MANKATO — The massive and massively expensive modernization of Mankato’s regional sewage treatment plant, already more than double the original cost estimate, got a little pricier Monday night.
With fees being charged by consulting engineering firms growing by nearly $1.7 million during the first year of construction, the total cost of the project is now above $90 million. The rising expense for outside engineering, which is are expected to climb by at least another $2 million before the project is complete in 2027, was blamed on vacancies in the city’s engineering division.
Black & Veatch, a global engineering firm that specializes in wastewater treatment, and fellow engineering consultants Bolton & Menk sought the contract amendment to reflect the additional work they are doing on the project because city engineers aren’t performing as many tasks as planned.
The original contract was for “office-based” construction consulting and totaled $1.005 million, according to a letter to the city from Scott Fronek of Black & Veatch and Kristopher Swanson of Bolton & Menk.
“The essence of the original contract was to provide support to the City as requested, for review of contractor submittals and answering contractor questions. The City was to provide all contractor management and field inspection services,” the letter stated. The amended contract’s scope “includes full construction related engineering services (office-based and field support) to deliver a successful project for the community.”
The two municipal engineers most heavily involved in planning for the sewer plant modernization were Public Works Director and City Engineer Jeff Johnson, a longtime member of the U.S. Army Reserve, and Assistant City Engineer Michael McCarty. Johnson is currently on leave and McCarty was hired as Watonwan County engineer and public works director in September. In addition, Jon Nelson — who had been supervising Mankato’s engineering division — left that post last spring to become assistant city engineer of Lakeville.
The departures came just as Mankato was undertaking one of the priciest projects in city history — one expected to cost $88.7 million and take 1,000 days to complete. The work involves replacement of the treatment plant’s core components — the disinfection basin and the trio of digesters — along with improvements to the operations building and plant lab and an expansion of the biosolids storage bunker.
Portions of the plant, located along the east bank of the Minnesota River, date back to the 1950s and were on the verge of breaking down. The facility serves about 65,000 people living in Mankato, North Mankato, Eagle Lake, Madison Lake, South Bend Township, the Lake Washington Sanitation District and Skyline.
The Nov. 15 letter from Fronek and Swanson estimates that the consulting fees will grow by another $1.78 million in the second year of construction and by $382,000 in the third and final year for a total of $4.49 million.
Because the contract charges on an hourly basis, if the city gets its engineering department fully staffed and municipal employees can handle more of the project oversight “potential fee savings would be realized,” the letter states.
However, the contract does not cover one other looming expense.
“At this time, the proposed scope does not include an Operations Manual, which is required at the conclusion of the project by the Minnesota Pollution Control Agency,” the letter cautions. “We will work with the City as part of your annual operations budget to plan for this and complete portions as requested.”
Black & Veatch has been consulting on the project since 2017, when the firm estimated that the work now underway would cost $39 million — an estimate that rose to $44.5 million after final designs were completed late in 2021.
When bids were opened the following February, it was clear that Black & Veatch’s estimates had missed the mark badly. All three bids were at least 33% higher than predicted, ranging from $60.5 million to $67 million, and were well beyond the available financing.
As the bid results were summarized at a meeting on Feb. 14, 2022, it was clear the firm was not feeling much love from the City Council. A frustrated Council President Mike Laven wondered why a representative of Black & Veatch wasn’t sitting beside city staff when the bad news was presented.
“I was expecting a third person here tonight,” Laven said.
“We share that same frustration,” said Parker Skophammer, the city’s budget director, noting how much the consultants had already been paid during project planning. “I think we were in the neighborhood of $3 million in design work.”
In the ensuing two years, city officials worked closely with state lawmakers and Minnesota’s congressional delegation to cobble together enough funds to cover the inflated costs, which had grown to an estimated $86.5 million when it went out for a fresh round of bids last year.
Even that proved a bit low. When a construction contract was approved with low-bidder Rice Lake Construction of Deerwood, the total cost had edged up to $88.665 million. With the higher consulting fees approved Monday night, the new figure is $90.34 million.
If the estimated future consulting fees are paid in 2026 and 2027, the total would reach $92.98 million, not counting the yet-to-be-determined cost of writing the plant’s operations manual.
A staff memo to the City Council leading up to Monday’s meeting suggested that the engineering oversight, expensive as it is, could be a money-saver in the long run.
“To protect the City’s investment in this critical piece of infrastructure, it is important that the construction be monitored closely and issues that arise be resolved quickly and in the best long-term interest of the City,” the memo stated. “The proposed amendment provides for the full construction services needed to deliver this project.”
Along with approving the amended contract with the engineering firms, the council increased the amount of money it is borrowing for the project through the Minnesota Public Facilities Authority by $1.67 million, bringing the total to $45.34 million. Those borrowed funds will be repaid with local money contributed by utility customers in the seven communities.
The Legislature voted in 2023 to provide $42 million, and Congress added another $3 million last March.