COUNTY NEWS RELEASE
Ordinance 712 will be considered by the Los Alamos County Council at 6 p.m. on Tuesday, Nov. 9, at the county council meeting. If approved, the ordinance would authorize the utilities manager to request that the Department of Public Utilities’ (DPU) loan amount with the New Mexico Environment Department (NMED) be increased from $17 million up to a maximum of $30 million for the construction of the water resource recovery facility (WRRF). This facility is proposed to replace the aging White Rock wastewater treatment plant. Los Alamos citizens can watch the November 9 council meeting and provide public comment via Zoom: https://us06web.zoom.us/j/85396454950.
Material and labor shortages, as well as supply chain delays related to the COVID-19 pandemic are causing significant cost overruns for all recent DPU projects and the water resource recovery facility project is no exception, according to DPU officials. Even after anticipating and preparing for larger bids, project bids received for the WRRF were well above the engineer’s estimate and the department’s budget authority.
While bid results are still under review, DPU’s project manager approached officials with the NMED Construction Programs Bureau, the state department that administers the Clean Water State Revolving Fund loan, to weigh options. Citing similar issues from other cities and counties across the state, NMED officials agreed to prepare a new ordinance to increase the loan amount to a maximum of $30 million while maintaining the original interest rate at 2.38 percent.
DPU staff presented the new ordinance to the Board of Public Utilities at the October 20 meeting. BPU members voted unanimously to approve the ordinance and forward it to the County Council for consideration on November 9.
“Thirty million is a worst-case scenario for the purpose of establishing adequate budget authority by ordinance and avoiding delays associated with revising the ordinance again in the future,” stated Utilities Manger Philo Shelton. “The final loan amount will be established by the final actual costs for both design and construction.”
Shelton emphasized that this is a huge cost increase, but without budget authority the bid committee will need to cancel the bids. “Frankly, I don’t see that the price will go down if we have to rebid. Construction for a new facility will only get more expensive over time since wage rates are anticipated to go up on January 1, 2022.” The proposed WRRF scope has already been scaled down with designs that upgrade and incorporate many components of the existing wastewater treatment plant into the new facility to minimize costs. “We are proposing to build a Chevy, not a Cadillac,” he clarified.
To provide a healthy financial platform to construct the new White Rock WRRF, aggressive rates were adopted by the BPU and Council during fiscal years 2015 through 2019 to make up for decades of low sewer rates. Three years ago, DPU recommended and the BPU and Council adopted an additional three-year series of rate increases of 6, 3 and then 2 percent respectively. The increases were designed to progressively drop each year to eventually cover only inflationary costs. Future rate increases to fund the WRRF are based on design and construction costs at 2 percent per year over the next four years.
If the ordinance is approved by Council at the virtual November 9 meeting, DPU staff will work with NMED to amend and finalize the loan documents. A closing date will be scheduled 30 days later. Construction on the new facility could begin as soon as January 2022 once the successful bidder is selected and a contract awarded. The new White Rock WRRF would be operational in the fall of 2023.
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