BY ADAM ATKINSON

North Country This Week

POTSDAM — Facing ever deepening costs in materials and labor, town board members, its legal counsel and contracted engineering service are debating whether to continue to develop the Route 56 water and sewer districts project and go to bid, or pull the plug on them.

And, at least one property owner who lives in the district is critical of the idea of dissolving the districts, and says the move would effectively put property owners there on the hook for more than $700,000 the town has spent on the project already.

The board, with attorney Roger Linden whom the town contracted to handle the legal setup of the districts, and project engineer Jay Berkman, from the firm C2AE, discussed the situation at the board meeting Nov. 9. More followup discussions are expected.

“We know we have cost overruns. And the figures I’m going to give to you on this are what were brought to us by Mr. Berkman back in January of this year,” Linden told the board.

“On the sewer the original total project cost was $5,491,000. Now it's $8,109,500 call it. That’s a 64 percent increase in the project cost. Current EDU calculation based on 148 EDUs would be $1,874 per year for sewer. Which is 2.7 times the current Comptroller limit.”

On water the original total project cost was $4,782,000. Now, the figures we got in January are $6,665,000. That’s a 39.5 percent increase,” Linden said. “Current EDU calculation based on 148 units for water will be $969 per year.”

The attorney said the combined cost to district residents for water and sewer service from the town would be $238 based on those numbers.

Linden said the town has borrowed about $1,250,000 for each district project to date, and will be paying $53,000 annually on interest with the current rates. He said if the town stopped the sewer project now, they would have the option to call the bond which allows them to pay it off early, saving about $30,000 in interest.

The attorney said the town can’t go to bid on either district project without USDA review that the town has all the pieces in place for the projects, and eventual approval. That approval takes time and the project approval calls for the town to go to bid within 5 years, a deadline which looms this coming year.

“And everything has to be in place before they let us go to bid,” Linden said.

He said with the additional expected costs climbing the town will need another hearing and a vote from district residents to have the project approved, which also takes time. Linden said that the town will have to present the two district projects with the numbers and funding the town currently has and not on speculation the municipality would receive additional grant funds for the work.

The attorney said the bigger problem of the two districts is the sewer district, which is the more expensive of the two. He said he was concerned that if the projects had to go to vote again, the water district project could also get voted down due to association with the sewer district.

“I would like to see the people in that district get something for their money,” Linden said, adding that the town could keep the water district project afloat and sink the sewer.

Town Supervisor Ann Carvill called the news “sobering.”

The Route 56 Water and Sewer Districts project has faced several challenges up to this point. The town board first agreed to establish the districts in February 2021 after several years of discussion on the issue, and a subsequent vote by the residents in the district boundary approved the districts’ formation 19 to 10.

The idea was to extend town water and sewer service down the Route 56 commercial corridor in an effort to attract development there.

The now defunct L.C. Drives company was expected to construct a manufacturing facility in the districts before the firm was shuttered citing poor outside investment interest in its new electric motor design.

The town plans to leverage about $4.78 million in grants and loans from USDA Rural Development will help pay for the project, and is seeking other grant funding sources as well.

At the Nov. 9 meeting, Berkman countered Linden’s advice to sink the sewer project.

“I don’t disagree about most of what Roger said, but he is making some strong assumptions,” Berkman said. He said that the town to date has paid the firm $746,048 to develop the engineering and site plans.”

“We are like 95 percent done,” Berkman said. The engineer said that state agency review of the completed plans of the districts could typically take about 3 months.

“With drawings going in now we are looking at the end of January, February to go to bid,” he said.

The town has received some grant money already, and are waiting to learn if they have been approved for funding from the state’s Water Infrastructure Improvement (WIIA) program which provides competitive grants to help municipalities fund critical wastewater and drinking water infrastructure projects.

In addition, USDA has a cost overrun process which could allow the town more funding, the engineer said.

“We expect these prices to be higher,” Berkman said. He said the firm has met with the local and state USDA officials. However, the USDA cannot start their cost overrun process until they get a bid number.

Berkman said C2AE wants to get a bid number and then go through the cost overrun process to see what additional funding USDA would have to offer, and then what grants would be available to cover the project.

Berkman said Linden was correct that at that time the town would have to hold a new public hearing and present the new first year project cost for a vote by the users in the district.

“And let them vote, let them decide, the people who are going to pay the bill either way, whether you terminate it now and put the money that is the short term financing and that interest on them now without ever having the service,” Berkman said. “Or get to a bid number, see if we can get more funding, fight for it, and let them vote on what could be a higher cost then. Let them decide. Let the residents of the district decide whether they want to move forward with the project.”

“That’s what we would advise through and through,” Berkman said.

Carvill asked Linden what would be the financial benefit to ending the project now.

Linden said his belief is that USDA will not let the town go to bid until the issues are resolved with the cost.

Councilwoman Toni Kennedy said she thought the town would have to hold a vote anyway to stop the project, however Linden said the town board has the authority to stop the project without a public vote from the district residents. He said the fact that the districts have been approved and formed does not mean the town has to go through with it, but it does mean the town has to pay the bill.

“One of my concerns is that the bid question seems to go out and out and out. It’s like the unreachable goal. So I think that is what has frustrated some people in this process because it seems more like a guessing game than anything we can assure ourselves,” said Carvill.

Deputy Supervisor Marty Miller agreed with Carvill and pointed out that when the bids do come in they will be subject to a state comptroller review which could take months.

Carvill said there was a lot to ponder and suggested the board review the information that was presented and discuss it further at their next meeting.

Miller suggested the town set up a meeting with USDA to review the current situation prior to the board convening on Dec. 12.

In a separate conversation with North Country This Week, Carvill called the situation with the project’s changing costs due to higher cost of materials “frustrating.”

“You feel helpless,” she said. “We are going to talk to funding sources and see if we can get any optimism.”

The supervisor said her sense, though, was that the board may be inclined to seek new bids for the districts and let the projects go to public vote for approval again.

At least one of the property owners in the district is critical of the idea of the town dissolving the district and moving on, and would prefer the town go to bid to learn what the new numbers would be and then let the voters who live in the district decide the project’s fate.

“It would be a travesty if we allowed an attorney (not associated with a property owner) to request the termination of this project without our voice, the property owners,” property owner Bill Kenny told North Country This Week.

In a letter to town board members Kenny details project cost projections and other aspects from his perspective.

“To summarize, I feel it would be irresponsible to terminate the project at this point without having the bids in,” Kenny said in the letter. “I do not feel like the near 100 deed owners understand that if this project terminates we will all be on the hook for almost $750k in engineering and planning that would need to be paid back as a tax debt service. I personally do not like the idea of being taxed to pay back a project that was terminated without having all of our estimates, updated grant requests, and engineering 100% complete. It would infuriate me if a board decided to burden us, the taxpayers, with the debt service without giving us the opportunity to know the true per EDU cost. To me, that would be irresponsible and honestly, I don't understand how that would even be legal.”