Understanding the Consequences
Based on the justification presentation for suspending the Black Castle contract at the June 6th Town Hall Meeting, and my June 29th meeting with the Mayor, I feel it necessary to express my concerns by highlighting potential consequences to the City if the Black Castle contract is cancelled. As a Wimberley citizen and retired Project Manager/Engineer with 39 years of project engineering, design and construction experience, I felt that I needed to express these concerns.
A project construction package is the product of dozens of technically trained and experienced individuals, working over several months to years, creating a sound and environmentally safe design. This construction package has been completed and construction is in progress. Cancelling the project means a multi-million dollar scope change decision will have been made in a few weeks with minimal confirmed information. A small number of people in a short period of two to three weeks cannot possibly consider all the potential consequences and schedule impacts of this magnitude of scope change.
From my meeting with the Mayor, it appears that the Mayor is leaning toward cancelling the contract. At this stage of progress, the only valid reason for cancellation of any project is that it will not work as designed. Over-expenditure is neither a valid technical nor legal justification for cancelling the Black Castle contract. In addition to this, the over-expenditures to this point are due to the collection system unknowns and resultant design changes, not the Black Castle contract for the treatment plant.
Making this scope modification opens the door to serious environmental and legal consequences. Failure to get positive resolution on even one of my below concerns may result in project disarray and exposes the project to completion delays and significant engineering design, construction, permitting, and legal costs that will far outweigh any possible savings from cancellation. Below are my thoughts on what could go wrong and I am sure there are others I haven’t thought of.
1. This major scope change will put the TWDB loan in jeopardy. Cancelling the Black Castle contract without prior approval by TWDB would be a violation of the bond agreement with TWDB as that agreement clearly states that TWDB must approve any material change to the project. The consequences could be an immediate injunction to halt any disbursement of loan funds and the bond holders might make a call on the bonds. In effect, “You have broken the contract. We want our money now.”
2. Currently the E.D.A. Grant funds ($1,000,000) only allow the use of these funds for construction of the sewage treatment plant. Cancellation of the treatment plant may cause loss of these funds. We would have to petition the E.D.A. to grant a waiver to use these funds on a collection system and currently have no confirming documentation granting this waiver.
3. Although the Black Castle contract has a cancellation clause within it, it uses the term “fair and reasonable expenses.” The City’s and Black Castle’s interpretation of “fair and reasonable expenses” may differ by more than $100,000. If a “reasonable” agreement is not reached, the result may be a lawsuit by Black Castle. It will be challenging to finalize negotiations by the currently targeted cancellation date of July 22nd. In addition, there have been numerous contract proposal discussions between the City and Aqua Texas. During this time of a legally binding contract with Black Castle, there is a possibility that this could be viewed as a breach of contract or demonstration of lack of good faith and may be grounds for a lawsuit.
4. In the Mayor’s June 28th news column, she stated that it was a “relatively simple hookup” to cross Cypress Creek and tie into the existing Aqua Texas sewage collection systems. At this time, there have been no engineering scoping studies that confirm that Aqua Texas’ collection systems can handle the volume of present and potential future volume of the City’s sewage. Cancellation of the contract prior to this confirmation would leave the City at potential risk. Our only option at the time would be to build a separate two-mile long sewage line to connect with Aqua Texas in Woodcreek. This would include collection sumps, lift stations, and electrical power distribution for the lift pumps and control systems.
5. To cross Cypress Creek will require permits from TXDOT, TWDB, and TCEQ. If the contract is cancelled before receiving these permits, we are subject to two potential outcomes. If the permits are approved and the pipeline is constructed across Cypress Creek, we have then exposed Cypress Creek to the leakage of raw sewage due to possible external damages, especially in the event of major flooding in Cypress Creek, which we have experienced three times in the last five years. If you can’t get a permit, you would have to run a two-mile long sewage collection piping along Winter’s Mill Parkway, with the same issues mentioned in Item 4 for running a sewage line.
6. What do you do with several thousand cubic yards of fill that has been placed for the treatment plant foundation? Leaving in place exposes the fill to erosion and damming up nearby Deer Creek.
The project is being reviewed by the Mayor due to an anticipated over-expenditure that has nothing to do with the Black Castle contract. The over-expenditure would probably be less than $500,000 with all the over-expenditure due to collection system unknowns that will not go away or be reduced by contract cancellation.
Cancelling the waste water treatment plant (Black Castle contract) exposes the City to the potential for loss of project funding (probable), numerous lawsuits (probable), and raw sewage spills into Cypress Creek. Is the fairly well quantified WWTP project over-expenditure of less than $500,000 worth exposing the City to maybe a multi-million dollar debt, with possibly no functioning treatment system?
Our City deserves answers to all of these questions and a careful review of all possible consequences prior to making this scope change decision.
William H. Bowman