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City votes on $36.5m treatment plant loan

Council also passes sports complex referendum ordinance

Posted: February 16, 2012 4:36 p.m.
Updated: February 17, 2012 5:00 a.m.

A unanimous vote to seek a $36.5 million loan to construct a S.C. Department of Health and Environmental Control (DHEC)-mandated wastewater treatment plant and a split vote to award a more than $34 million construction bid to build the plant were the highlights of one of the longest Camden City Council meetings on record Tuesday evening. The work session began at 5 p.m.; the regular meeting ended after 9:15 p.m.

Four council members, with Councilman Willard Polk absent, voted unanimously to take out the $36.5 million loan from the State Water Pollution Control Revolving Fund (SRF) at 2.25 percent for 20 years. If the ordinance passes on second reading in two weeks, the loan will translate into annual debt service of $2.27 million to be paid in quarterly installments. The first payment will be due Sept. 1, 2014.

“We’ve been talking about building the new plant for quite a while and in 2010 we started considering how to pay for it,” Assistant City Manager Mel Pearson told council. “Staff initially evaluated the public bond market and determined it was not favorable.”

That led to a recommendation to approach the state revolving fund authority. A public hearing was held in February 2011 to help citizens understand the need to build the 4-million-gallons-per-day plant in order to comply with DHEC and U.S. Environmental Protection Agency standards.

“We believe this is a very good deal. This was an arduous process, but we gained respect for the SRF group and, at the same time, they gained respect for our team,” Pearson said.

He explained that the loan will work on a draw-down basis, where the city will only borrow funds up to the $36.5 million limit as needed. Interest, he said, will be capitalized -- charged at the end of the loan.

Reaction from council appeared resigned.

“I guess we knew this was coming,” Councilwoman Alfred Mae Drakeford said.

“We have to do what we have to do to make this happen,” added Councilman Pat Partin, who has often criticized DHEC for its uneven handling of environmental issues in the region, but has also applauded the benefits the plant will provide. “What we have done is work very diligently over a long period of time to bring this (demand) to fruition. Not only will it benefit the city of Camden, but could expand service into the county. It will be a top-notch facility that could be a provider for (a portion) of the county, and it will help the health of the Wateree River and provide benefits for communities below us … for a reasonable cost.”

While the first reading vote on the ordinance authorizing the loan was unanimous, Partin voted against granting a $34.635 million construction bid to State Utility Contractors Inc. of Monroe, N.C. State Utility’s bid beat the second-lowest bidder -- Encore Construction Company LLC of Winter Garden, Fla. -- by $65,000. Other bidders included Wharton-Smith Inc. of Sanford, Fla.; PC Construction Company of Burlington, Vt.; T A Loving Company of Goldsboro, N.C.; and M.B. Kahn Construction Co. Inc. of Columbia.

Partin expressed great concern when Public Works Deputy Director Sam Davis revealed that once the contract with State Utility is signed, a change order will be executed that will deduct $4.635 million from the project’s cost, reducing the outlay to an even $30 million. Davis said the savings would be realized from having State Utility agreeing to eliminate or replace equipment with units the city determined were redundant or could be obtained at lower costs without affecting quality.

City Manager Kevin Bronson explained that what the city had done was, essentially, conduct most of its contract negotiations with State Utility ahead of time.

“So, the company has agreed to reduce their contract,” Partin said, “but what if they say the change order is not worth $4 million-plus?”

“That would be bad faith negotiations on their part,” Bronson replied. “Once you approve this bid -- we still have a contract to execute and will execute this (change order) as an addendum to the contract.”

Mayor Jeffrey Graham said the contract will not be signed unless the deal is “there.”

City Attorney Charles Cushman added that this is not likely to be the only change order involved in such a large project.

But Partin said he did not want to “play around” with $4 million of citizens’ money that “isn’t mine.”

“And I will tell you that staff hasn’t played around with that $4 million,” Bronson told him.

Pearson said the change order process -- even as an addendum to a new contract -- is “typical” with SRF funds.

“It is not uncommon to them, either, a change order of this magnitude,” Pearson said. “This is a good thing because we at one time thought this would be a $29 million construction process, but the bids came in much higher.”

Pearson said the city had discussed the matter with various institutions and that all had agreed this is what the city needed to do.

“The $36.5 million is available, but we’re not under obligation to draw all of that,” Bronson reminded council. “If we leave $6 million on the table, then we don’t have to pay interest on that amount.”

In fact, Pearson said, the reason the SRF is allowing the city to draw from a $36.5 million pot is to accommodate change orders that could increase the cost of constructing the plant.

“I just don’t like it,” Partin said. “You didn’t go back to the other bidders and ask ‘How can you reduce your price?’ Basically, what you’re telling us is we got this $34.6 million bid and we went back and asked ‘How much can you reduce your price?”

Partin then suggestion the project be rebid and asked how much it would cost to do so.

Davis explained that would not be feasible because of DHEC’s time table, and Graham reminded Partin that the staff worked hard to bring the bid to council.

“This process is in keeping with other bids,” Bronson said. “When we bid out for the sports complex, we negotiated with the final two bidders for the final price. When we bid on refinancing (a bond), and the bids came in … often negotiations take place with the lowest bidder only. We use (this) all the time for securing and procuring goods and services for the city of Camden. There were a lot of deliberations among engineers and staff. This was not done willy-nilly; a great deal of thought went into what can be foregone for the sake of future expansion and (yet) not compromise quality. The staff and engineers have worked months to bring this bid to you. It would likely take 90 to 120 days to rebid this and the clock is ticking with DHEC and its order.”

Partin said he disagreed with Bronson’s assessment.

“You should go to all the bidders. You didn’t do that. This is (more than) 10 percent of the construction costs. We’re in a down economy and I don’t think it’s fair to the other bidders. I’m going to vote against it,” Partin said.

Bronson came to his staff’s defense.

“This is standardized. It is not wrong. It is good and fair and straightforward. If (the bidders) have supplied all the information … we often negotiate items in or out. I don’t believe there’s anything wrong with that.

“I take offense if you’re saying staff did something inappropriate. We did everything appropriate to bring you the best bid as well as anyone could. We live this day-in and day-out so our citizens and customers get every dollar out of it we can. They have done an excellent job and I would stake my professional reputation on this,” Bronson said.

Councilman Walter Long said he was confident with the process and agreed with Bronson’s conclusions.

“I always want the staff to get the best deal for us, and I think that’s what they’ve done,” Long said.

He asked Davis if the change order to eliminate or reduce equipment costs were for items everyone involved had “agreed with across the line.” Davis confirmed that was the case.

“I didn’t mean anything personally to you or anyone on staff,” Partin said to Bronson, “but I’m 61 years old and you’re a whole lot younger than me. My father was a subcontractor and what you’re doing is what he called ‘peddling the bid.’”

At that point, Graham moved the council on to other items.

Immediately after the meeting, Partin said he used the term “peddling” incorrectly. He explained that the term means to go to the second-lowest bidder in order to negotiate a lower price than the winning, lowest bidder. Partin said that was not the case in this instance. However, he still felt staff should have gone to at least both the lowest and second-lowest bidders, if not all the bidders, in an attempt to see what final price any of the bidders could offer.

Partin said his comments were not intended to disparage Bronson or city staff.

Earlier in the meeting, Partin expressed outrage at how state and federal agencies have treated the Santee Wateree Regional Transportation Authority (SWRTA).

As she had at a recent Kershaw County Council meeting, SWRTA Executive Director Ann August made a presentation to council in which she asked the city to begin contributing to its operations. August explained that the SWRTA has provided public transportation needs to Camden and Kershaw County since 1978. For its first seven years of operation, the SWRTA requested -- and received -- local funds to match those provided by federal and state sources. Since 1985, August said, the SWRTA has not sought local matches because of the funds it received from the S.C. Department of Transportation and residuals from its Medicaid contracts.

In the recent past, Medicaid contracted with an Atlanta, Ga.-based broker to act as an intermediary with local rural transportation authorities, such as the SWRTA. In 2011, August said, a Denver, Colo.-based company underbid the contract by $50 million -- and then pulled out saying it could not afford to do business at that level in South Carolina.

August said that with the resulting reduction in Medicaid-related trips, the SWRTA has no choice but to turn to Camden and Kershaw County for a total of $118,500 in local funds.

Partin, while expressing sympathy for August’s situation, said he would likely vote against contributing any local funds under the scenario she described.

“Let me get this straight: the state is paying a third party to tell you how many (Medicaid) trips you can make?” Partin asked. “So they pay them to do that while they sit there and draw their salaries. There are two sides to every story. What is Columbia going to tell me? That you’re wasting money?” -- August assured him that would not be the case -- “This is offensive to me, asking for money from this community that has already been given to this state which they are now giving to brokers in Denver and Atlanta. We are paying over and over again and they are squeezing you.”

Also Tuesday night, council voted unanimously on first reading to place the following question on this November’s general election ballot:

“Should the City of Camden continue with plans to construct a recreation facility and partner with a third party to administer the facility?”

Council is placing the question on the November ballot in accordance with a citizens' petition. In response to a question from Long, Cushman said the question includes no reference to costs because the recently submitted petition did not include such language. Bronson said the city should have a solid estimate of the costs to build council’s proposed sports complex by the end of the month.

“So, we should have that before second reading,” Mayor Graham said. “It won’t be part of the question, but it will be out there for the public to make a sound decision.”

Long said he wanted to make sure council would not be tied to a particular cost based on voters’ decision.

“I don’t want us to be bound to do something we can’t afford to do,” Long said.

Partin asked if the question should include any mention of the city’s hospitality tax, which council originally tapped for the complex’s construction. Long said he did not think that would be appropriate at this time. The city is still dealing with a lawsuit preventing it from using any further hospitality taxes for the project.

“It’s unfortunate that we lost a $1.2 million grant and that we’re still dealing with the lawsuit,” Long said. “I do think this step today resolves some issues for those who truly wanted a referendum (for) citizens of Camden to vote on. Going through this process has put recreational needs in Camden and Kershaw County on the front burner.”

Long said that as painful as that process was, he hopes all citizens of Camden will educate themselves before going to the polls in November.

Following an executive session at the end of the meeting, Cushman said that, based on case law, he believed a court would strike down wording in the citizens’ petition asking for the creation of a committee to determine alternatives to council’s proposal. That, he said, was why he did not craft the ballot question to include that request.

“We need a court to tell us that. If the court does tell us that, we may need to amend the question on the ballot (before) November, but we need to make certain the question to voters can stand up to any legal question,” Cushman said.

In other business:

• Council voted unanimously on first reading to change its meeting times so that both its regular meetings -- on the second and fourth Tuesdays of each month -- will be held at 6:30 p.m. If passed on second reading at council’s next meeting, the change will take effect in March, with council still holding its Feb. 28 meeting at the original 8:30 a.m. time. With the change, council will also revert to holding two work sessions each month. Each session will be held immediately prior to each Tuesday night meeting, from 4:30 to 6:15 p.m. and provide for a 15-minute break between the work session and regular meeting. Council also decided to cancel its March 13 meeting because two council members will not be present. Council will meet only one time that month, March 27.

• Council unanimously passed a resolution authorizing the use of $158,402 in matching funds for a $500,000 Village Renaissance Community Development Block Grant for the second phase of an ongoing project. Among other things, the total funds will be used to rehabilitate manholes and/or sewer lines along portions of Lyttleton and King streets and Savage Avenue; replace a sidewalk on Market Street; install new sidewalks on another portion of Market Street, as well as King and York streets; and repave Lyttleton Street between Rutledge and King streets.

• Historic Camden Executive Director Joanna Craig spoke during public forum, thanking council for working with the county to form a joint tourism department. Craig also announced a public tour of the Battle of Camden site on Flat Rock Road set for March 11 at 3 p.m. She said the National Park Service (NPS) is still conducting its special resources study to determine if Historic Camden and the battle site should be combined into a joint 582-acre NPS unit. Later in the meeting, council unanimously passed a joint resolution supporting that effort.

• Council unanimously resolved to approve the $498,978 lease-purchase of a new Pierce Sabre Fire Truck. TD Bank will service the lease-purchase at a 2.2545 percent interest rate for 10 years. The new truck replaces a decades-old unit at the Camden Fire Department.

• Council unanimously passed a resolution allowing the Hobkirk’s Hill Society to consume wine and beer during its annual meeting at the Camden Archives and Museum between 4 and 6 p.m. April 22.

• Council unanimously resolved to adopt its strategic plan developed during a recent retreat at Carolina Motorsports Park (see accompanying sidebar on this page).

• Council unanimously approved a façade grant of $212.37 in matching city of Camden funds for a $424.74 project at Flowers Naturally on Broad Street.

• Council unanimously proclaimed February as Black History Month.

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