The city of Vermillion anticipates opening bids for a new water tower in August.
The news was announced at the regular city council meeting Monday night when the councilors approved several resolutions relating to the project.
"For several years the city has been reviewing options for replacing or rehabilitating the Market Street water tower," assistant city engineer Jason Anderson said. "After reviewing options, replacing the aging Market Street tower with a new 500,000-gallon water tower has been determined to be the best option."
The city requested and received an engineering agreement from Banner and Associates for preliminary, final design, bidding, construction and post-construction services for the project.
The agreement, which was approved Monday, is a time and material contract, with a total cost not to exceed $161,300, Anderson said.
The design portion of the agreement is estimated at $73,200 and the construction administration portion at $88,100.
"We're trying to do the project so that we get the best possible project that we can for the least possible cost," said city manager John Prescott.
Prescott went on to thank Banner and Associates for their assistance.
"I would say we probably spent more time negotiating this agreement than we have some other ones that have come before the city, and so as a staff we're comfortable," he said.
"While $161,000 is nothing to sneeze at, this is an amenity that should last our community up to 100 years."
Construction and improvements are scheduled to be completed by August 2014.
The council members also approved a water rate adjustment for 2013-2015 and authorized prepayment of a 1999 State Revolving Fund (SRF) loan for financing the project.
Finance officer Mike Carlson said the city had applied to the Department of Environment and Natural Resources (DENR) for an SRF loan in January 2011.
In March 2011, the city was notified that an SRF loan of $1,532,000, with 10 percent principal forgiveness for 30 years at 2.25 percent had been approved.
Carlson said the city hoped to utilize grant funds to reduce the impact on water rates.
"Since that time we have made two applications for community development block grants for additional grant assistance with this project," he said. "The first time, we were notified that there was no funding for this project at this time, (and they) asked if we wanted to be considered at the next round of funding."
The city council approved a resolution requesting consideration in December 2011, but was informed the next month there were no funds.
As a result, there will be an increase in the water rates, Carlson said.
"As the condition for the loan was that the city has rates in place to provide for the debt service on the new loan at 110 percent, our revenue new income at 110 percent debt service by repaying this 1999 loan, it'll free up some debt service and allow smaller rate increases to meet that requirement," he said.
The increase for 2013 is estimated at 1.99 percent for customers using 670 feet of water per month, which amounts to about 54 cents per month, Carlson said.
The years 2014 and 2015 will see an increase of 2.28 percent or 63 cents, and 2.54 percent or 72 cents, respectively, he said.
The city council adopted the resolution, but not before council member Steve Ward clarified their reasons for doing so.
"I just want the public to understand that as water rates go up, there is a purpose behind them," he said. "The city has done due diligence in trying to find grant funding, trying to make the water tower replacement as inexpensive as possible, and we reluctantly are agreeing to raise rates to pay for it."
The council members also recognized Duane Schilling, who has worked as a draftsman for the city's engineering department since March 22, 1972.
Schilling is retiring this Friday, at which time he will complete the longest current tenure of any City of Vermillion employee.
"I'd just like to say it's been an honor to work for the city, and I've learned a lot of things from the city, from the engineers I've worked with, and from all the mayors and city managers," Schilling said. "You've all been great."