STARKVILLE — A busy Tuesday night for Starkville Utilities Department saw aldermen reject the first round of bids for a downtown water/sewer project, raise customer water and sewer rates, and drastically reduce the city’s investment in an area solar energy farm.
The prevailing theme throughout the actions was clear: things simply cost more than they once did.
At the request of SUD general manager Edward Kemp, aldermen rejected bids for water and sewer infrastructure upgrades downtown after contractor bids more than doubled the project’s nearly $2.4 million estimate. Kemp said SUD received three bids for the project, all of which were in the “high 4, low 5 million” range, with the low bid being about $4.8 million.
Kemp said he wants to refine the proposals and rebid the project, which he told aldermen he still believes can be done between $2.5 million and $3 million without sacrificing quality or scope. If the utility can open new bids by February, the project could still conceivably be finished by late next year, he said.
“We will not sacrifice the quality of materials,” Kemp said. “We’re not going to cut any corners. We know how important this project is.”
The planned project will replace aging 4-, 6- and 10-inch water lines with 12-inch lines down Main Street, from City Hall to Jackson Street; and Lampkin Street, from Washington Street to the railroad tracks near Montgomery Street.
It will also install 12-inch lines along Washington and Jackson streets between Main and Lampkin and provide new service connections for customers on roughly 100 parcels in the project area, as well as sewer line upgrades behind businesses on South Jackson Street, behind Starkville Cafe and near Starkville Police Department on Lampkin.
The city plans to use American Rescue Plan Act funds to pay for the upgrades.
Ward 5 Alderman Hamp Beatty pressed Kemp on how the project estimate missed the mark so badly compared to the first round of bids.
Kemp pointed to rising material costs generally, coupled with contractors being saturated with projects right now, many of which are ARPA funded. The main problem, though, is the need to clear up more unknowns in the project’s proposal so it helps better mitigate contractor risk.
Speaking to The Dispatch after the meeting, Kemp said the new proposal would try to quantify more of the otherwise “unforeseen things” for which contractors would have to absorb costs — whether it is extra needed material or labor at certain points in the job. By not quantifying those potential “pay items” the first time, he said contractors may have padded their bids to reflect contingencies and unforeseen risks.
“We need to sharpen our pencils and refine our plans a little bit,” Kemp said, again stressing the process would not sacrifice quality or scope, for now. “If we need a scope change, we’ll have to come back and present that to the board of aldermen.”
Water/sewer rate hike
Aldermen unanimously approved customer rate increases for water and sewer service that will become effective Feb. 1.
The move raises the base rate — which covers the first 1,000 gallons — for customers with city water and sewer service from $9 to $12 per month ($1.50 each for water and sewer). The variable rate, which covers amounts of water and sewer used beyond the first 1,000 gallons, will increase from $8.30 to $9 per thousand gallons.
With the proposed water rates, the most common type of water and sewer customer, who uses 2,000 to 5,000 gallons of water per month, would see their bills go up roughly $4.63 based on McGough’s research. The most common type of water only customer, those using less 1,000, would see their bill increase just $1.50.
A flat rate of $18.67 per month will be charged to sewer-only customers, customers in the Deerfield and Rockhill areas who have rural water service but city sewer.
Kemp said since the last rate increase in 2020, operations costs have begun eating into SUD’s capital improvements budget. The rate increase will provide an additional $1 million in annual revenue, he said, most of which would be dedicated to capital improvement projects.
Mayor Lynn Spruill told the board that among the capital improvements needed in the near future is a new well, which she estimated would cost $4 million.
“That’s good … because that means we’re growing,” she said.
Solar investment
Also at Kemp’s request, aldermen agreed to slash its planned renewable energy investment by nearly 80 percent, citing the rising cost of solar energy.
In April 2021, SUD partnered with the Tennessee Valley Authority’s Green Invest program to earn renewable energy credits on 30 megawatts of solar power at a 200 megawatt solar farm being built near Golden Triangle Regional Airport. On Tuesday, the city reduced that commitment to 6.3 megawatts.
Originally, Kemp said, SUD would pay $80,000 annually for the 30 megawatts. Rising prices ballooned that cost to upwards of $250,000 annually, he told The Dispatch, causing the utility to renegotiate.
The new 6.3 megawatt deal will cost SUD $40,000 annually.
Kemp explained the purchased solar power would go into TVA’s transmission system, from which SUD is among hundreds of utilities to buy power. In return, SUD earns renewable energy credits, which Kemp said are commodities that can be traded or sold in the open market.
More practically, it’s a way to invest in TVA reducing its carbon footprint.
“We want to be partners in this to show a forward-leaning approach and to be a part of something that is more environmentally friendly,” he said.
Zack Plair is the managing editor for The Dispatch.
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