Milton wastewater treatment plant cost doubles to $54 million, city looks to cut costs

Annie Blanks
Pensacola News Journal

This story has been updated to correct a mistake that appeared in the original version. The request for proposals for the new treatment plant was issued Sept. 30 and opened Feb. 3. 

Bids for the city of Milton's new wastewater treatment plant came in at about $54 million — nearly twice what it was originally estimated to cost — leaving city officials scrambling to figure out how to cut millions from the price tag so the direly needed project can be seen through. 

A request for proposals, or RFP, was put out Sept. 30 and opened Feb. 3, just 10 days before  city officials broke ground on the new plant Feb. 13. The city expected to get proposals in the $28 million range and was prepared to go as high as $32 million due to rising lumber costs and other incidentals, which is the price range that engineering firm Baskerville-Donovan Inc. initially told the city it could expect. 

City Manager Randy Jorgenson said he was floored when the bids came in between $52 million and $54 million, even from Baskerville-Donovan itself. 

"When the plans came back, we were a little surprised," Jorgenson said. "The project came in at $26 million over the original estimate, at $54 million. That was perceived by me, and, I think, numerous others, as a challenge."

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The reason for the cost discrepancy probably lies somewhere in inflation rates for lumber and other building supplies that have shot up at least 30% since the pandemic began, Jorgenson said, as well as huge personnel demand due to Hurricane Sally repairs.

While Jorgenson and the City Council were prepared for a cost discrepancy, they weren't ready for one as large as potentially $26 million. 

Assistant Supervisor James Petty tests the pH level in water that has been treated Jan. 28 at the Wastewater Treatment Plant in Milton. Milton city officials are looking to cut down the cost of building a new wastewater treatment plant after bids for the project came back at $54 million, nearly double what the city was expecting.

"So they did the package that was bid on, they gave us an estimate at the time the package was assembled, and they missed it by $27 million?" asked confounded Councilman George Jordan at last week's City Council meeting. 

Jorgenson corrected Jordan that the firm had been off by about $25 million, not $27 million. 

"We didn't anticipate, nor can they, COVID or Sally or some of those effects, and we didn’t anticipate, nor can they, the ebb and flow of the nation's economy and the building that's occurring in America today," Jorgenson said.

Ric Delp, a project manager with Baskerville-Donovan, told council members at last week's meeting that he was "surprised" that his company's own bid came in as high as it did.

"In the 42 years I've been doing this, I've never had a delta (difference) so great," he said. "They're starting to see this in other areas as well, more in the 30% to 40% range, but not a 90% increase (from estimate to bid). Maybe I should have seen some of that and alerted staff, but we were just moving forward, this project was so important to everybody that we just kept moving forward and got it done.

"The cost estimate we gave in June of last year did not have any reflection of what the impacts of COVID would have on the construction market, and Sally happened right after that, so we never could have guessed it being that high."

Wastewater continues its journey through the treatment process at the Wastewater Treatment Plant in Milton on Jan. 28. Milton city officials are looking to cut down the cost of building a new wastewater treatment plant after bids for the project came back at $54 million, nearly double what the city was expecting.

How Milton will cut $22 million in costs 

After receiving the high bids, the city underwent a "value engineering" process to find cost-saving measures that could bring the price tag down to its original estimate. 

The biggest cost-saving measure they could find was relocating the site of the Rapid Infiltration Basin, or RIB, system that was originally slated for a property about eight miles away from the new plant. The city is asking Santa Rosa County for permission to use about 200 acres of county-owned land right near the new wastewater treatment plant that could save the project $16 million. 

The city is looking to save another $6 million by redesigning the treatment plant itself. 

In all, reducing the cost by $22 million would put the total cost for the new plant at $32 million, which is at the high end of the city's budget but something city officials think Milton can handle. 

The city has already acquired about $28 million through loans and grants, so it is prepared to fund the construction costs for the main building. It doesn't have to start building the RIB project until at least a year after construction on the main building begins, so Jorgenson said he would use that time to find out how to fund the extra $4 million or $5 million, likely through a request to the Triumph Gulf Coast board. 

The city was also allocated $4.4 million in CARES Act money through the latest round of federal stimulus money, which could be used for water treatment projects. 

Milton Mayor Heather Lindsay, who has made the new wastewater treatment plant a hallmark of her first term as mayor, said the city still has a few questions it needs answered, particularly about the environmental impacts of the new potential location of the RIB system on the 200-acre, county-owned site.

"I certainly want this to be accomplished without there being a risk to the Blackwater River and its habitats, because part of this project's appeal is that we're going to be able to take the septic tanks off septic and put them in the sewer, which will protect the effluent and we'll no longer have any effluent in the Blackwater River," she said. "The infrastructure is needed, and how it gets done and the amount of money that is going to be required are questions that we’re going to be working on.

 Annie Blanks can be reached at ablanks@pnj.com or 850-435-8632.