FAIRMONT - No one is comfortable spending $31 million on a new water plant, but the alternatives aren't any more appealing to the officials making the decisions.
Fairmont Public Utilities commissioners are recommending the City Council proceed with the project, a decision made Monday morning after much discussion.
The next step is the preliminary design phase, and city staff would like the council to vote at its Dec. 14 meeting in order for the project to meet a fall 2012 completion date.
"There are a whole lot of reasons for moving forward," said City Administrator Jim Zarling.
Before commissioners reached the same conclusion they addressed some questions, including whether it would be wise to hire another engineer to examine the work done so far by Advanced Engineering. The cost would be $10,000 to $15,000, according to Butch Hybbert, water plant supervisor.
Commissioner Jeff Ziemer is unhappy with Advanced Engineering's estimates, believing the figures are higher than what he has heard anecdotally about other new plants. He suggested an outside source look at the numbers and suggest other options.
"What Jeff's asking for is another facility plan," Hybbert said, explaining the cost would be much higher than $15,000.
Advanced Engineering's actual estimate for the new plant is $23.9 million, which aligns with Minnesota Department of Health data.
The health department reports $4 to $4.50 per gallon is typical for a conventional lime softening facility. For a plant sized to produce up to 5.4 million gallons per day, the cost is usually $21.6 million to $24.3 million, based on the health department's estimates.
Advanced Engineer's project cost of $31 million includes demolishing the existing plant, decommissioning the lime sludge ponds, restoring shoreland, building a pipeline to a new plant, engineering and administrative fees and a 20 percent contingency.
"I just think there's got to be a cheaper option than this," Ziemer said. "... For instance, they're projecting population numbers that haven't historically been true."
Hybbert acknowledged the city doesn't currently need a 5.4 MGD plant, but he wants to be prepared for the future: "If you cut back, you limit the potential for industrial growth."
Other issues were rehashed as well, like the possibility of staying in the existing plant.
Rehabilitating the 80-year-old plant has been researched by Advanced Engineering, and the costs outweigh the benefits, according to the consultant's analysis.
"I think our water plant has gotten to the point where it's beyond being fixed," said City Engineer Troy Nemmers.
The project would cost an estimated $26 million, almost as much as building new, and it would take longer since the city would have to continue providing safe drinking water throughout the construction process.
City Administrator Jim Zarling doubted if rehabilitation would even be allowed.
"I'm not sure we can get permission from the health department to rehabilitate that building," he said. "It doesn't make much sense to rehab when it's almost as expensive to rehab as build new."
Another reason city staff wants to move forward is the possibility of netting financial assistance.
"It sounds like stimulus money is going to be available again," Hybbert said.
The further along planning is, the more likely the project will be approved for funds.
One hesitation with moving ahead is the unknown placement of the plant, a concern commissioners and City Council share.
The city's top two sites are Budd School, still being used for elementary students, and Cardinal Park. Both are owned by the school district. The school is closest to the existing plant, making it more appealing. The further away the plant is from the water intake on Budd Lake, the higher the cost to pipe water to the new location.
Joe Kurtzman, who serves on the school board and PUC, said the district will have only one chance to run a referendum in the next six months. Voters must approve closing the school to expand Five Lakes Elementary before the city could purchase the building.
"Budd School is still feasible if the referendum passed," Kurtzman said.
In the end, the vote to proceed with preliminary design passed unanimously.
The commission also approved its 2010 budget and rate increases. Water rates for all classes of users will increase about 25 percent in anticipation of constructing the new plant. Wastewater rates also are set to increase 3 percent in 2010. The new rates will take effect Jan. 1, with the council set to approve them later that month.
In other business, the commission discontinued its wind generation program. In 2000, Southern Minnesota Municipal Power Agency created the program to encourage customers to purchase blocks of 100 kilowatts of wind generation for $1 per block, while continuing to pay for their regular electricity use.
Since then, the power agency has expanded its wind generation and met the government's requirement that 13.5 percent of its energy come from wind. SMMPA is ending the program Jan. 1, 2010, feeling it is no longer necessary to bill customers a premium for wind generation.