Despite significant increases to construction costs for water system improvements, Denison officials do not foresee increases to its water rates beyond those already approved. Earlier this month, officials and city leaders discussed the five-year series of water system improvements that were originally approved in 2014 and are expected to continue through the year 2020.
When the projects, which include a new water pump station at Lake Texoma and the installation of new automated water meters, was approved three years ago, it came with a price tag of about $28 million. Now officials are increasing that price tag by about $9.4 million, with an additional $2.9 million being added in new projects. The projects and costs were last discussed during the city’s annual budget retreat in early May.
In anticipation of these increased costs, City Manager Jud Rex said the city has spaced out the remaining projects to balance the debt service for the projects.
“We are definitely on task in regards of getting the major projects done within that expected five year window,” Rex said in a phone interview Tuesday.
In 2014, city leaders approved a series of gradual increases to the water and sewer rates from December 2014 through 2018 to help pay for the debt service for these projects.
During the budget retreat, Finance Director Renee’ Waggoner compared the city’s rates to those of nearby cities, including Sherman, McKinney and Bonham based on 5,000 and 10,000 gallon use. Of the cities surveyed, Waggoner said Denison had the lowest water rate and second-lowest sewer rate behind Sherman.
“We need to look not at what other people charge but at what we need to get the job done,” Waggoner said at the retreat.
In spite of the price increases, Rex said the rates the city is charging remain viable for paying off this debt. While some projects have gone up in price, Rex said others have come in under budget, but not enough to fully offset the additional cost.
“Where we are now is on par with where those rates need to be,” he said.
Among the projects that have seen price increases was the proposed construction of a new Denison water pumping station at Lake Texoma. The new pump station will feature two pumps with the capacity for two additional units. Each pump would produce about 10 million gallons per day. At full build out, this would allow the city to draw its full allotment of water and take a pump offline for repairs and maintenance.
By comparison, the current facility, which was built in the 1950s, features one pump and produces about 8 million to 9 million gallons of water per day.
When initially proposed, officials said the project would cost about $8 million. However, more recent estimates are closer to $12.83 million.
“The $8 million wasn’t an accurate estimate,” Rex said on Tuesday. “There is a lot of concrete in this project and the price of concrete has really gone up since that projection.”
Denison Public Works Director Bobby Atteberry said the construction costs have spiked nearly 10 percent each year since the original estimate. He attributed this increase to a surge in development in the Dallas-Fort Worth Metroplex that has been a boon for builders and developers.
“They don’t have to come this far north to get work,” Atteberry said Tuesday. “So, we aren’t seeing the competition between them that you might see down there.”
Despite this anticipated price increase, Atteberry called his estimate conservative and noted that there may be some opportunities for savings for the city.
“We are going to be vigilant on that $12 (million),” Rex said. “We don’t anticipate that project to start until 2020 and we have to scale that price back.”
Despite these increases, Atteberry said he anticipates that other projects will come in under budget. Among those projects are a $2.77 million series of system improvements under the Texas Commission on Environmental Quality. Other projects that will likely be under budget are the Iron Ore Creek sewer project and a waterline extended from Loy Lake Road to FM 691. This water line will also serve as the path for the proposed Katy Trail walking and biking trail system.
Beyond the pump station, Rex said there are nearly a dozen other projects that are either under construction or in the design phase. Among these projects is the ongoing reconstruction of Chestnut Street from a brick roadway to a modern paved street. The project was originally envisioned as a water main replacement, however that necessitated extensive repairs to the road. Eventually city officials elected to fully rebuild the road as a part of the project.
Rex said the paving portion of the project was about 75 percent complete, and anticipated the work would be completed by late July.
“Residents of Denison can feel confident and comfortable knowing that the council and leadership are dedicated to the upkeep of our water utilities and other infrastructure,” Rex said.