Port LaBelle Utility System 

Banyan Village Water Supply Construction Project Update

John Capece

September 18, 2006 

Based on meetings with Hendry County staff, USDA Rural Utility Service grants administrators, and PLUS Advisory Board members, the attached report & recommendation was submitted to the Hendry County BOCC for consideration at the September 12 meeting.  The BOCC enacted the recommendations to (1) withdraw the USDA grant application, (2) proceed with securing independent financing and (3) award a construction contract to Forsberg Construction, Inc. for the two Banyan projects (transmission line and distribution network). 

The rationale for withdrawal of the USDA application was to avoid additional project delays that would result from waiting for the new USDA budget allocation and their subsequent eligibility decision process for the Banyan projects.  Moreover, the relatively good bid prices received from potential contractors would soon expire and rebidding would likely increase project costs significantly.  The bids were low due to unusual circumstances in a major Cape Coral utility project that was temporarily suspended, idling the low-bid contractor.  Regardless of bid expiration date, USDA would, for reasons of procedure, require rebidding of the projects after the final USDA decision on the grant/loan award package.  Furthermore, there was no certainty that USDA would, in fact, choose to fund the project despite their verbal assurances that funds would likely be forthcoming.  Depending on the magnitude of any subsequent USDA grant, the federal assistance could have been partially or entirely negated by the increase in construction bids.  

An additional consideration in the decision to move forward without delay was that property assessments for Banyan Village dramatically increased this year, creating a tax liability comparable to lots in areas already served by water.  Owners in Banyan are paying dramatically higher taxes on lots that are not buildable until the water services are provided.  

Forsberg Construction, Inc. contract for the transmission line is $2,265,,250 and their contract for the distribution system is $5,763,468.  CAS originally presented two options for the design: (1) a 12” main transmission line or (2) an 8” main line with a 500,000 gallon storage tank at an additional cost of $800,000.  The Advisory Board and BOCC elected to go with the no-tank option, but increasing the pipe size from 12” to 16”.   

Using an assumption of 3600 taxable lots in Banyan, the distribution system special assessment of $1640 per lot will yield $5.9 million, very near the $5.8 construction plus other distribution system costs.  In the connection charge is also a fee of $400 per lot for transmission main lines.  This will yield $1.4 million or $860,000 short of the construction costs alone.  Deducting the BOCC contribution of $425,000 leaves a net shortfall of $435,000.  Distributed over the 3600 Banyan lots, this would increase the transmission line connection charge from $400 to $521.

The current connection fees are  

The tentative connection fees for Banyan (pending completion of the rate study) would be: