The Silver Bay City Council has approved a wastewater preliminary treatment project to move forward despite bids coming back nearly $1.5 million over the engineer's estimate.

The lowest bid for the project was awarded to Magney Construction out of Chanhassen, Minn. The total bid came to $3.99 million.

The council unanimously voted to approve moving forward Monday, Oct. 7; Councilor Shane Hoff was absent.

A complicated history

This project was postponed for well over a year because funding for the project was tied up in the 2018 bonding bill, which was the subject of a lawsuit. Environmental advocacy groups took issue with the Legislature using funds from a natural resources trust fund to pay for infrastructure projects such as the preliminary treatment plant. However, a separate bill in 2019 allowed the funding to come through.

However the city’s complications weren’t over as the Minnesota Public Facilities Authority (PFA) notified the city it was no longer eligible for the Water Infrastructure Fund (WIF) grant, which would cover almost $900,000 of the project.

“So we were in kind of a panic mode, regarding how would we ever accomplish this?” City Administrator Lana Fralich said. “But our engineer for this project, John Graupman of Bolton and Menk, redid some calculations and submitted it back to the PFA. Low and behold, we received our WIF money back and more than what was originally earmarked for us.”

High bids cause concern

The project was bid back in June. The project received three bids, the other two being noncompetitively higher than Magney’s $3.99 million bid. This led to some concern among councilors.

“My question, and concern is, how did we end up with our lowest bid being 1.5 million higher than our engineering estimate?,” asked Councilor Richard DeRosier. “It seems like we get this a lot.”

Engineer John Graupman offered an explanation, consisting of the project’s extended timeline (it was originally estimated in 2017), the lack of competition in the construction trade and few bidders.

“In our experience, this last summer, on projects nearby, anything that required building, the prices were extremely high for the building components,” Graupman said.

Utilities department manager Mike Miller also pointed out that the city has undertaken two other water projects this year — the main water looping project and the trunk sanitary sewer line project — and both came in under estimate.

“I’d say that two out of three isn’t too bad,” Miller said.

What is in the project?

The project mainly consists of two components: adding a better pretreatment process and changes to aid mercury removal.

Improved pretreatment removes rags and larger debris from wastewater before it enters the system. Removing grit such as sand or other inert material before it goes into the system is essential since it aids with the long-term maintenance and life of the equipment.

The second part of the project deals with mercury limits. The Minnesota Pollution Control Agency enforces mercury limits on wastewater systems that are near the Lake Superior Basin.

To ensure the wastewater plant continues to meet these mercury limits, the project will place covers on five clarifiers at the facility. The covers limit rainwater contamination.

The mercury removal enhancements also ensure the project qualifies for point source implementation grant funding from the PFA to accompany the WIF grant. The rest of the project will be funded by a low-interest 20-year loan from the PFA.