City also awaits USDA’s decision on additional funding for over-budget project
BY MARK J. CRAWFORD
Telegraph Editor
STARKE — The city of Starke is issuing an invitation for banks to bid on interim financing — a nearly $10.7 million loan to help fund the construction of an upgraded wastewater treatment plant.
USDA awarded the city a $9.63 million grant and $10.68 million loan to fund planning and construction. However, the city must “carry the debt” until the project’s completion — an approximately 24-month period. Starke’s attorney, Clay Martin said at that time the bank loan will be repaid and the debt converted to USDA backed bonds.
The city has delayed awarding the construction contract. Instead, the commission approved an intent to award the project to the low bidder while engineers from Woodward and Curan try drumming up additional funding from USDA. That’s because the low bid for construction alone came in at more than $23 million. That is on top of the millions of dollars that are going into planning and design.
This overrun was foretold back in 2020 when Justin deMello from Woodward and Curan informed the commission that preliminary engineering performed by another company underestimated the cost of planning and constructing a new plant. Previously estimated at $16 million from start to finish, the actual cost could have been closer to $30 million.
Even with Woodward and Curan’s work on scaling back the project, engineers approached USDA with a project that was awarded $20.3 million in combined grant and loan funds.
According to deMello, the construction bid leaves a difference of $6.72 million.
After reviewing the bid, USDA informed Woodward and Curan that it did not have funds available be to make up the difference — at least not in the current budget. There is a chance that money not spent on projects this year could be reassigned to the city of Starke, or USDA could work the funding into next year’s budget.
The city received two bids for construction, $23.36 million and $26.94 million — a big difference — and Woodward and Curan have moved discussions forward with the low bidder, PWC Joint Venture. However, given the funding shortage, the city stopped short of awarding the project. Instead, an intent to award notice has been issued in order to lock in the low bid, which would have expired before the funding issue is resolved.
It remains to be seen how the additional construction cost will impact customer rates. Rate have already risen to ensure the city will be able to repay USDA. The agency previously evaluated the city’s “affordability rate” and determined it cannot repay more than $10.68 million without charging even more.
For that reason, deMello said USDA is scrambling for additional grant funds. He said the city should know more by early November.
In the meantime, talk has shifted to moving on with construction in two phases. That would allow the city to begin spending the money it has while giving USDA time to produce additional funding.
DeMello said USDA has made a major funding commitment to the city and wants to see the project through to completion.
“We hope that within the next month this becomes a nonissue.,” he said. “If it doesn’t, rest assured that I’ll be back here talking about plans B and C that we have lined up.”
