MMU Commission awards pipeline bids

MARSHALL – A major city utility project moved another step forward Wednesday, as members of the Marshall Municipal Utilities Commission voted to award bids for a pipeline connecting the city with a new well field in Sandnes Township, Yellow Medicine County. The completion goal for the 27-mile pipeline is summer 2015.

Adding up construction and materials, historical costs of developing the well field, and additional costs, the pipeline project’s total cost is about $13.5 million, MMU staff said.

“A lot of work has gone in to get us to this point,” sad MMU General Manager Brad Roos. “Now it’s time to get us into the construction phase.”

Bids for pipeline materials, connections at the well field and the Marshall water treatment plant and construction of the pipeline were let over the past month. MMU staff said the various pieces of the pipeline project had good bids – the total project cost using the low bids was less than a 2014 engineer’s estimate.

Roos said base and alternate bids were let for the project. He recommended commissioners award bids for the alternate proposal, which calls for a two-mile stretch of pipeline within Marshall city limits to be expanded from 20-inch pipe to 24-inch pipe. The expanded pipeline would run approximately from Lyon County Road 7 to Michigan Road.

MMU Water Operations Manager Jeff Larson said there were several advantages to expanding the size of the pipeline in that area. It would reduce pumping pressures throughout the pipeline and allow for possible future expansion at the Sandnes well field. It could also help with construction of a new water plant some 30 or 40 years in the future. Larson said the stretch of expanded pipeline would allow a new water plant to be built on the north side of Marshall, where soil conditions are better.

MMU commissioners, including chairman Bill Ziegenhagen, had questions about the bids and pipeline project during discussion at Wednesday’s meeting. Ziegenhagen directed one question to Lucas Youngsma of the Minnesota Department of Natural Resources, who was present in the audience.

“Our water usage has been down the last couple of years,” Ziegenhagen said. “How would you respond if we didn’t approve the project?”

Youngsma said the DNR appreciates water conservation efforts in the city. However, he said, “It does not appear to the DNR that the conservation measures will be adequate” for Marshall not to tap an additional water source.

After discussion, commissioners voted in favor of awarding the low alternate bids for the project. A bid of about $3.6 million for PVC pipe was awarded to DSG of Sioux Falls, S.D. A bid of about $6 million for construction of the pipeline was awarded to Winter Brothers Construction of Sioux Falls, S.D. A bid of $289,000 for connection of the pipeline to the Marshall water treatment plant was awarded to KHC of Marshall, and a bid of $437,000 for construction of the well pumps and well houses was awarded to KHC of Marshall.

In addition to awarding bids, commissioners also discussed bonding to help pay for construction of the pipeline project. MMU Finance Manager Kevin Lee estimated bonding about $5 million in 2014.

Lee said MMU’s water department has about $7.2 million in unrestricted reserves for 2014 and about $6 million in restricted reserves which can be used for 2014 capital projects. He said MMU’s financial reserve policy is to have enough unrestricted reserves at the end of each year to cover four months of operating expenses. The calculated four-month reserve for the water department would be about $2.3 million.

Based on those figures, commissioners asked, would it be possible to use reserve funds and take on less bonding debt?

Roos said action on the bonding wouldn’t be taken Wednesday, but he would take commissioners’ direction if they wanted to use more reserve funds.

“One of my biggest concerns in this project has been, can we afford the principle and interest with our current (utility) rates?” Ziegenhagen said. However, he added that while there are still unknowns for the pipeline project, the bids the commission received did look positive.