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HomeMy WebLinkAboutAgenda - 08-22-1995 - IX-A t 1 OR AN G E C 0 U N T Y BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 22, 1995 Action Agenda Item # X'L. SUBJECT: Piney Mountain Homeowners Association petition for remission of County administrative and legal expenses related to the Piney Mountain wastewater treatment improvement project DEPARTMENT: County Manager PUBLIC HEARING: Yes B No ATTACHMENT(S) : INFORMATION CONTACT: Petition from the Piney County Engineer ext. 2300 Mountain Homeowners Assoc. TELEPHONE NUMBERS: Hillsborough - 732-8181 County Engineer' s memorandum Durham - 688-7331 Mebane - 227-2031 Chapel Hill - 967-9251/968-4501 PURPOSE: To present to the BOCC information related to: 1) the County' s costs/charges for providing legal and administrative services for the Piney Mountain wastewater treatment project and grant; 2) the Piney Mountain Homeowners Association' s request that the County' s (as well as OWASA' s) legal and administrative charges be remitted; and 3) the status of the Piney Mountain wastewater treatment construction project and expenditures from the County' s Piney Mountain project account. BACKGROUND: Since March 1994, the County has been involved in obtaining a state high unit cost grant, constructing a new wastewater pumping station and force main and making improvements to the existing wastewater collection system and individual STEP systems. During this time frame, the County collected $348,850 from the Piney Mountain Homeowners Association and $88,500 in high unit cost grant funds. The total of $437,350 was deposited in project account which was created for the sole purpose of funding the construction and associated expenses for the improvements to the Piney Mountain wastewater treatment system. To date $322,355 has been dispersed from this account to pay for construction costs, OWASA' s legal and administrative charges, pump station/force main engineering fees, collection system and STEP system engineering fees and Durham tap-on fees. Additional expenditures of $49, 130 in documented or estimated construction, engineering and County legal and r 2 i administrative costs are pending. The estimated total of County fees is $24,630, which includes $22, 130 in documented costs which have already been incurred (though not billed to the Piney Mountain account) and $2500 in estimated costs for transferring title of the Piney Mountain wastewater collection system and pump station/ force main to OWASA. If the cost estimates are correct, approximately $65,865 plus accrued interest could be returned to the Homeowners Association at the close-out of the Piney Mountain project. It now appears that the project will be completed and closed out in September 1995. A memorandum outlining the steps or process for closing out the Piney Mountain project, from County Engineer' s perspective, is attached. Included as an appendix to the County Engineer' s memorandum is a more detailed breakdown of the County' s administrative and legal costs as well as an accounting of general project expenditures and estimated costs remaining. Orange County' s participation in the process to obtain state grant funding and to provide an extension of municipal sewer service to the Piney Mountain subdivision was discussed in several of the BOCC meetings which occurred between March and September of 1994 . Throughout these discussions, it was considered as given that: a) the County would try to assist the Piney Mountain property owners to obtain state grant funds for wastewater system construction; b) the Piney Mountain Homeowners Association would pay all wastewater system costs not covered by grant funds; and c) OWASA would eventually own and always operate and maintain any municipal sewer system serving the Piney Mountain subdivision. However, the grant funding requirement that the County at least temporarily own the wastewater system was somewhat problematic for both the BOCC and County staff. A primary concern was the potential for the County to incur significant ownership-related liabilities and costs. To address County concerns as well as those of OWASA and the Homeowners Association, three contracts were developed to provide a binding agreement among OWASA, the Homeowners Association and the County. This agreement provided a basic framework by which the Piney Mountain wastewater system would be financed, owned, operated, maintained, administered, etc. In addition to addressing the County' s concerns about potential ownership liabilities, the three contracts were crafted specifically to conform to the principles intrinsic to the County' s Water and Sewer Policy and Wastewater Treatment Management Program (WTMP) . The overriding concept of the contracts was first to adhere to the Water and Sewer Policy by providing for the extension of municipal sewer utilities into the Rural Buffer solely to address a specific public health problem. Adherence to t 3 the principles of the WTMP was accomplished by insuring that the cost of County intervention into a waste treatment problem involving an on-site treatment process more complex than that of single family conventional septic tank systems is paid by the individual(s) directly served by that intervention. Specifically, the contracts which bound OWASA, the Homeowners Association and the County together allowed, provided for or required: 1) the extension of municipal sewer service as necessary to serve approved lots in the Piney Mountain subdivision and only those lots; 2) the assumption by the Homeowners Association of all expenses and the deposit with the County of funds for all estimated expenses for pump station/force main and collection system construction, including the legal/ administrative expenses of OWASA and the County; 3) the initial assumption of ownership of the PUMP station/force main by the County and the transfer of that ownership to OWASA as soon as practicable under the terms of the state grant; 4) the retention of STEP system(s) ownership by the individual homeowners with the requirements that: a) each STEP be evaluated by an engineer who would provide a certified report of needed replacement or repairs and associated costs; b) the Homeowners Association, on behalf of each homeowner served by a STEP system, be responsible for the repair or replacement of each STEP system; and c) funds amounting to 110 % of estimated total STEP systems repair costs be placed on deposit, by the Homeowners Association, with the County until all repairs are completed; and 5) the provision by OWASA - at the expense of the Homeowners Association- of all necessary technical and administrative services necessary to bid, construct, operate, maintain and administer the pump station/force main and collection systems. The three contracts were approved in concept by the BOCC on 20 September 1994 and executed by the County, OWASA and the Homeowners Association on 12 October 1994. Although the Piney Mountain Homeowners Association has previously agreed to pay and remains contractually liable for payment of County and OWASA legal/administrative costs associated with the wastewater project, it has petitioned the County and OWASA for remission of those costs. The BOCC was petitioned at its 4 August 1995 meeting. A copy of the petition, which includes a Homeowners Association accounting of total wastewater treatment system-associated income to and expenditure by the Piney Mountain Homeowners Association, is attached. Staff has made no attempt to confirm the Association' s accounting for any income or expense other than the income and expense which has passed through the County' s Piney Mountain project account. RECOMMENDATION: As the Board decides To:Ma.Kadny SWw at Orange County From:Noonan C.ChndN Fax:(919)4994171 Vole:kV191 499.6171 Page 2 of 6 Friday,duly 21,1996 1.16:14 PM ' 4 July 27, 1995 Petition for Remission of Administrative and Legal Costs To the Orange County Board of Commissioners and the Board of Directors of OWASA from Piney Mountain Homeowners Association Piney Mountain subdivision off of Mount Sinai Road in the Rural Buffer of Orange County i It has been two and one-half years since we, as Piney Mountain property owners, first learned that there were serious problems in renewing the operating permit for the low pressure pipe system("LPP System")in our community operated by North State Utility Corporation('North State"). Since then we have undertaken extensive efforts to resolve our wastewater system crisis. We have engaged engineers and soil scientists. We have coordinated complex negotiations and agreements with Chapel Hill, Durham, Carrboro, Orange County and OWASA to investigate the nature of the problems with the LPP System and to arrange for an alternate way of disposing of wastewater from our subdivision. We made appearances before the N.C. Utilities Commission and in fact filed the petition that led to the appointment of emergency operators for all North State LPP Systems throughout the State. We were the first group to go through the maze of cost- consuming requirements to seek and receive a grant from the Environmental Management Commission("EMC"). We filed a two lawsuits: one against the State of N.C., and a second against the subdivision's developer, engineer and North State. We are proud of our leadership role in helping our state and other communities to address the crisis in North State LPP systems. We are proud of our success as a community in solving our own wastewater crisis by marshaling human and financial resources, and in remaining united despite many disunifying factors. We are proud of the first-class wastewater system which we are contributing to OWASA, the value of which exceeds$500,000, including both new construction and repair of the existing collector system. We are proud that our specifications for the new system went far beyond statutory and regulatory requirements in including an odor control system which resulted in a total of$45,600 in extra construction costs(for the odor control system, road widening and an additional well). We are proud to contribute to the beauty of the Rural Buffer by obtaining a transfer from North State of the land previously used for nitrification fields and dedicating this land to open space, greatly exceeding the open space requirements of the Rural Buffer. We are proud of the good working relationships we have established with the staff of both Orange County and OWASA, and we thank them for their cooperation and good will in helping us through this process. To:Ms.Haft Bakes at Oramp County From:Dooms.C.CM1sW Faa:019)4894171 Yoko:019)489-0171 Paps 7 of6 FddW,,,1Ay 21,1996 1.17:31 PM ' Piney Mountain Petition -2- July 27, 1995 S Now that we are at the end of this process, as we compare our situation with that of other neighborhoods whose North State LPP Systems also failed, we see observe some striking contrasts. In Wake County, for example, the county government has assigned a project manager to work with county attorneys to establish six sewer districts for obtaining grant money from the Environmental Management Commission("EMC"). Wake County is absorbing, and the Wake County customers are not being billed for, all administrative and legal time required by the county project manager and attorneys for the grant application process, the selection of design engineers, the preparation of bid documents, the selection of contractors, and the supervision of the construction. In addition, Wake County has succeeded in making available to residents in all 6 sewer districts a low interest revolving loan program which provides loans to former North State customers at the rate of 3.04% per year over amortization periods as long as 20 years, to pay for the construction assessment not covered by the grant from the EMC. In contrast with the experience of the Wake County North State Customers, the attached Expense Statement for Piney Mountain shows that Piney Mountain has spent $176,000 to hire attorneys, soil scientists and engineers to do what Wake County has done at no charge for its North State customers. It shows that Piney Mountain has incurred substantial attorneys fees to obtain grant money and settlement funds from responsible parties, and yet each lot still shows a financial loss of$4,030. Moreover, it does not show the staggering investment of time and energy and personal funds expended by so many Piney Mountain residents in two and one-half years of daily meetings, telephone conversations, late night paperwork, travel time, and physical inspections and labor. Also in contrast with the Wake County approach, is the agreement dated October 12, 1994("the Agreement")among Piney Mountain, Orange County and OWASA. Unlike Wake County, which is underwriting all administrative and legal costs of creating the sewer districts, applying for state grants, and overseeing the design and construction process for the new municipal systems, Orange County and OWASA are requiring Piney Mountain to pay"(1) all costs and expenses, including the value of administrative and professional time expended by each, in the application for, administration of and the closeout of the State Grant; and(2), all costs and expenses not covered by(1)expended by each in the design, bidding and contract award, construction, regulatory approval and permitting of the Subdivision wastewater system." Finally, we note that since 1994 the policy of OWASA has been not to charge any administrative or legal costs associated with assessment projects, and to cap assessments at $50 per linear foot. Even prior to 1994, OWASA did not charge for administrative or legal costs unless they exceeded 15%of construction costs. Can Piney Mountain be distinguished from other OWASA assessment projects? It cannot. We look forward to being OWASA customers,just as does any other homeowner whose septic tank has failed. The Piney Mountain Appeal To:Ms.Kalhy S Wr at:OrwW C urdY From:D4Donh C.Christie Fax:(919)4883171 Voice:(919)489-4171 ?a94 4 of 5 Fr)oay',UIY 21,1986 1 18.57 PM 6 4 Piney Mountain Petition -3- July 27, 1995 It is in light of these contrasts, and our extraordinary cost in human labor, money, and emotional fortitude that we appeal to you to offer a small acknowledgment of our efforts by remitting the administrative and legal fees incurred by OWASA and Orange County in the preparation of legal documents associated with the Piney Mountain project, and in contributing engineering and other staff time to oversee the project. The total amount to be remitted does not exceed $25,000 for each of OWASA and Orange County. This is a small sum when compared to the annual budgets of Orange County and OWASA. It is a small sum when compared to the value of the system which will be conveyed to OWASA(in excess of$500,000 which includes$350,000 in new construction and$150,000 as a conservative estimate of the collector system which has been extensively repaired). It is not a small sum to the Piney Mountain residents, whose lot per lot would be cut from $4,030 to$3,127 if the administrative and legal costs are remitted. We thank you for the opportunity to present this appeal to you and answer your questions at the OWASA Board meeting of July 27, and the Orange County Board of Commissioners meeting of August 3. By August 15, we hope to have approval of completion of our project from OWASA and recommendation from the Orange County staff of final disbursements of all amounts remaining in our account with Orange County to Piney Mountain assessed members. Thank you for your consideration of our petition and for your service to our community. We pledge our continued support for your work and the preservation of our environment and neighborhoods. To:Ma.Kaft Baker at Orange Couriy From:Deborah C.CMaala Faa:019)4991171 Yok:a:019149"171 Papa 8 of6 Fnday,.uy21,1996 1.19:68 PM 7 Piney M o u n t a i n Petition -4- July 27, 1995 Piney Mountain Expense Report PREPARATORY COSTS Project investigation and analysis (soil testing,attorney's fees,engineering) ($146,000) Grant application costs (30,000) Subtotal preparatory costs ($176,000) PROJECT COSTS Paid To be Billed Force Main ($216,522) Hook Up Fee (25,901) Engineering (35,220) Piedmont EMC (3,852) North State Land Survey (712) Step/Collector Engineering (25,253) ($6,000) Collector Replacement (28,711) (3,289) Collector Testing/Repair (30,089) (3,000) Well (11,000) STEPS(estimated) (36,000) Subtotal Project Costs (425,549) ADMINISTRATIVE/LEGAL GOV.COST OWASA (22,312) Orange County (24,633) Subtotal Administrative/Legal Gov. (46,945) GRAND TOTAL EXPENSES (648,494) LESS SETTLEMENT AND GRANT FUNDS Developer assessment and settlement 222,552 Engineer settlement 75,000 State of N.C.settlement 120,000 Grant 88,500 Less litigation costs (67,079) Subtotal Settlement and Grant Funds 438,943 NET LOSS (209,551) NET LOSS PER LOT(Average) (4,030) NET LOSS PER LOT WrIH GOV ADMIN/LEGAL FEES REMITTED (3,127) Note: Not included: Cost of abandonment of Phase 2 nitrification field(est.$2500-$10,000) 8 ' OPA GE COUNTY HMESBOROUGH -NORTH C AROLIN lla zagr�.r C ce &VaG/is/led,-7762 _ MEMORANDUM TO: County Commissioners John Link, County Manager Geoff Gledhill, County Attorney Piney Mountain Homeowners Association FROM: Paul Thames, County Engineer DATE: August 16, 1995 SUBJECT: Closing out project to provide improvements to the Piney Mountain wastewater treatment system On 10 August 1995, the County Manager and County Engineer met with representatives of the Piney Mountain Homeowners Association, at the Association' s request, to discuss the imminent conclusion of Orange County's role in the Piney Mountain wastewater treatment system improvements project. Specific issues discussed included: a) the Association's petition that the County remit all legal and administrative charges related to the Piney Mountain wastewater treatment improvements grant, appl cation, and construction project; b) the eventual disposition of ownership of the abandoned waste treatment system nitrification fields and repair. areas which have also served as. the subdivisio'w a required open space and which presently remain ,under, the° ow 4hip, of�:.Mortihhstate Utilities; and c) the County Eng',ia'oeer's: p_erspeotive on the steps. that remain to be accomplished prior to cloWi.rt� -out the ccifftruction project. As the petition issue falls solely within -the purvtes`r of the BOCC and the issue of eventual ownership of nitrification fields/open space is not related to closing out the construction project, these issues have not been addressed in this memorandum. An appendix to this memorandum which provides an accounting of existing and estimated expenses for the improvements to Piney Mountain wastewater treatment system does, however, provide an accounting of the County' s administrative and legal fees. It has been the presupposition of the Homeowners Association, OWASA and the County that closing out the wastewater treatment project will include releasing all funds remaining in the County' s Piney Mountain wastewater treatment project account to the Homeowners Association. Likewise, it has been assumed that all pump station, force main and collection system construction and improvements will be completed prior to the transfer of ownership of these treatment system components from the County to OWASA. It has, however, been AREA CODE (919) 732-8181 • 968-4501 • 688-7331 • 227-2031 • FAX (919) 644-3004 Ext. 2300 9 contractually resolved by all parties that the County' s interest in the funds, if any; remaining in the Piney Mountain project account will be transferred to OWASA concurrently with County' s transfer of wastewater system ownership to OWASA. In the event that control of the remaining project funds does pass to OWASA, it will become OWASA' s responsibility to provide for the release of any remaining funds to the Homeowners Association. From the County Engineer' s perspective as to closing out the wastewater treatment project, there are four distinct categories of tasks or issues which must be addressed prior to project close out. The categories are: 1) identification and completion of all pump station and force main related construction contract and change order items; 2) payment of all outstanding bills related to pump station/force main construction, engineering, administrative, legal, etc. , costs; 3) identification and resolution of all issues involved in STEP system replacement, repair or improvement; and 4 ) OWASA' s acceptance of all wastewater system facilities and concurrence in all project close out issues. The categories can be reduced to more specific issues and tasks as follows: 1. Identification and completion of pump station/force main construction contract and change order items a) Execution of eyewash/emergency shower and potable water well change order and completion of construction b) Execution of pump station access drive widening change order and completion of necessary construction c) Execution of change order for abandoning the old Phase II system and monitoring wells and completion of construction Note: Each of the three tasks listed above may be accomplished by change order or other extension of the construction contract with Shiloh Utilities. Each task may also be accomplished as a discrete project using different contractors. However, if these tasks are to be funded from the County project account, adherence to all statutory public bidding requirements is required. 2. Payment of all outstanding bills related to pump station/force main construction, engineering, legal/administrative, etc. , costs; a) Payment of all costs associated with construction tasks a, b and c listed in ( 1) above b) Payment of remaining Colonial Engineering and Rust Engineering fees c) Payment of current County administrative/legal costs and provision of a deposit for estimated County expenses related to transfer of system ownership if so required by the BOCC 10 3. Identification and resolution of all issues involving STEP system replacement, repair or improvement a) Provision of final report by STEP system engineer, containing initial evaluation of all STEP systems with required repairs, final certification that required repairs have been completed and are adequate, and certified cost estimate for all required repairs not completed b) Deposit into a County STEP system account, funds totalling 110% of the engineer' s certified cost estimate for completing all remaining STEP system repairs Note: It is possible and perhaps probable that all STEP system repairs identified by STEP system engineer will have been completed by project close out and that there will be no requirement that funds be deposited with the County. However, the engineer' s certification that all repairs have been completed satisfactorily will be required. 4. OWASA's acceptance of all wastewater system facilities and concurrence in all project close out issues a) Provision of a formal OWASA certification that it is satisfied with the adequacy of the pump station, force main-, collection system and related facilities and is prepared to accept responsibility for and ownership of those components b) Provision of all standard release of lien, warranty, certification of completion, as-built drawings and all similar and standard construction contract close out documents to OWASA and the County c) OWASA concurrence with STEP system engineer' s report and cost estimate and with final disposition of all funds related to pump station/force main project and STEP system repairs I believe that this outline of issues and tasks related to closing out the Piney Mountain project accurately reflects the discussion of 10 August 1995. As an Appendix, an accounting of the past and projected activity of the Piney Mountain wastewater treatment system improvements account is provided. If I may provide any additional information or clarification related to closing out the Piney Mountain project or the accounting of expenditures, please advise. t 11 APPENDIX Actual and estimated expenditures from County- administered funds for costs associated with Piney Mountain wastewater treatment system improvements In November 1994, Orange County created a Piney Mountain wastewater treatment project account with a total budget of $437,350. Funding of $88,500 was expected to be provided by a state high unit cost grant (grant funding was received in June 1995) and $348,850 was provided by means of a cash deposit from the Piney Mountain Homeowners Association. The sole purpose of the account and its funds was to pay the estimated costs of engineering, legal/administrative services, capital facility fees and construction costs for the improvements to the Piney Mountain wastewater treatment system. The breakdown of those estimated costs was as follows: $ 235,000 Construction of pump station and force main improvements 23,500 10 % construction contingency 75,000 Collection and STEP system improvements 38,000 Engineering/technical services (consultants) 25,000 Capital facility fees (Durham tap-on fees) 15,000 OWASA administrative/legal costs 25,850 County administrative/legal costs $ 437,350 Total To date, the costs (which are eligible for funding from the County- administered project fund) that have been documented, paid, invoiced or estimated are as follows: $ 220,375 Pump station/force main construction (paid) 20,000 Pump station/force main construction change orders (est. ) 25,900 Capital Facilities Fees (paid) 22,230 Pump station/force main engineering (paid) 1,000 Pump station/force main engineering (estimated) 31,540 Collection/STEP system improvements engineer. (paid) 3,500 Collection/STEP system improvements engineer. (estimated) 22,310 OWASA administrative/legal expenses (paid) 22, 130 County administrative/legal expenses (documented) 2,500 County administrative/legal expenses (estimated) $ 371,485 Total The cost/expenditure figures shown above do not include any funds expended by the Homeowners Association for consulting fees to its own attorneys or for technical/engineering consultant fees incurred or expended by the Association prior to the creation of the 12 County' s project account. Funds expended by the Association to test, repair and construct portions of the subdivision collection system and the individual STEP systems are also not shown within the project cost/expenditure figures. These expenses are not eligible for payment from the County project fund, even though monies for these expenditures were included in the estimates which determined the total amount of the fund. This situation has occurred because the procedures by which those expenses were incurred did not conform to statutory bidding requirements for publicly funded projects. The contracts governing the actions and responsibilities of OWASA, the Homeowners Association and the County relative to the wastewater treatment system improvements make provision for repairs to the STEP systems owned by the individual homeowners in the Piney Mountain subdivision. The agreements require that an engineer provide a certified evaluation of needed STEP system repairs with a cost estimate for accomplishing those repairs. The homeowners are required to deposit with the County a sum equal to 110% of the cost estimate provided by the STEP system engineer. The Piney Mountain Homeowners Association has authorized the County to transfer funds remaining in the existing wastewater improvement account at project close out into another account which will fund the required 110% of the STEP system repairs. As of June 1995, the most recent engineer' s estimated cost of repair for all STEP systems was approximately $26,000. The required STEP system deposit totalling 110% of this amount is approximately $29,000. This $29,000 is not shown as an estimated expenditure in the Piney Mountain project cost/expenditure figures provided above. It is anticipated that all repairs to the STEP systems will be completed within the same time frame as the pump station/force main project. In this event, it is unlikely that any funds will be required for or transferred into a STEP system repair account. Assuming that no STEP fund transfers or other unanticipated and additional charges against the County project fund are incurred, the Homeowners Association stands to be reimbursed approximately $66,000 plus accrued interest at the close out of the pump station/force main project. In response to the Piney Mountain Homeowners Association petitions for remission of OWASA and County administrative/legal charges, the following information related to those charges has been compiled. To date, OWASA' s charges to the homeowners total $22,312. OWASA charges up through culmination of the grant application were $11260, which included approximately $6500 in legal costs associated with development of the agreements among the County, OWASA and the Homeowners Association. All of the remaining OWASA charges, approximately $15,812, reflect the engineering and administrative costs related to development of agreements, project construction administration and supervision, etc. OWASA has determined that all additional costs incurred after 1 July 1995 will be integrated into individual sewer bills. i 13 To date, County expenses associated with the Piney Mountain project total approximately $22, 130. Of this total, $17, 130 are legal charges which have been billed and paid, $4500 are engineering- related administrative costs and $500 are other administrative costs. Approximately $3690 of the legal fees cited above accrued prior to the onset of the grant application process. It is estimated that an additional $2500 in legal/administrative fees will accrue during the process of closing out the wastewater treatment project and conveying ownership of system components, real property and easements from Orange County to OWASA. The obligation of the Piney Mountain Homeowners Association to pay the legal and administrative costs of both OWASA and Orange County is specifically referenced within the Piney Mountain wastewater treatment system improvement, ownership and operations contracts executed by OWASA, the County and the Association.