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Staff warns rising unit costs and fewer bidders will force choices: larger projects or higher rates
Summary
Utilities staff said per-foot replacement costs have risen from roughly $73/ft in early projects to as much as $280/ft in recent bids; finance estimates show raising annual replacement to $5M could require an ~18% first-year rate increase for customers.
City staff told the commission that replacement costs have risen substantially and the number of bidders has fallen, increasing pressure on the water programs purchasing power.
Martha Tasker reviewed historical unit costs and recent bids: earlier projects were as low as about $73.74/foot, later projects came in at $164/ft and $255/ft, and Meese Construction recently bid about $280/ft. "When we started out with these projects, we had 8 bidders. The last project we bid, we had 2 bidders," Tasker said, noting fewer bidders reduce competition and raise prices.
Finance staff (speaker labeled as Finance director) told commissioners that moving to a $5,000,000-per-year replacement program could prompt an estimated 18% water-rate increase in the first year, roughly $20 a month on an average customer under current assumptions. Staff and the city manager discussed whether to return to debt-financing a larger, front-loaded program or to continue funding smaller projects through operating rates and reserves.
Several commissioners pressed staff about whether bundling larger projects (5—10 miles) would attract more contractors and lower per-mile costs; staff said contractor capacity, administration and shop-drawing lead times remain constraints and they will survey outside bidders and report back.
