By Alex Bridges
Strasburg likely could save millions of dollars on an upgrade of its wastewater treatment plant by taking a different contracting approach.
The town received seven proposals Friday afternoon from firms interested in designing and building the required upgrades to the plant, town manager Judson Rex said Tuesday.
"We were very pleased to get seven proposals," Rex said. "That's a very positive sign that we went in the right direction there."
Town staff members plan to review each of the proposals and then narrow down submissions before presenting a smaller group to council for its consideration, Rex said. The review process could take three to six months, Rex said.
Earlier this spring, Strasburg received an unsolicited proposal from a firm offering to design and build the project. The firm submitted the proposal through the Private-Public Education Facilities and Infrastructure Act. Under the act, a firm may submit a proposal to build a municipal project, but the details can remain confidential and proprietary until such time as local officials may release the information.
Rex would not disclose the range of costs included with the proposals. But the estimated costs fall below that of the most recent estimate of around $23 million.
"We're looking at a range that is much more comfortable for council to look at doing this project," Rex said. "There's still a variety of prices that were given, but they're more within the range of what we were hoping to get the project to -- not $31 million, that's for sure."
Strasburg residents and business owners benefit from efforts by council and staff to keep the cost of the project down. Town officials and council calculated future increases in the sewer rates based on a project cost well below $31 million. Rex has proposed rate increases of 6 percent for sewer and 12 percent for water to take effect July 1. The town would pay an estimated $890,000 each year on the debt for the project but, as he explained, a project cost of closer to $20 million could mean smaller rate increases.
"We're confident that our rates are definitely where they need to be to complete the upgrade, and once we know for sure what the price is going to be we can go back and revise the rates if we need to," Rex said.
But that price may not be disclosed for months. Rex noted that the design-build nature of the PPEA proposal allows for the town to withhold information on the proposed costs. The town did release the range of the opened bids submitted under the request for proposals issued in the fall.
"The pricing is proprietary at this point until we get further down the process," Rex said. "Once we sign either an interim or a comprehensive agreement then we can disclose the price.
"It really depends on whether we narrow it down to one or two and then sign agreements with both to kind of go forward and study it more," Rex added. "Or, if we like one and one stands out and we're comfortable with that then we would at that point move forward, sign a contract and then that would be disclosed at that point."
The town received bids last fall to build the project. The lowest project cost of $31 million came in far higher than the $20 million given by engineers with Arcadis last spring. Town officials negotiated with the lowest bidder and reduced the estimated cost of the project to approximately $23 million, which Strasburg then would need to finance. That amount still comes in higher than what the town had used to calculate increases in the sewer rates.
The PPEA process presents new territory for the town, Rex said. Statewide use of the PPEA process to build such plant upgrades remains rare, he added. Should the town pursue a project through the PPEA route, Rex noted Strasburg would lose approximately $10 million from one financing source, but could regain that funding from another channel through the Virginia Department of Environmental Quality.
The project aims to build the necessary upgrades to meet requirements of the Chesapeake Bay Act. The town faced the challenge of having limited land available on the current site for the upgrades, Rex said. Officials saw the PPEA process as a way to invite input from interested firms that could provide solutions to the issue, Rex said.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org