City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: March 17, 2025
FROM: Patrick Dobbins, Public Works Director/City Engineer THROUGH: Carmen Gil, City Manager
SUBJECT: Resolution No. 2025-08 Expenditures Reimbursement for Industrial Wastewater System Construction
RECOMMENDATION
Staff recommends the City Council Adopt Resolution 2025-08, A Resolution of the City Council of the City of Gonzales Stating its Intention and Expectation to Reimburse Expenditures Incurred by the City in the Planning, Design and Construction of the Industrial Wastewater System Prior to Obligations Approved by the State Water Resources Control Board.
BACKGROUND
Phase 1 of the Industrial Wastewater (IW) System will increase the capacity of the City’s wastewater system by 1.0 million gallons/day. The IW System will be delivered through the following construction contracts:
• IW Pipeline contract
• IW Treatment Facility contract
On August 6, 2024 City staff opened five bids for the IW Pipeline contract. On September 3, 2024, the Gonzales City Council awarded the IW Pipeline contract to Sierra Construction and Excavation, with construction beginning in November 2024, and anticipated completion in May 2025.
With construction of the IW Pipeline contract progressing on schedule, City staff issued the IW Treatment Facility (IWTF) for bid on January 15, 2025. On February 26, 2025 the City opened the following bids for the IWTF contract:
AGENDA
ITEM
17 Contractor Bid Amount Percent over
Low Bid
1 Gateway Pacific $21,938,000
<low bidder> - - -
2 Specialty Construction $22,219,663 1.28%
3 Clark Brothers $22,447,500 2.32%
4 Sierra Construction and Excavation $22,813,420 3.94%
5 Don Cascade $24,640,726 12.04%
6 Anderson Pacific $27,968,100 27.49%
It’s important to note that the three low bids are very close, with less than 2.5% difference. MNS Engineers is currently reviewing the three low bids for conformance with the City’s bid document including compliance with the SRF Loan requirements.
REVIEW & ANALYSIS
The following table provides a breakdown of anticipated costs for the IW System. As shown, staff anticipate a funding gap of $6,000,000 to complete the IW System.
Construction
IW Pipeline contract (under construction) $7,991,000 (1) IW Treatment Facility contract (based on bid results) $23,584,000 (2) Other Ancillary Work $175,000
Subtotal Construction = $31,750,000
Consultant Costs
Planning/Design Phase
Pretreatment Program $20,000
Finalize Design $60,000
Engineering Services During Bid Phase $220,000
Temporary and Permanent Easements $260,000
Construction Phase
Engineering Services During Construction $1,472,000
Program Management $400,000
Construction Management $2,860,000
Environmental $350,000
Subtotal Consultants = $5,642,000
City Costs
Legal and Financial $200,000
TOTAL = $37,592,000
SRF Loan = $28,884,000
Sewer Impact Fees = $2,750,000
SHORT FALL = $5,958,000
(1) Includes 5.0% Contingency
(2) Includes 7.5% Contingency
SRF staff were contacted regarding the process for an amendment to the City’s $28.9M SRF loan and they provided the following information:
• The amendment process is initiated by a letter from the City Manager outlining the increase requested, and a justification (i.e. bids came in high). • The City shall provide SFR staff with updated financial reports for review by SRF staff to confirm the City’s sewer rates will cover the debt service on the additional loan amount. • The City Manager’s letter should include any adjustments to the construction completion date. • SRF’s review of the updated financial reports will take four to eight weeks after the updated documentation has been submitted.
• Once review of the updated Financial Reports is complete and they deem the City eligible for the SRF Amendment, it will take two to three months for the City to receive an executed SRF Amendment.
The City’s rate consultant, Lechowicz & Tseng, calculated there is room in the City’s sewer rates to cover the $6.0M Amendment. As demonstrated in the following table, the adopted sewer rates are sufficient to cover the required 1.20 debt service ratio.
FY2026
Net Revenue
FY2027
Net Revenue
Net Operating Revenue $1,976,166 $2,113,166
$28.884M SRF Loan at 1.7% interest $1,233,000 $1,233,000 Coverage 1.60 1.71
Additional Loan ($6.0M, 30 yrs at 1.70%) Debt $256,976 $256,976 TOTAL DEBT $1,489,976 $1,489,976
Coverage (based on $6.0M SRF Amendment) 1.33 1.42
Therefore, staff recommends that the City Council direct staff to pursue an amendment to the IW System’s $28.9M State Revolving Fund loan. To that end, staff prepared the attached letter for the City Manager’s signature requesting a SRF loan amendment of $6,000,000, bringing the total SRF loan amount to $34,884,000.
To initiate the SRF Financial Review, the Council needs to adopt the attached Resolution. Upon direction from the Council, staff will email the amendment request letter to SRF staff to begin the amendment process.
How Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small town charm.
Explain: This project supports our vision by making improvements to the wastewater system to increase its capacity for residential and industrial developments.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____ No____ N/A
Explain: Maintaining and improving the wastewater treatment plant enhances the community’s quality of life by providing for treatment and safe disposal of the City’s wastewater.
City services will be delivered in a cost-effective, respectful and friendly manner to insure the safety and well being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. X Yes ____No ____ N/A Explain: See Vision explanation above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes X No N/A
• Housing X Yes No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
Explain: See Vision above.
ALTERNATIVES
Amend or modify staff’s recommendation.
BUDGET IMPACT
There is no cost impacts related to this staff report
CONCLUSIONS
Staff recommends the City Council Adopt Resolution 2025-08, A Resolution of the City Council of the City of Gonzales Stating its Intention and Expectation to Reimburse Expenditures Incurred by the City in the Planning, Design and Construction of the Industrial Wastewater System Prior to Obligations Approved by the State Water Resources Control Board.
Attachments:
1. Letter to Initiate the SRF Loan Amendment Process
2. Resolution No. 2025-08