Highland Village council authorizes CMAR hire for Pilot Knoll Park; debate centers on $3M+ 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 advance design and pricing for Pilot Knoll Park improvements, including infrastructure work the city says is needed to keep the park operating.

Council action approves a CMAR fee structure of 3.5% for construction-phase fees and 8.5% for general-conditions fees; council discussion made clear those percentages will be applied to a later guaranteed maximum price (GMP) developed after bidders price final construction packages. The motion carried 7-0.

City staff and consultants told the council that the park’s water and septic systems date to the 1960s–1970s and are failing, and that replacing them is effectively prerequisite work for other improvements. Staff presented a range of cost estimates developed during design and feasibility work: the city’s draft engineering estimates put a full water-and-sewer upgrade at roughly $3.6 million (about $1.2 million for water only and roughly $2.0–2.2 million for sanitary sewer), plus an earlier cabins-and-amenity package that has been budgeted in capital plans at roughly $2.6 million for 16 rental cabins. Staff said engineering and contingency add materially to total program cost; the council was shown a 20% escalation to reach a current planning figure of about $10.8 million for the bundled park package when county and bond items are included.

Why it matters: park staff and the consultant team framed the CMAR hire as a way to produce real, bid-level cost numbers quickly and to let the city test several options (full program, utilities-only, or a reduced scope) before obligating construction dollars. Supporters said the CMAR process reduces the risk of large bid surprises and provides value-engineering that can protect the city’s overall budget. Several council members pushed for a conservative, rigorous review of the financial model before committing to cabins or other higher-cost elements.

What the council heard - Staff described frequent service outages, exposed sewer lines near the lakeshore and an old potable-water system built of mixed PVC that requires frequent repair. The United States Army Corps of Engineers and the city’s lease with USACE were discussed as context for permitted uses and placement of improvements. - Consultants and Dean Construction representatives said the CMAR process brings early contractor input, value engineering, and staged budgeting: at 60% drawings Dean will prepare progressively more accurate cost forecasts (60%, 75% and final bid/GMP). Dean’s representative said the approach helps avoid the low-bid surprises that have produced single or very few bidders under traditional design-bid-build. - Staff presented multiple revenue/occupancy scenarios for cabins (75%, 64%, 50% occupancy were modeled). A 75% occupancy assumption had previously been used in feasibility work; staff said RV occupancy at the park and comparable sites influenced the 75% uplook but acknowledged cabin occupancy is uncertain and that the city’s long‑term financial model is sensitive to that assumption.

Key numbers and clarifications provided at the meeting - Water-line replacement estimated at about $1.2 million if done alone; sanitary replacement estimated at roughly $2.0–2.2 million. Engineering and contingency together were shown in planning spreadsheets (city staff cited an assumed engineering cost in the $348,000 range for utility work). - A full park program—cabins, gatehouse, trail and boat-ramp improvements plus utilities—was shown in the presentation with a planning-level total in the multi‑million dollar range; staff cited earlier CIP and bond proceeds, Texas Parks and Wildlife grants (boat-ramp design grant and local park grant), and county bond funds as partial funding sources but said the final funding mix remains to be nailed down. - City staff said the boat-ramp design grant covers design at an 80/20 match and that the design award now increases the chance for later construction funding but does not by itself fund all construction.

Council direction and next steps - The council approved the CMAR authorization (the vote was recorded as 7–0). Councilmembers repeatedly emphasized the hire is to get firm numbers, not to approve construction budgets; staff confirmed the GMP will come to council for approval after the CMAR delivers firm bid packages. - Staff said the city will hold the plan set at roughly the current 60% level for CMAR pricing so Dean can prepare cost estimates and value-engineering options without investing further design funds immediately. If the GMP or refined estimates exceed what the council finds acceptable, the council can scale the project or stop it with limited sunk cost—the CMAR preconstruction services were presented as having no direct preconstruction fee.

Quotes from participants Toby (Dean Construction), the firm’s project lead, described the CMAR role: “We come in on the early stages … and start to do a couple different things … we start to value engineer before all the designs are set.”

What the vote did (formal action) - Action: authorized the city manager to negotiate and execute a CMAR contract with Dean Construction for Pilot Knoll Park improvement projects. Construction manager contract fees were capped in the authorization at 3.5% (construction phase) and 8.5% (general conditions); GMP to be developed later and presented to council for approval.

Outstanding questions and risks - Cabin economics: council members repeatedly asked for clearer, conservative assumptions on occupancy, pricing and operating costs. Staff modeling showed large sensitivity to occupancy assumptions; several council members asked for a compact financial model showing the occupancy/rate levels needed to reach specific net revenue or payback targets. - Disruption/operations: staff said sequencing and construction phasing would aim to minimize peak-season revenue loss (staff estimated potential revenue impact during construction but did not commit firm percentages). Council asked staff to quantify expected revenue loss and construction schedule impacts before the council considers a GMP. - Grants and county funding: staff will confirm how county bond proceeds and interest earnings are treated, and whether the county will absorb inflation-related increases in the county-funded share.

Ending: The CMAR authorization moves the project into a phase intended to produce firm, bid-ready prices and explicit tradeoffs for council review; the outcome will determine whether the city proceeds with cabins, a full park buildout, limited utility-only repairs, or some hybrid approach.