AWPF construction bids come in roughly 50% above estimate; district pauses award to review costs and funding

At a special meeting, Carpinteria Valley Water District staff told the board that construction bids for the district’s advanced water purification facility (AWPF) returned far higher than the engineer’s estimate, a gap that could meaningfully raise project financing needs and customer rates.

Chris Malgin, who presented preliminary bid results, said the district received three bids from contractors identified in the packet as Walsh, Shimek and Hensel Phelps. The engineer’s estimate prepared for the project was $42,000,000; the three bids clustered in the low‑$60 million range. Malgin described the bid grouping as “tight,” which staff and the engineer characterized as an indicator that the market price for the work—rather than a single outlier—may be driving the difference.

Public commenter Bob told the board he had discussed the project with the sanitary district general manager and warned residents would face “sticker shock,” suggesting the total program cost could grow toward $100,000,000 once pipeline and well packages are added. “I think by the time we’re done… maybe a $100,000,000,” Bob said during public comment.

Craig Erickson, the project manager from Woodard & Curran (the design engineer), said the design estimate had “missed the mark” and acknowledged a roughly 40%‑plus delta between the estimate and the current bids. Erickson urged the district to work with contractors to clarify bid assumptions and identify adjustments.

Staff outlined several likely contributors to the gap: contractor assumptions taken during limited review time, restrictive sequencing requirements that raise contractors’ perceived risk (and potential liquidated damages), stronger builder’s‑risk insurance requirements drafted after legal input, subsurface unknowns at the site and recent tariff/Buy America‑type policy uncertainty that were not in the engineer’s February cost model. Staff also flagged a single high subcontract cost for deep soil mixing—reported in the presentation at about $3.4 million—as a notable variance from the estimate.

Malgin said the district will use the bid escrow process to ask the apparent low bidder to provide an “open‑book” review of how the bid was assembled. Staff plans to meet with Walsh and also to contact the other bidders to scrub assumptions, seek clarifications and look for possible scope or sequencing changes that could lower cost. The district also intends to examine unsuccessful bidders’ reasons for not participating more fully.

On funding, staff noted Title XVI grant reimbursement at approximately 25% of eligible construction costs (as applied for previously) and said the district had applied earlier with a $75,000,000 project buffer. Staff additionally said the state SRF loan program currently shows a potential maximum loan amount of about $50,000,000 for the district, and that clarification from the funding agency was pending. Staff modeled the combined AWPF, conveyance and well construction to a higher total—presentations referenced construction totals increasing roughly from the mid‑$50 million range to about $70–$77 million under current assumptions—and said soft costs and other work not previously captured have also risen.

Because the bid tabulation process and funding implications require more analysis, staff recommended and the board agreed not to award construction at the next meeting; the district will delay any award at least until Jan. 14 while it completes bidder reviews, open‑book examinations and funding outreach.

What’s next: staff will conduct open‑book reviews with bidders, pursue clarifications about insurance and sequencing requirements, re‑run the financial model with updated capital numbers, and brief the board on funding options, including a clearer SRF loan cap interpretation and potential additional federal funding avenues. The board asked for a follow‑up that specifies rate and tax impacts once a definitive construction award path is identified.