Council reviews request to alter payment timing for wastewater disc filters amid 8-month lead time

Mayor Pro Tem Scott Phillips presided over discussion of Change Order No. 2 for the wastewater treatment effluent reuse project after engineering staff said the manufacturer for the project's disc filters is requiring prepayment to start fabrication.

"The disc filter units will take approximately what, 8 8 months to to deliver," Jonathan Stathis, Cedar City engineering department, told the council, explaining the manufacturer's terms and why the contractor had requested a change in payment timing. Stathis said the city's contract allows payment only for materials that are stored on-site or in an approved warehouse.

Contractor Mike Green of Action Contracting said the chosen manufacturer "effectively created a monopoly," and that the alternative manufacturer (Beacon) offered more favorable terms (a smaller down payment and larger pay-on-delivery portion). Green added the manufacturer's terms include a 25% payment at order, further payments at shipping, and a final retention.

Stathis told the council the Division of Water Quality indicated it would not reimburse the state portion of project costs (including ARPA funds) until materials were on-site. Stathis and other staff said the city's standard practice is to require contractors to carry supplier prepayments and only invoice the city when materials are stored on-site.

Council members discussed three options: require the contractor to carry the prepayment per the existing contract; have the city purchase the units directly (which likely would face the same supplier terms); or change to a different filter product (Beacon) that had easier payment terms but would require design/submittal changes and state approval. One council member with contracting experience said upfront prepayments for specialized, long-lead items are common in current markets.

Staff recommended following the existing contract (contractor to carry the cost until materials are on-site) and return the item on the action agenda for a formal vote. No vote on the change order was taken at the work meeting.

Key details noted in the meeting: the manufacturer's prepayment schedule, an approximate filter prepayment amount discussed (~$600,000 for the filter units alone), an estimated eight-month lead time, and that state reimbursement would not be released until materials were physically on-site.