A Long Road
Just over a year ago I posted a blog on the continuing challenge to replace our two 30-year old wastewater treatment facilities. In my last update on this issue (posted on February 6, 2018), I reported that when we opened the bids at our February 6, 2018 meeting, the low bid was an astonishing $17,538,000!
I may have been a freshman councilman back then, but it was clear this was more much more than the city could afford. I made the motion to reject all bids, and it passed unanimously by the four councilmen eligible to vote (One of our councilmen, who works for one of the bidding contractors, abstained because of the conflict of interest). It was clear that I was not the only councilman with reservations about the cost of the project and whether this solution was the best one for Lyons.
Back to the Drawing Board
I was “all aboard” when the City Manager suggested a different approach …
“Design Build” (DB). I won’t repeat my post of a year ago (you can read it earlier in this blog), but essentially, the approach does not start with our paying an engineer to design a system ahead of time and asking companies to bid on that engineer’s design. Instead, it asks companies to submit their own designs for a facility that will meet our needs. Let them tweak their existing engineering designs, in other words, that they had already successfully applied to sewage systems they had built for other cities. There is no use paying to reinventing the wheel, right?
Round Two Also Fails
The DB approach did not go well either. After the entire Council eagerly agreed to the DB approach, the Mayor directed the City Manager to hire a consultant to draft up a new “Request for Proposals” (RFP). Unfortunately, when the consultant drew up the RFP, he added two minimum requirements without first getting the full consensus of Council, to wit:
- The total treatment capacity was to be increased from our present 1.5 million gallons per day (MGD) to 2.17 MGD.
- The total budget for the project was to be $12,500,000.
There were several Councilmen, including myself, who knew nothing about these two new requirements and were unwilling to support either, thus, it was no surprise when the four DB Team proposals were read at the Workshop held on January 2, 2019, that none garnered enough support to secure a majority favorable vote at the next Council meeting.
So, it was back to the drawing board a third time. This time, to avoid going into a third round of bids without a consensus of the Council, we held an open and free ranging debate on what the Mayor and members of the council felt Lyons needed to solve its sewage treatment needs now and in the future.
During the discussion, it was acknowledged that our two 750,000 gallons / day sewage plants were adequate now and in the foreseeable future for the business and residential users we have or anticipate we will have. We also have sufficient capacity to service our current industries located in the industrial park north of downtown Lyons. What was lacking was sufficient surplus capacity to attract new food processing industries to the park (I understand that about 70% of new industry prospects are food processing industries who produce lots of sewage).
Thus the dilemma: The Toombs County Development Authority was encouraging us to expand our capacity on speculation it would enable them to promote the Industrial Park in Lyons better. But how do you justify the cost of adding extra capacity to increase your ability to attract industry when there is a risk that industry may not come, leaving the Lyons residents holding the bag and having to pay down the massive debt unassisted by an industrial water and sewage customer. Despite their assurances that the industry would come, it was an inescapable fact that the industrial park has been there for over 20 years and has only been able to attract two long-term industries.
Helping the Industrial Park Without Hurting the Citizens
I had noticed early on that we had extra capacity at our East Sewage Plant, but it was inaccessible to the Industrial Park, which is currently serviced only by the North Sewage Plant. It occurred to me that if we connected the two systems together, we could make the surplus sewage treatment capacity at the East Plant also available to the Industrial Park. I pitched the idea and the Council agreed to include that option in the next bid specifications.
Armed with a consensus, the Council directed the City Manager to have the consultant draft a letter to the DB Teams. To avoid any further miscommunications, a draft of the letter was to be circulated among the Council members to make sure it reflected their collective will before it was sent. This was accomplished and the RFP went out with the full support of the Mayor and Council for what was being requested.
A Winning Solution!
When the bids were opened, the DB Team being spearheaded by McLendon Enterprises came in with the lowest bid, presenting a solution that would refurbish the two plants, bring them back to their original specifications (plus some improvements) and connect the two.
The winning bid was $6,706,948.36! This was $10,831,051.64 less that the original bid a year earlier!
Where Does This Leave the Development Authority?
Estimates vary, but by connecting the two plants, and based on figures provided to me by the Lyons City Manager, we should be able to make at least 450,000 gallons/day or more of sewage treatment available to the Industrial Park for future tenants. This should handle at least one more industrial tenant and perhaps two.
And that is about the best we can do, given our economic circumstances. Lyons does not have deep pockets. It has a small property tax base. One mill in Lyons produces only $106,222 in tax revenue, while a mill produces $681,311 in Toombs County, and $304,799 in Vidalia. Lyons also gets a small fraction of the sales tax collected in the county. We are just not flush with cash.
And we have to accept the reality of the return to Lyons on our investment in the park. The Industrial Park provides a significant economic benefit to the entire region, including the surrounding counties, but the burden of providing it water, sewage, police and fire protection falls solely on the citizens of Lyons. Keep in mind also that the Toombs County Development Authority gave the current industrial tenant a 10-year property tax exemption on their real property and they have not been paying any property taxes on that real property for the entire nine years we have been providing services to them. Any new tenant would likely have a 10-year property tax exemption as well. Water and sewage revenue would be our only income and that pays for the W&S system, not police, fire and other city services that are supported by property taxes.
We all welcome the jobs and economic activity that industry provides, but Lyons is not the sole benefactor of that job growth and economic stimulus. Only 59% of the employees at our major employer in the park live in Toombs County. Only about 10% of the people who live in Lyons, work in Lyons, so few employees of the industries make their residence in Lyons and became taxpayers here. Most shop, eat, go to the theater or get their car washed in Vidalia, I would speculate, just based on how many more businesses are located there. Few of our merchants have any of the manufacturing supplies the industries in the park need. Let’s face it, Lyons just doesn’t receive the same economic benefit from our industry Vidalia and surrounding areas do (I should note that I have been told there are no impact studies that show the economic benefit of industry specific to Lyons, so my above statement is based on assumptions).
I saw this often when I was was the Director of the Property Tax Division of the Georgia Department of Revenue … communities that would provide all types of incentives and tax breaks to industry only to find, after all the smoke cleared, that the economic benefit from those industries did not equal the sacrifices they made to attract them to their communities. The incentives get pretty lucrative and industries can write their own ticket when you have 159 counties and 500+ cities all competing for industry. Sometimes, you get burned.
In my humble opinion, it would be prudent for the TCDA to acknowledge the city’s limited resources to fund ALL their sewage treatment needs to the Industrial Park and approach Vidalia and Toombs County about providing more capacity. They could, for example, buy up land adjacent to the park, but outside of our city limits, and encourage the commissioners to build a sewage treatment facility to service any prospective clients that might locate there, or alternately, approach Vidalia, who I understand (again, reliable estimates are hard to find) has over a million GPD of surplus sewage treatment capacity, about extending a line to the expanded area of the park that would be outside of the City Limits of Lyons.
There may be reasons why this is not feasible, but we need to have a discussion about the need of the TCDA for more sewage treatment capacity and the limited ability of Lyons to meet that need unassisted, if nothing else but to convince me, and some of the other skeptics on the Council, why Lyons should bear the ENTIRE burden of providing expanded sewage capacity to an industrial park that benefits ALL the citizens of the county.
It has been a long road. Talks about replacing our 30-year sewage system have been going on for several years, long before I was elected to the council, and have continued non-stop for the entire time I have been serving. It was a bold move to strongly oppose the first proposal that was presented one month after my election last year, but with the help of the other councilmen and the mayor, we persisted in finding a much better solution that we could afford and one that helped the Industrial Park … all at a savings of over $10 million to the citizens of Lyons! That’s something we can afford and live with.
As to future expansion to attract more industry … well, let’s get some other benefactors of such an expansion to the table to help fund the necessary infrastructure.
Work on the renovation is slated to begin May 31, 2019.