ELGIN – Elgin is moving quickly to replace its east water well, which became unusable earlier this year, and seek a commercial loan for the project.
The Elgin Public Works Authority, which is made up of the five Elgin City Council members, voted 5-0 Aug. 13 to issue a $1.08 million note to finance the project. The board also waived competitive bidding for the note, which is secured by utility system and sales tax revenue, and authorized its sale on a negotiated basis.
The council approved the authority’s action, as required by state law, in a separate meeting.
State law requires public trusts to follow the competitive- bidding process for projects financed with general obligation bonds, said Nathan Ellis, an attorney with the Oklahoma City-based Public Finance Law Group. However, he said, a public trust may waive that requirement with a three-fourths majority vote and authorize the sale of the note on a negotiated basis.
Ellis said the city does not have time to assemble a fullblown bid package for interested banks, send it to the banks and give them time to submit bids.
“We’re trying to compress the time frame,” he said. “And so, this puts us in a position that we can potentially get an answer as soon as possible.” Replacing the well Flow rates in Elgin's east well started fluctuating earlier this year, and the city hired a contractor to rehabilitate the well, according to an Aug. 6 letter from Public Works Director Keba Hendrix and Fire Chief Mike Baker. The contractor began working on the well in May.
“During that process, the interior of the well casing filled with the gravel pack due to a failure of the casing and/or well screens, making the well unusable,” Hendrix and Baker wrote. “Without this well in service, the city is in an emergency situation.”
They said if one of the city’s remaining wells failed or a major fire broke out, the city would not have enough water pressure to meet residents’ needs or provide adequate fire protection.
In July, city officials declared an emergency and curtailed water usage by restricting outside watering and closing the splash pad park, Hendrix and Baker wrote. They said the city’s only other option for boosting the water supply was drilling a new well adjacent to the east well.
“An engineer was hired, and plans have been prepared for the East Well Replacement Project including submittal of the plans to Oklahoma Department of Environmental Quality for a construction permit,” Hendrix and Baker wrote. “Funding for this project is critical to reestablish adequate water supply capacity for the city.”
The council discussed the situation at an Aug. 8 special meeting and declared an emergency stemming from the failure of the east well. The declaration allowed the council to waive competitive-bidding requirements for constructing a new well, which was separate from the process for seeking bids on the financial instrument used to fund the project.
Under state law, Elgin must seek competitive bids for construction projects that are expected to cost more than $100,000, said Mayor JJ Francais. However, he said, the council may set that requirement aside as long as threefourths of the board members vote to do so.
Francais said he had consulted the State Auditor and Inspector’s Office, as well as the city’s bond counsel and several other entities, about waiving competitive-bidding requirements in this case.
“The universal advice is if you do that, try, try your absolute best to protect every public dollar possible,” he said.
City officials sought multiple quotes from reputable contractors who have worked on similar projects in the past, Francais said.
“We have been as open and transparent as we can,” he said. “The reason we are waiving competitive bidding is so that we can move faster and ensure the health and safety of our residents.”
The council voted at the same meeting to accept quotes for the project from Charlie’s Backhoe, which will perform general construction- related tasks, and Slattery Construction, which will drill the well. The project will cost about $794,661 unless Slattery discovers it needs to drill up to 200 additional feet further to find suitable water.
The city will pay an additional $134,000 if Slattery has to drill further down, which would boost the total cost to $928,661.
The contractors have 120 days to complete the project. If they finish earlier than they expected, they will receive an incentive of $1,000 for every day they are ahead of schedule, with a maximum incentive of $60,000. Project financing The city will seek a commercial loan to finance the well replacement project, Francais said.
“We have determined that a commercial loan is the best way to go, and we can try to wrap it into a bigger loan in the future,” he said.
Francais said city officials are hoping to obtain a fully prepayable loan, which would allow the city to pay off the loan ahead of schedule without incurring a penalty.