Shocked by the steep cost increase of its planned new sewer plant–a certain precursor of sharp rate increases–the Flagler Beach City Commission Thursday voted unanimously to table approval of a $47 million loan to finance the project until commissioners can question the design, explore potential cost savings, and possibly rebid the project.
The project has been on the drawing board for over six years, crossing the desks of three city managers. The city is facing a 2032 deadline to have it done.
With that in mind, the administration had received two bids and was ready to award the contract, pending the commission’s approval of the loan this week. The sticker price caused a little effluence in the commission chamber.
It would have been the commission’s third loan approval since 2019. Commissioners had already approved two much lower loans. On Thursday, commissioners were under the impression that the project’s costs had increased from $18 million to the current $46.3 million, which would be a 157 percent increase.
In fact, when the commission first examined blueprints in 2019, the cost was $11 million. So the cost increase in six years is 321 percent. Either intentionally or preferably, no one’s memory went back that far. That loan will have to be repaid by rate-payers, since development impact fees will not account for a sizeable portion, though the breakdown between impact fees and utility rates is unclear, and was not part of the commissioners’ documented information. Nor did commissioners question the administration about future rates, though that, in the end, is the most salient question for residents.
“It’s a statewide, system-wide increase in costs that we all have to deal with,” City Manager Dale Martin said, citing increases in Apopka and Bunnell. He might have also cited ballooning costs in Palm Coast as that city upgrades its oldest sewer plant and just finished expanding one of its sewer plants.
“In a vacuum, when you look at a cost increase from $15 to $18 million to 46 million, it may seem as a shocking increase,” Commissioner Scott Spradley said. “But I know, just in my law practice, I represent a lot of developers and others in the construction industry. And it is shocking how the Covid economy has affected the cost, and a number of businesses I work with have gone out of business for that very reason. Raw materials, labor. So while it’s disappointing that it’s this high, it did go out to bid, and I’m not shocked. It’s just disappointing, but that just is kind of a fact of life these days.”
In Palm Coast, a 2-million-gallon-per-day capacity expansion to Wastewater Treatment #2 was presented to the City Council in January 2020, the project was billed at $20 million, with a completion date of November 2022. It was only completed in August, at a cost of $30.9 million, a 54 percent increase.
Commissioners Eric Cooley, Rick Belhumeur and John Cunningham took a more jaundiced view than Spradley, while Commission Chair James Sherman was on the verge of anger over the cost.
“I’m going to keep my composure right now,” Sherman said. “I want to use a lot of different words that I wouldn’t say up here, but this is ridiculous.” He could not see why the project has been delayed so many years. “I have no more patience. I would have expected this being near completion, how much we talked about it. I know you inherited this. You inherited this. Shame on our previous city manager. But this is unacceptable.” He said the city was being “bullied” into the $46 million bid.
Cooley wants the project to go forward, as do all his colleagues. He’s been wanting it to go forward for years. But he had a problem with the information before him. He said he didn’t know what the bid was based on and what he was being asked to pay for. “I have a huge issue with agenda items not being transparent and us not getting information. I have a massive problem with it,” Cooley said. “We’re approving a $46 million project, and we don’t even know what the thing looks like. We don’t know where it’s going. We don’t know what it has. We don’t know a thing about it. We are approving a $46 million concept, but the people who are constructing it, they know what they’re bidding on. We don’t know what we’re approving.”
Cooley took issue with the fact that the contractor knew more about the $46 million appropriation than the commission making the appropriation. “I cannot believe that you put something in front of us for $46 million and didn’t even let us see it,” he said, addressing the administration. He wanted to see the specifics of cost increases. Otherwise, “this has thrown up a lot of red flags for me.”
Martin, the city manager, clearly took umbrage at comments directed at his administration and fired back, saying the bid was outlined on a specific page before the commissioners. (The bid package itself is 2,557 pages.) He said the site plan will tell the commission little more than where the sewer plant is going to go. It’s going in the same location as the current sewer plant off Avenue A on the mainland of Flagler Beach. “If you want us to throw it out and rebid it, we can’t value engineer it until we have a contract,” Martin said. “So I guess we’re at a loss of how do you want us to bring it forward to you.” Rebidding would take four months, the city engineer said.
“If your pleasure is to rebid, we’ll rebid,” Martin said.
Cooley said the commission could figure out collectively with engineers how the plant is going to work, what it is going to cost, and what functionalities could be changed perhaps to lower the cost. He favored a future “discussion on different concepts of how this works.”
“You say the cost being so much more is because of Covid. That’s a 170 percent hike in cost,” Belhumeur said, addressing the manager and City Engineer Bill Freeman. “I don’t know that the Covid caused anything to go up that much in cost.” It did not. Covid is among the factors. But costs have continued to rise well after the pandemic subsided.
Specifically: In 2019, the City Commission reviewed blueprints for the new sewer plant that put the cost at $11 million. In June 2021, the City Commission voted to borrow $15 million for the sewer plant.
In December 2021, well after Covid had crested, the commission approved a $17.6 million loan secured through the Department of Environmental Protection’s State Revolving Fund. The cost had increased 17 percent in just six months, and 60 percent since 2019. It didn’t stop there, continuing to rise to the current $46.3 million, as the Trump administration’s tariffs have added yet another tax on raw materials.
The largest portion of that increase ballooned after Covid, adding an additional 163 percent increase. That’s how the project has seen its cost increase 320 percent in six years. It won’t end there: further cost increases are almost certain.
“Personally, I wouldn’t be against rebidding it. It might go down significantly,” Commissioner Cunningham said, before adding a shockingly false aside: “I mean, Covid was never really a real thing anyway, except made [all] prices go up.”
By every accepted standard and official measure, Covid is responsible for 1.2 million deaths in the United States since 2020, and 7 million deaths worldwide, though Covid deniers, like Holocaust deniers or climate change deniers, are not few. In Flagler County, no elected official has made comments to that effect since former School Board member Janet McDonald did on and off her public seat, though even McDonald did not outright deny the existence of Covid. She especially disputed how to combat it.
It’s not clear whether there will be a rebid. What’s clearer is that the commission will attempt to become more comfortable with the latest cost, and perhaps lower it by eliminating certain functions, though that’s not likely. With every passing week, costs may yet increase further.
The plant was built in 1987. It still filters some waste through drying beds. It processes about 700,000 gallons per day, with a future obligation–to Veranda Bay/Summertown–of 272,000 gallons a day, and more in the future. The plant is to expand capacity to 1.5 million gallons per day, with an option for 2 million.
State law requires local utilities to have so-called “advanced water treatment facilities,” which significantly lower contaminants in effluent from current standards. It’s an expensive upgrade, and though the state is making it mandatory, the state is not funding it. The city is also under a state mandate to stop dumping effluent in the Intracoastal Waterway by 2032 (the date has been reset over the years).
The old plant will keep operating until the new plant is done. Belhumeur complained that the site plan for the new plant was late to reach the commissioners.
The city was prepared to award the $46.3 million bid to L7 Construction.
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