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WSb Memorandum To: Honorable Mayor and City Council City of Hugo From: Mark Erichson, PE City Engineer Date: October 1, 2019 Re: Water's Edge Stormwater Reuse — Phase 2 City of Hugo, MN WSB Project No. R-013127-000 Bids have been received on the Water's Edge Phase II Water Reuse Project. Peterson Companies, Inc. submitted the only bid in the amount of $610,000. This is higher than the Engineer's Estimate of $585,000. The low interest and somewhat higher bid amount are likely due to the specialized nature of the project as well as the general low level of competition in the Z current bidding environment. Peterson Companies, Inc. is qualified in this type of specialty work, and as general contractor, performed well on Phase I of the Water's Edge Reuse project. It is recommended that the Contract be awarded to Peterson Companies, Inc. Financing for this project is somewhat unique. First, a significant grant has been obtained from Rice Creek Watershed District in the amount of $187,500. All the remaining project construction and delivery costs are being borne by the Homeowners' Associations (HOAs) that are served by N the project. Agreements spelling out the cost sharing responsibilities have been signed by the three HOAs. These 25-year agreements also spell out that the HOAs will pay for 100% of the 10 anticipated operation, maintenance, rehabilitation and electrical costs, as well as a portion of the pond cleaning costs that are anticipated sometime in the life of the 25-year agreement. The benefit to the HOAs comes in the form of cheaper irrigation costs. Comparing the amount z that would be spent on irrigation water at present day water rates over the 25-year period, the HOAs are expected to save approximately $1.4 million, even after all the construction and O&M cost participation. On the City side, there are two benefits. First there is an expected minimum of a 24 million gallons that won't be pumped from the aquifer each year. Second, the reuse system o_ "treats" stormwater, by disposing of it via the irrigation system. Therefore, this project presents Q multiple benefits to all the signatories of the agreements. W 0 In order to move forward there are two city actions needed. The Council should approve the agreements with the HOAs and authorize the Mayor to execute them. Secondly, Council should W award the contract to Peterson Companies, Inc. Taking these two steps will set the project in motion and keep it on track to have the system operational by about July 15' of 2020. K:1013127-0001Admin%Meeting1013127 MEMO recommending award of contract 100119.docx