The board of directors for the Lewis & Clark Regional Water System voted Oct. 25 to rejects bids that were submitted for the system's water treatment plant.
The contractors' bids were opened two months ago, revealing to the water system's board that not near enough funds were on hand to cover the amount of the lowest bid.
The least expensive offer for the project was $142 million. Add contingencies to that amount, and the total cost of the plant's construction likely would have shot up even farther.
Lewis & Clark had estimated the plant's cost at $108 million.
"To give you an apples-to-apples number, the $142 million compares to $98.5 million," said Troy Larson, executive director of the Lewis & Clark Regional Water System. "That was the engineer's estimate without contingencies."
The facility, when constructed, will be located north of Vermillion, and will likely provide as many as 30 jobs.
For the plant to become reality, however, the Lewis & Clark board must either secure additional funds, or become very creative with the use of the money it currently has.
"We have often said that Vermillion is more impacted by this than some of our members," said Larson. "We have reviewed some various options, and one of the options was to build multiple plants. We looked at the idea of building a small plant by Beresford and a small plant by Tea.
"That by far was the most expensive option and the least practical," Larson said, citing duplication of costs and parallel pipeline that would have to be built. "The good news for the folks in Vermillion is the plan is still to have one plant three miles north of Vermillion."
This facility, when ultimately completed, would treat 60 million gallons of Missouri River water daily.
"We're planning to build this plant at 45 million (gallons of water treated daily), but the ultimate build-out is for 60 million gallons a day," Larson said. "That's still the plan. What we don't know yet is whether we are going to build it in phases."
One option that the Lewis & Clark board is considering is to possibly build a 35-million-gallon-per-day plant, and expanding it over time to 45 million and eventually 60 million.
"What we are doing now, essentially, is reviewing a variety of changes that we can make to the plant," Larson said. "Some of the changes would involve permanent cost savings, however, the majority of the changes that we are looking at involve the deferral of either the construction of certain components of the plant, or the purchase of certain equipment."
Deferring items would lower the price tag of the treatment plant at the time the construction bids are received. "But when you add all of those other things in, it becomes more expensive," Larson said.
The Lewis & Clark board had hoped that the water treatment plant could be completed by January 2011. "This sets us back one or two years depending on how we bid the plant," Larson said. "It will depend on whether we decide to bid this project as one complete plant, or multiple phases."
Larson said the rejected bid "shines the light even further on the critical importance of increasing federal funding. It was important before, and it's even more important now. We need to ramp up our federal funding."
In 2006, Lewis & Clark received $17.5 million in federal funds. Washington increased that amount to $21 million in 2007.
The budget for the fiscal year 2008 has yet to be passed. Lewis & Clark is waiting for Congress to reach a compromise: the U.S. Senate is considering a $28 million package; the U.S. House appropriation is lower, at $22.5 million.
"If they split the difference, which the Conference Committee usually does, we're looking at about $25 million," Larson said.
The Lewis & Clark board has consistently stated that it needs $35 million annually to keep the project on schedule.
"But we are trending up in our funding," Larson said, "and our current situation heightens the need to ensure our federal officials are doing absolutely everything they can to ramp up our funding."
When completed, the Lewis & Clark project will provide treated water to 20 communities and rural water systems in South Dakota, Minnesota and Iowa.
South Dakota communities include Beresford, Centerville, Lennox, Tea, Harrisburg and Sioux Falls.
The delay in the treatment plant construction will have no effect on Vermillion's water supply. City leaders decided in 2001 to not participate in the rural water project because of cost factors, though its wells and treatment plant will be a short distance from Vermillion.
Back in 2001, the city's average water production was 1.2 million gallons per day, with a peak average of 1.8 million gallons per day.
That means if Vermillion chose to be a Lewis & Clark customer, it would still have to keep three of its wells operating.
It was determined that for Vermillion to bear the cost of a new pipeline from the Lewis & Clark treatment plant and the purchase of raw water from the system, it would have to raise the city's water rates by 31 percent.