said Texas Parks & Wildlife indicated grant funds could be reallocated to other park improvements if elements of the grant-funded program change.

What happened next: staff will work with Dean Construction and the project architect to refine the preconstruction budget, produce updated cost opinions, and return to council with a GMP package for approval before any construction contract is executed. The council’s vote authorizes negotiating and executing the CMAR contract with the fee caps approved at the meeting.

Additional details: the staff presentation showed the potable water piping system and septic infrastructure were at the end of useful life, that the existing 2-inch water line and older sewer lines had required frequent repairs, and that failing systems had led to periodic shutdowns of RV sites. Staff also presented prior expenditures, park-fund revenue trends and a path for funding the work through grant proceeds and bond proceeds; the local park grants and design grants were cited as partial funding sources for specific elements of the project.

The council’s action does not itself authorize construction spending or a GMP; those decisions will return to council after the CMAR preconstruction period and trade pricing are completed.

Quotes drawn from meeting remarks: • Heather, finance director: "We are pricing the full water and sewer upgrade to be 3,600,000.0." • Toby, Dean Construction: "We...come in with that mentality to begin with, which will help you out...we always have done it on time and in budget." • Council member (paraphrase): council members repeatedly asked that staff "put out an apples‑to‑apples model" comparing cabins vs. no cabins and showing how utility upgrades affect the city’s returns.

Ending: Staff will return with refined cost estimates and a proposed GMP for council approval; the CMAR authorization is intended to speed development of reliable construction pricing and to allow value-engineering before a construction contract is awarded.