Freeport officials question why sewage plant project is $110K over budget

July 31, 2018

Freeport officials are questioning why the sewage plant project’s first phase is costing about $110,000 more than the anticipated price, but they say no one can give them answers.

Borough Treasurer Rich Hill and Mayor Jim Swartz this week expressed concerns about the $779,000 construction cost of the first phase.

That contract was awarded in June to Jet Jack Inc. of Oakdale, the lowest of five bidders.

Council members want project engineer Brian Churilla of KLH Engineering to answer their questions about his first phase projection of $668,000, at the Aug. 6 council meeting.

The borough has received a $920,000 loan from PennVEST for the project.

Council decided it would pay for the additional construction costs with money from the borough’s capital reserve fund rather than incur delays and additional interest by seeking to increase the loan amount.

“Bottom line: PennVEST is going to loan you $920,000 for this project, and if it costs over a million, you’re going to make up the difference,” Hill said.

In his projection for the first phase of what is expected to be a $12 million project, Churrilla estimated the construction cost at $668,000 with another 10 percent or $68,000, set aside as a contingency fund.

Churilla could not be reached for comment.

“He missed the bid by $110,000,” said Hill. “It’s hard for me to believe. If he misses $110,000 on $668,000, what’s he going to do on a $12 million project? He missed it by 20 percent.”

“I’m a little nervous about that,” Councilwoman Melanie Zembruzski said.

Council President John Mazurowski , who said he spoke to Churilla, said what he was told was the disparity is because Churilla used a 2016 budgeting tool in estimating the costs.

“Why would you use a tool with numbers that are 2 years old?” Hill asked.

He said engineers are constantly putting out cost estimates for projects they are working on so their clients can formulate budgets and how to finance them.

Mayor Swartz, like Hill, was not in favor of building a new plant, contending that the cost would be too much to bear for the borough’s 750 households.

At a council meeting Monday, the discussion became heated when Swartz angrily recalled that when the previous council voted to approve the sewage plant construction without putting it on the agenda. Only three members from that council remain, including Mazurowski.

As Mazurowski attempted to move on, Swartz wouldn’t yield the floor. He grew even louder, and kept talking as the usually mild-mannered Mazurowski loudly slammed the gavel and threatened to have Swartz removed from the meeting; that didn’t happen.

Councilman Justin DeAngelis noted that with the construction costs going up the contingency fund would have to be increased along with it -- from about $67,000 to about $78,000.

However, both he and Hill said the cost might be lowered if there are no change orders and the contingency fund is not used. But Hill seemed doubtful of that happening.

“If we say we can cover it, and then the cost goes over $1 million and the contingency fund is eaten up, we’re going to be on the hook again,” he said.

He said the borough can’t continue to rely on its capital reserve to keep bailing out the project if the cost keeps growing.

“We get $400,000 in that fund every year,” Hill noted. “Where the hell are we going to get $12 million?”

In addition to the disparity in the construction costs, Freeport officials also want to know if they have already paid for some of the $160,000 in engineering fees for the first phase. They want to know whether they are unnecessarily borrowing more than they have to and whether those fees will increase with the project cost.

They also have questions about $15,000 for administrative costs and $10,000 in accounting fees that are listed in the cost breakdown.

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