MANKATO — One of the costliest city projects in Mankato’s history should be underway in about a month after the City Council approved the $88.7 million modernization of the regional wastewater treatment plant Monday night.
Just a single contractor submitted a bid to tackle the 1,000-day construction project, and the bid was 11.6% higher than expected. But with the cost steadily escalating for the past several years and the overall price tag still fitting into the budget, the council quickly voted 6-0 to move forward with the long-planned project.
Public Works Director Jeff Johnson suggested that more study, additional revisions or another round of bidding was unlikely to bring a better outcome.
“We believe we have the best possible project that we can put together,” Johnson said.
The only council question, from Council President Mike Laven, was when the work would begin. The entire presentation and discussion, despite the magnitude of the financial commitment, lasted barely 10 minutes.
The work leading up to it, however, took a fair amount longer.
“Staff spent hundreds if not thousands of hours on this project,” Johnson said.
The original hope was to have construction finishing up by this summer at a cost of $45 million. But when the city first put the project out for bid in the winter of 2021-22, the lowest bid was $60.1 million — 33% above estimates and well beyond the revenue available to pay for it.
In the 27 months that followed, Public Works staff and a consultant looked for strategies to shield the project from the full force of the steep inflation hitting the construction sector, and City Manager Susan Arntz, Mayor Najwa Massad and other municipal leaders lobbied state and federal lawmakers for additional funding to help cover the ever-increasing cost of the project.
When the project was ready for another round of bids this spring, the estimated cost of the construction work had risen to $75 million, with the total project cost anticipated to hit $86.5 million when engineering, a contingency fund and other expenses were added.
When the lone bid was opened on May 2, Rice Lake Construction of Deerwood was offering to do the work for $83.7 million. Even with the contingency fund trimmed by $5 million and other administrative expenses sliced to nothing, the higher-than-predicted construction portion of the project pushed the overall budget approved by the council Monday to $88.665 million.
That just squeezes within the $89 million financing plan established earlier this year. Under the plan, ratepayers from the communities that send their wastewater to the Pine Street plant — Mankato, North Mankato, Eagle Lake, Madison Lake, South Bend Township, the Lake Washington Sanitation District and Skyline — will contribute $43.66 million, mostly to repay bonds sold to cover the upfront construction costs.
The state of Minnesota is providing $42 million, and a federal appropriation will chip in the final $3 million.
The council could have trimmed $7.7 million from the project by approving two alternates to the construction bid. The first would have dropped the planned renovation of the operations building and lab at the plant, which is officially called the Water Resources Recovery Facility. The second alternate would have eliminated the expansion of the plant’s biosolids storage space. Rice Lake Construction offered to reduce its price $4.8 million for the former and $2.9 million for the latter.
Staff recommended against both. Johnson said the current project is the most plausible way of financing the needed modernization of the plant’s operations building and lab. And the biosolids storage bunker — where disinfected solids are kept until weather, permitting and other factors allow the material to hauled away for spreading on farm fields — sometimes approaches capacity.
“We really need that storage space now,” Johnson said.
The council, accepting the staff recommendations, did not discuss adopting either of the two cost-cutting measures.
With the council’s authorization for Arntz to enter into a contract with Rice Lake, Assistant City Engineer Michael McCarty said construction should begin in four to six weeks and continue for 1,000 days. Because of limited space at the riverside plant, which dates back to the 1950s, the replacement of its major components must be done sequentially even as the facility continues to function.
First, Rice Lake will build the large concrete tank that will serve as the plant’s new disinfection basin, along with the building that houses equipment that feeds chemicals into the system. After that is constructed and put into service, the old basin can be removed to make room for the construction in 2025 of three new digesters — the heart of the treatment process where microorganisms spend weeks decomposing biosolids.
If all goes according to schedule, the improvements to the operations building will wrap up in 2027, the old digesters will be removed and about 65,000 people living in the immediate Mankato area — and thousands more working, shopping and attending school there — will be able to continue to flush with confidence.