By Gari Voss
The Allegan City Council held a special meeting on Thursday, August 11, 2022 to examine two significant monetary proposals. The first involved the approval of the Lead Replacement Program, and the other was the approval of Streetscape, or the Downtown Allegan Infrastructure Project.
The approval of Resolution 22.33 would authorize the issuance of 2022 water supply system junior lien revenue bonds totaling $3,200,000. This would assist in funding a portion of the lead service line replacement program across the city.
Water Utilities Director Doug Sweeris reviewed the process for bond application to receive forgiveness by the State. “The City applied for Clean Water State Revolving Funds (CWSRF), specifically Booker Funds, to replace service lines. As the City pays bills, the State forgives those costs up to $3 million. The request for $3.2 million covers any possible overages. But, the Booker Funds do not cover engineering.”
Sweeris went on to remind the Council of Abonmarche’s roll in assisting with applications and bid specs. About 1/3 of the project ($1 million) covers contractors responsible for longer services and street repair. City workers would replace the water mains to the curb stop or right of way area into the building or structure with $2 million of Booker Funds. These moneys would be for the 2023 and 2024 construction years.
City Manager Joel Dye reiterated that the replacement of lead service lines is required by State Law. The ability to purchase bonds with 100% forgivable Booker Funds is a great “win” when replacing the 1,400 lines.
The lines already replaced and the engineering costs to Abonmarche have been paid through fund balance. Sweeris does not foresee going into the $200,000.
After approving Resolution 22.33, the Council was able to approve Resolution 22.34 that “tentatively” accepted the Milbocker and Sons bid for construction of the drinking water system improvements in the amount of $1,321,714.90.
The Council moved on to examine Resolutions 22.35, 22.36 and 22.37. As with 22.32 and 22.33, these Resolutions piggyback on each other.
At the regular council meeting on Monday, August 8, 2022, the total cost for Streetscape, or the Downtown Infrastructure Project, came in at over $10 million, which was about $2.5 million over engineering estimates.
After the meeting, City Manager Joel Dye, Financial Director Tracy Stull, Water Utilities Director Doug Sweeris and key leaders began scrutinizing expenditures and income for the project.
Dye reiterating that the Downtown vision is “Downtown Allegan is committed to creating a well-designed place where the community comes together and fosters the local economy.”
To achieve this vision the City has been able to complete a number of key projects – reconstructing the Cutler Street Parking Lot, Renovating and expanding the District Library, adding the canoe/kayak launch, installing the community fireplace and Perrigo Plaza Splash Pad, building the performance stage, adding public art, and rehabilitating the 2nd Street Bridge. These are considered key investments.
The “Investment begets investment” mantra in City Hall reminds staff that progress has been made with 20 new businesses and 17 new 2nd story lofts, plus the city has invested over $8 million in downtown.
The Streetscape Project includes Hubbard Street from Walnut Street (the Civic Center) east to the beginning of the business district to Water Street. The Business District converges at the intersection of Hubbard, Brady and Locust Streets.
The $10 million in expenditures encompass a complete infrastructure overhaul. Design Engineering Fees of $278,000 and Construction Engineering Fees of $469,000 are expenses accrued in the planning phase that was accomplished before the City could begin applying for numerous grants to assist with the project.
A huge portion of the project requires going underground. Most of the water, sewage and electric infrastructure lie below ground level. Though not visible to the naked eye, the network is “elderly” and in places needs to be moved from the current paths. The Water Utilities and Associated Work of $2,646,325.73, Sewer Utilities and Associated Work of $2,211,098.12, and Road Work of $2,488,738.25 not covered by Water or Sewer funds.
The cosmetic portion of the project is the Streetscape Work. This includes the surface work, that residents and visitors to the city will enjoy.
Dye presented three options: 1. Proceed with the full project as envisioned and planned; 2. Complete a “surface only” project to accomplish some of the original goals; 3. Postpone the project.
Option 1
Worst scenario would be $10,068,862.96 which includes a 20% contingency. The project would address deficiencies in Downtown.
The proposed funding of the project would be:
$1,904,336.12 in cash
$3,401,493.61 in grants and outside funding
$4,763,033.23 in bonds that will not require increasing water rates
If the project is not completed, this could impact the Hubbard Street/M-89/M-40 roundabout and the small urban grants affecting other streets. Over 5 years, the water fund would average $558,295 and the sewer fund $2,035,000. The general fund balance would drop to $1.7 million.
Currently, the City has $3,333,817 in General and Street Fund Balances. $1.5 million would be transferred to Streetscape leaving $1,833,817. Factoring in awarded grants, an estimated annual bond payment would be $356,000 considering CWSRF bonds for 20 years and GOLT bonds for 15 years.
Option 2
Option 2 addresses surface only improvements. The most expended would be $6,600,000 but would not be best management practices or replace 80-year-old water and sewer mains. The funding would be:
$1,650,000 in cash
$2,526,000 in grants and outside funding
$2,424,000 in bonds paid from general fund
The project would be rebid. City staff would replace 60-65 Downtown lead service lines. The water and sewer rates would not be impacted.
The general fund balance would go from $2.75 million to $2.1 million with an estimated annual bond payment of $207,482 for 15 years.
The downside would be that $250,000 in Federal set aside could be lost. The forgiveness through the CWSFR program would not happen. In the years to come, the roads and sidewalks would be affected as water and sewer lines are repaired and/or replaced.
Option 3.
There will be ongoing maintenance, all outside funding would be lost, the new roundabout would empty onto an unimproved downtown, and there would be bonding required when utilities require replacing.
After questions and discussion by Council, the audience representing business owners plus additional residents expressed overwhelming support for Option 1. “Do the project correctly rather than kicking the can down the road” was repeated.
The Council approved Option 1 and Resolution 22.35 to approve the Downtown Infrastructure Funding Program passed.
The approval of Resolution 22.35 led to the approval of 22.36 to authorize issuance of 2022 sanitary sewer system junior lien revenue bonds in the amount of $2,120,000 to replace sewer mains in Downtown Allegan as part of the Downtown Infrastructure Program.
The Council then approved 22.37, the “tentative award” of a construction contract to Milbocker and Sons, INC. for wastewater system improvements to the city’s existing water and wastewater system, roads, sidewalks, and streetscape amenities in Downtown Allegan.
By addressing the Water and Sewer Bonds along with Streetscape, the City of Allegan should come close to hitting the requirement to replace lead and galvanized water lines while providing a new, inviting look to the city’s Downtown District.