Cost of sewer extension south of town grows

     Since last spring and summer, the City of Monticello has been working with Roger Stephen and Tyler and Jayme Freye to extend the city’s sewer services to those properties along S. Main Street/Business Highway 151 South.

   As plans have been in the works and engineers have been working their magic, it seems the costs have skyrocketed.

   “The scope of the project itself has changed to a degree,” warned City Administrator Russ Farnum.

   During the April 21 Monticello City Council meeting, Farnum updated the council on the latest with the project.

   The city has not only been working with its own engineers, Snyder & Associates, on the project, but MMS Consultants Inc., engineers hired by Stephen.

   The goal is to not only serve the commercial and future residential properties on the left (east) side of S. Main, but those on the west side, too.

   In July 2024, construction estimates to provide city sewer service to that area were around $350,000. This only included construction costs, not engineering, inspection, bonding, etc. After council input, the city started exploring offering sewer services beyond just the newly developed properties on the east side.

   The plans call for the sewer to serve 48 future residential lots, seven commercial lots, and seven possible multi-family lots of Stephen’s property. In addition, it would serve another 154 acres on the west side of S. Main. Considering both sides of the roadway, it would serve a total of 248 acres.

   “We have three future commercial/industrial lots we'll be able to serve right away,” noted Farnum. “In addition to that, Tri County Propane, Welter's existing buildings, Culligan, Freedom Auto, Oak Street Logistics, three multi-family lots, 39 single-family lots, plus Roger's campgrounds are all going to be hooked up. So right out of the gate, we have a lot of potential benefit to the users and the buildable lots in that area.”

   The project now stands between $1.2 and $1.9 million. The $1.2 million does not include engineering, inspection, etc.

   “If the project costs were to go over $1.9 million, we can’t borrow any more than $1.9,” Farnum said.

   Additional costs, included in the $1.9, have to do with bond counsel and legal fees at $150,000, financial advisor fee at $15,000, closing costs and bank fees at $50,000, engineering and inspection at $100,000, etc.

   “Our actual bonding amount is going to be a little over $1.5 million probably, right at $1.6 million,” Farnum thought.

   “What was the trigger that caused this project to double?” inquired Council member Mary Phelan. “First we were talking $350,000. Then it went up to about $1 million. Now it’s $2 million.”

   Farnum said it was the decision to serve more than just Stephen’s property.

   Phelan asked if the sewer project could be done in phases.

   “The best way I would say to build it in phases would be to not build it across the highway (to the west),” suggested Farnum. “That’s only going to save us $100,000.”

   “If nobody is intending to do something with it right away, maybe we don’t need to do that step,” added Council member Dave Goedken of extending it to the west.

   Farnum said if the contractor is already digging a 14-foot-deep trench for the service line, they may as well keep going.

   “You might as well extend that pipe out to where the lots are going to be because the expensive part is digging that trench,” explained Farnum. “Part of the expense is trench backfill because the soils are awful. You have to backfill it with crushed rock so you can have structural support for your future roadway.

   “It would break gravity right behind Kromminga’s (Motors),” continued Farnum. “At that point, it makes more sense to send the sewer south because that’s downhill from there, rather than trying to provide a future lift station or pumping in the future, which we do not want to do. So that’s part of what contributed to all the additional costs. It’s a difference between digging a hole 8 feet deep and 14 feet deep.”

   Council member Scott Brighton was on board taking the sewer extension across S. Main to warn those property owners of the city’s intention to annex that area in the future.

   “There are users, like Kromminga’s, who would want sewer today,” Farnum said.

   “I’m not saying I’m against this,” offered Phelan, “it’s just that it has morphed into something completely different.”

   Farnum said he understood where Phelan was coming from.

   “It’s all based on what we wanted to do, which is not build the pipe twice,” he said.

   Goedken asked how the project would be funded.

   Farnum said ideally, he’d like to see this property added to the city’s Urban Renewal Plan as TIF property, “as well as any of the surrounding land that we annex that wants to hook up to sewer.” That way, the TIF increments could be used to pay off the sewer bonds rather than property taxes.

   “The TIF is property tax that's generated specific to that geographic area that's benefiting from the sewer,” added Farnum. “So the people using it have to pay a little extra taxes to have the benefit of that sewer there versus all of the taxpayers in Monticello.”

   They could also establish a sewer connection fee district that just encompasses this specific geographic area where sewer connection fees would be higher to help pay back the bond.

   Farnum is estimating a five-to-seven-year term on paying off the bond.

   Brighton voiced that he’s not against new properties paying more to hook up, “but I think charging any of the businesses a hook-up fee after they've already paid for a septic, I don't think that's ok.”

   “But everybody who hooks on pays an impact fee,” noted Goedken.

   Brighton also sought clarification as to how soon Farnum thought Stephen would start developing the residential lots on his property.

   “We're talking five to seven years payback; will we be recouping some of our money there?” he asked.

   “I would hope to see that, yes,” answered Farnum. “I believe he is willing to let go of some land, yes.”

   Related to this discussion, the council approved a resolution noting the city’s intent to bond for the project.

   The council also approved a payment of $61,000 to MMS Consultants for their work thus far associated with assisting the city.

   “They did so much work helping us out in planning to make sure that this serves more than just Roger's property,” praised Farnum. “I think it's fair that we should reimburse (them).”