Council rejects water plant bids

The Olney City Council rejected all bids for a planned water treatment plant, saying they would go “back to the drawing board” to avoid saddling residents with more debt. The Council took the action after seeing the lowest of four bids on the project come in $2 million over the City’s $13.5 million budget.

Olney Mayor Rue Rogers and Councilmembers said they were determined to replace the City’s 100-year-old water treatment plant but after meeting with bankers, the project’s engineers at Corlett Probst & Boyd, and other advisors, could not find a way to finance it by the Nov. 23 deadline for accepting bids.

“This is not us throwing our hands up and saying we are not going to do the project because … We have an aging water treatment plant that has to be addressed, and we’re going to figure out a way to get it done,” Mayor Rogers said.

The City sold the revenue bonds in April of 2022, and has three to five years to spend the funds, meaning that the interest accrued during that time could help bridge the funding gap, said Jake Lawrence, financial advisor for Government Capital Securities, which advised the City on the bond sale.

Four Texas-based general contractors submitted bids to build Olney’s new water treatment plant at base bids ranging from $21.36 million to $15.35 million.The City had 30 days to accept or reject bids.

A special committee called by the Council also explored several avenues for matching the project with the money on hand, as well as increasing the current water meter surcharge but determined it would have to rise $10 per meter - from the current $35 fee per meter - to afford the lowest bid by Hor- Corlett Probst & Boyd worked with Horton Excavation to reduce the cost of the bid, but the lower cost was still too high, Mayor Rogers said.

The company scaled back the plans to options that cost of $14.1 million and $14.4 million, he said.

“I’m hesitant for us to pass something that’s $2 million-plus more than what we have in our budget or what we feel comfortable being able to finance,” Mayor Rogers said. “And we’ve got the surcharge and with property taxes and different things I don’t think putting another tax on the citizens is something we can do or even should consider.”

The City likely would not be eligible to receive funds from Proposition 6, a voter-approved fund that created a fund for water-related infrastructure projects, because Olney’s water quality is too good, City Administrator Arpegea Pagsuberon said.

The good news, Mayor Rogers told the Council, was that the City “has the full engineering for the plant and the [Texas Commission on Environmental Quality] stamp of approval.”

“Now it’s just about trying to find the right contractor and then being able to do it in a manner that we can afford,” he said.

The rest of the Council had little to add to the Mayor’s assessment but all voted to reject the bids.

“It’s not the outcome we wanted but ... I just wanted to reiterate that the book doesn’t close right here either,” Mayor Rogers said. “There’s still work to be done and we’re still committed to doing it, and we’re going to find a way to solve this, serve a need that our community desperately needs and that we’re committed to addressing.”