Contractor orders, SRF rules and an old ordinance put Boyne City commissioners in a bind over sewer expansion

Boyne City commissioners paused part of a Clean Water State Revolving Fund wastewater contract after engineers said the contractor had ordered materials and planned to begin unserved‑area sewer work next week. The meeting focused on whether the city had legally committed to the $5 million expansion portion of Contract One and on the risk that SRF (state) program conditions could require repayment if connection requirements are not met.

City staff and C2AE engineers briefed the commission on a Gantt schedule and a contractor estimate that halting the unserved‑area work could produce immediate costs for restocking, demobilization and committed personnel. The engineers reported a written contractor memo estimating an initial minimum exposure of about $392,520 for restocking and non‑returnable purchases, and stated the number would rise as additional purchases and demobilization costs accrue. That figure does not attempt to quantify long‑term opportunity costs or any contingent liabilities that might be asserted under SRF rules.

Commissioners said they had repeatedly told staff they did not want the city to incur cost for the unserved‑area expansion until the Michigan Department of Environment, Great Lakes, and Energy (EGLE) accepted ordinance language clarifying hookup requirements. That direction, several commissioners said, was not clearly communicated in writing to the contractor when the notice to proceed was later executed. Engineers acknowledged multiple change‑order scenarios were discussed with the contractor but that a written ‘‘stop‑work’’ or signed change order eliminating the expansion portion had not been finalized.

To avoid further exposure while the commission seeks clarity, the commission directed C2AE and staff to tell the contractor to pause any purchases and work that relate to the $5 million unserved‑area expansion, and to ask EGLE whether the city’s existing ordinance (1975 language) plus a targeted amendment (extending the hookup commitment window) would satisfy SRF requirements. The commission also asked staff to seek immediate legal advice; the city attorney was expected to brief the commission in a follow‑up meeting.

Commissioners and engineers discussed options: (a) sign a change order now to remove the unserved‑area expansion (which the contractor warned may create restocking and demobilization costs), (b) keep the existing schedule and defend the SRF position afterward, or (c) negotiate a revised completion schedule and ordinance language that EGLE will accept. Engineers said it is possible to stage work so non‑expansion elements proceed while expansion work is paused.

The commission directed staff and C2AE to make immediate contact with the contractor to confirm no further non‑authorized purchases will be made related to the unserved‑area expansion, and to return at the next regular meeting with the city attorney and EGLE‑related guidance before authorizing further work. The meeting did not authorize money to reimburse any vendor; the legal and financial consequences of earlier purchases will be the subject of the planned review.

Commissioners expressed frustration with the paperwork and communications surrounding the contract and asked for a clear written timeline of remaining procurement, the signed notice‑to‑proceed (January 24, 2025) and the draft change order that was discussed in November 2024. Engineers committed to coordinate the contractor pause and to provide the commission with the written contract documents and the contractor’s written cost estimate of the exposure.