Rehoboth has finished construction of its wastewater outfall, but with millions of dollars’ worth of capital improvements associated with the project still to complete, now isn’t the time to relax.
During a special meeting June 4 with Sussex County officials and representatives from project engineers GHD, city commissioners began discussing how the town should move forward with those capital improvement projects.
According to a presentation by GHD’s Kelvin George and Sussex County Engineer Hans Medlarz, there are about $5.6 million worth of improvements that fall under the category of critical. Those include $4 million to replace existing switchgear and $1.6 million for structural improvements.
George said the existing switchgears for the city’s wastewater treatment facility are operating on borrowed time, and it is absolutely necessary for them to be fixed. He said the city waited to take action on these two items because officials wanted to make sure there was enough money to pay for the outfall.
It appears the city has crossed that hurdle. George said the city has used approximately $42 million of the $52.5 million voters approved in a referendum. He said the amount of money used includes roughly $2 million worth of contractor-requested change orders, but those haven’t been approved by the city. If the contractor has to pay for those change orders, the amount left for capital improvements could increase to about $12 million.
As a bit of a surprise to some of the commissioners, Medlarz said the county was prepared to put on hold engineering for $10 million worth of electrical upgrades to its wastewater treatment facility in Bethany Beach so the city and the county could partner to get a better price on construction. He said the county also uses GHD, and it was about 90 percent done with engineering work associated with the Bethany project.
As part of the proposal, Medlarz said the county was willing to fund the city’s portion of the project through a 10-year loan with zero percent interest.
The city’s $52.5 million referendum is in the form of two state revolving fund loans – one for $40.5 million with a 25-year payment term, and one for $12 million with a 20-year payment term. Each has a 2 percent interest rate.
Mayor Paul Kuhns said in a June 6 email he thought the offer by the county was generous. The county uses 42 percent of the city’s system, and this proposal shows county officials want to have the best equipment and cost savings for constituents, he said.
Kuhns said the commissioners are moving forward with the design phase for the $5.6 million worth of capital improvements; however, he said, the funding source has yet to be determined.
“The city is always interested in providing the best services to its constituents,” he said.
Sussex County Administrator Todd Lawson said June 7 the county sees the opportunity for a mutual benefit. For the county, he said he thinks there will be better pricing if a contractor bids on two projects. For the city, he continued, there’s a zero-interest loan, and because the county would be paying for it, the city wouldn’t have to pay prevailing wage as it would if it used the state loan.
During the meeting, Medlarz said that could mean an hourly wage paid could be cut in half – from about $70 an hour at prevailing wage to $35 an hour. He estimated, at prevailing wage, half of the $5.6 million would be labor.
Lawson said the decision is totally up to the city, but if city officials choose to move forward with the use of state funds, there would be no partnership on this project.
City Manager Sharon Lynn said June 6 the city would most likely wait until a rate study looking into user rates for the wastewater treatment facility was completed before any decision was made on whether the city would partner with the county. She said there was no indication of how much rates will increase, and she was hoping the study would be done by the end of June.