Update: Tuesday, Aug. 10, 2021 – The Henderson City Council voted to allow City Management to find funding options up to $20 million. Before anything is actually borrowed, the Council would have to take action to approve it.
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Henderson City staff are recommending the Henderson City Council authorize getting more funding to cover the present shortfall in project funding for the upgrade and expansion of the Kerr Lake Regional Water System.
The council will take a look at this and possibly vote on whether to seek the funds at the regular monthly meeting Monday night, August 9. Regular meetings start at 6 p.m. at City Hall on Rose Avenue.
Costs have gone up. About $20 million more is needed to get the three Kerr Lake Regional Water System partners Henderson (60%), Oxford (20%) and Warren County (20%) to the now guaranteed maximum price of $66 million. Henderson is the managing partner.
If the funds can be had by grant or loan, then it will be the second time more money was needed, if you want to look at it that way. First it was rehab, then expansion and now, simply, costs have gone up.
To express it in more progressive terms, the process being employed is actually called Progressive Design-Build delivery, allowing the KLRWS to work from a single contract, retain control, budget carefully and stay flexible to arrive at a quality result.
According to Henderson City Council agenda packet information, containing script written by City Manager Terrell Blackmon, “This $20.107 million funding shortfall is currently preventing this project from moving forward into construction.”
Blackmon indicated in a fiscal note to the Council in the agenda packet that “project costs will cause the City of Henderson to raise water rates slightly to cover these increased costs of the project but will be determined later prior to the City taking on any additional debt service.”
If you’d like to read more and see more of the recent history, continue reading the quoted words of Blackmon from the agenda packet below:
“The City of Henderson, on behalf of the three Partners, applied for funding to rehabilitate portions of the Kerr Lake Regional Water Treatment Plant (KLRWTP) in the spring 2017 Drinking Water State Revolving Fund (DWSRF) funding cycle. The DWSRF funding amount approved for this work was $19,893,000. Subsequently, in 2017, the KLRWS Partners determined that a capacity expansion of the KLRWTP was needed, and submitted two additional applications for DWSRF funding. Those two applications were approved in March 2018, allocating an additional $15,000,000 in funding to the City of Henderson and $5,000,000 to Warren County. Further, the
City of Oxford was awarded $6,000,000 bringing the total amount of DWSRF project funding as of August 4, 2021 to $45,893,000 for the KLRWTP Upgrades Project. The project will rehabilitate aging facilities, replace old equipment, and expand the facilities at the existing KLRWTP to bring the treatment capacity to a reliable 20 million gallons per day (MGD). The subject project is being delivered by a Progressive Design-Build delivery method, and CDM Smith was selected by a competitive procurement process in 2017 to be the project Design-Builder. CDM Smith has nearly completed Phase 1 of the design-build process, which includes design to a 70% milestone and development of construction pricing. In September 2020, CDM Smith notified KLRWS that they had received pricing and quotes from their subcontractors, vendors, and suppliers, and that the construction cost of the project had increased significantly since a budget was set in 2017, and since the last estimate had been prepared in early 2019. CDM Smith has arrived at a Guaranteed Maximum Price (GMP) of $66 million. The revised construction cost of $66 million is $20.107 million greater than the approved SRF funding amount of $45.893 million. This $20.107 million funding shortfall is currently preventing this project from moving forward into construction.”