To shave costs on construction of Chickasha’s new multimillion-dollar water treatment plant, the City of Chickasha will join the Chickasha Municipal Authority as a contracting party on the project.
The engineering firm on the water plant project, Freese and Nichols, “has advised that bids for comparable projects have shown significant price increases, and that construction bids” for the plant “will likely exceed preliminary estimates,” City Manager Jim Crosby informed the City Council in a Dec. 4 letter.
F&N’s latest construction cost estimate was $69 million, the city manager said.
Because the City retains ownership of all utility facilities and the CMA serves as the financing entity under existing agreements, both are proper contracting parties for the water plant project, Crosby related.
The state’s Public Competitive Bidding Act authorizes the governing body of a political subdivision to appoint a particular entity to make purchases necessary to fulfill a contract. This provision will allow the acquisition of materials and supplies for the water treatment plant to be exempt from sales taxes.
In accordance with that statute, the City of Chickasha qualifies for the tax exemption but the CMA, a public trust, does not, Crosby explained.
Consequently, during a Dec. 8 special meeting the City Council authorized construction bids for the new water treatment plant to be solicited under the city’s name. “The bid will mirror the one issued by the CMA,” Crosby wrote.
Freese and Nichols completed the final design of the new facility and submitted the plans to the state Department of Environmental Quality “right after July 4,” Clay Herndon, F&N’s project manager on Chickasha’s water plant project, told city officials on July 21.
The CMA received authorization Oct. 20 from the DEQ for five variances, and Crosby began advertising for bids on the project for six weeks. However, the bid opening date has now been pushed back almost a month: from Dec. 10 to Jan. 6 at 1:30 p.m.
The Oklahoma Water Resources Board approved a 30-year, $67,660,000 loan in 2023 to finance Chickasha’s new water plant.
The City of Chickasha’s tax-exempt status may save the city “several million dollars” on the project, Crosby said.
The city manager said most of the material and equipment for the project will be acquired outside of Oklahoma, “which should save us several million dollars in taxes.” The sales tax rate in Chickasha is 9.5 cents per dollar: 4.5% state sales tax, 4.25% Chickasha sales tax rate, and 0.75% Grady County sales tax rate.
The new treatment plant reportedly is expected to be “substantially” complete and operational on or before 700 days after the contractor receives a notice to proceed.
Chickasha residents approved a permanent 1.25% sales tax on Aug. 8, 2023, to retire the water plant debt and finance other capital improvements; the levy went into effect Jan. 1, 2024. The 1.25% rate replaced a Capital Improvements Program sales tax of three-fourths of a penny that expired at midnight Dec. 31, 2023.