About the Author
Mike Kanin is the Publisher of the Austin Monitor. As such, he doesn't report on much--aside from the workings of the Monitor--any more. In his previous life as a freelance journalist, Kanin has written for the Washington City Paper, the Washington Post's Express, the Boston Herald, Boston's Weekly Dig, the Austin Chronicle, and the Texas Observer.
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City releases cost analysis on delayed completion of WTP4 project
Monday, August 29, 2011 by Michael Kanin
The release last Friday of the much-anticipated cost analysis of proposed construction delays on the Water Treatment Plant 4 project could end the debate, but more likely it will serve to elevate the discussion to an even higher decibel level.
The report, which examines both five and ten-year delays, laid out just how much it could cost the city should it decide to mothball the project, and complete it at a future date. In the report, consultant Camp Dresser McKee (CDM) put the direct impact of pushing completion of the effort to 2019 at $138 million. Should the Council elect to delay completion until 2024, CDM estimates that it would cost taxpayers an extra $206 million. WTP4 is currently set to be completed by 2014.
Council members requested the report under pressure from a coalition of environmental groups, Including the Save Our Springs Alliance and Sierra Club, who claim the project is not currently needed and the money for it would be better spent on water conservation measures.
The CDM report’s figures would put the total completion amount at $645 million for 2019 and $714 million for 2024.
However, CDM suggested that there would be costs beyond those associated with stopping, restarting, protecting, and legally settling outstanding issues with the site. The firm suggested that interim operational and infrastructure costs—specifically, the construction of an additional pump station and transmission lines—would add $115 million to the 2019 price tag and $280 million to the 2024 total.
If correct, those figures would bring the grand total for completion of the plant after a five-year delay to $760 million. A 10-year wait could spell costs that would approach $1 billion. If completed on schedule in 2014, the plant is expected to cost roughly $500 million.
Council Member Bill Spelman‘s office issued a statement late Friday: “This afternoon we received the documents regarding the cost estimate for postponement of Water Treatment Plant 4,” it read. “Last week, the Audit and Finance Committee requested formally that the City Auditor review the documents once we received them. I have also begun to review the documents myself, but will not be making any comments on the materials until I have had more time to review them, and have heard back from the City Auditor.”
Spelman played a key role in requesting both the analysis and the auditor’s involvement in the process.
In addition to the cost analysis, city staff posted three other documents associated with the construction of the plant on the city’s web site. These included a look at the impact a delay in construction might have on the city’s water and wastewater bonds, a study of the costs associated with raising the water utility’s use of reclaimed water by 20 percent, and a memo summarizing the package from City Manager Marc Ott.
The bond letter detailed an oft-repeated concern on the part of the city’s bond advisor Bill Newman. “In my opinion, the rating agencies…will view the delay or abandonment of Water Treatment #4 as a direct contradiction by staff and outside engineers defining the need for the new facility,” he wrote.
Newman argued that a delay would likely cause “a change from stable to negative” in the city’s water and wastewater bonds, a move that would “likely” cost Austin taxpayers higher interest rates in future bond issuances.
Mayor Pro Tem Sheryl Cole requested the reclamation study since several environmentalists have suggested that additional use of reclaimed water would be preferable to building a new plant. CDM concluded that it would cost the city $249 million over the next five years to increase its reclaimed water capacity by 20 percent.
Council Member Mike
Spelman told In Fact Daily on Sunday that he is “almost certain” that Council members will “have more information” from the City Auditor by this Friday. He pointed out that, though it may be incomplete, he expects to see vetting of “the biggest numbers.” Those figures, he said, might be enough to sway his vote if proven accurate.
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