3.5. SR 05-27-2003Howard R, Green Company
**Item 3.5.**
May 19, 2003
File: 818980J-0060
The Honorable Mayor and City Council
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
RE:
2003 PAVEMENT REHABILITATION IMPROVEMENT
AWARD OF CONTRACT
Dear Council Members:
Finance Director Lod Johnson has requested that the award of the 2003 Pavement Rehabilitation
contract be brought forward to the Council at this time. Attached is a separate memo from Lori
Johnson explaining the actions of the State Legislature and how they will affect this project.
We have tabulated the bids received on Wednesday, May 7, 2003, for the Pavement Rehabilitation
project. There were a total of five bidders. The table below lists each of the bidders and their total
bid:
Barbarossa & Sons, Inc.
Richard Knutson, Inc.
North Valley, Inc.
Hardrives, Inc.
Arcon Construction Co., Inc.
$1,093,249.20
$1,118,669.45
$1,124,515.67
$1,146,612.72
$1,242,092.88
The feasibility study for this project estimated the construction cost at $1,355,000. Barbarossa &
Sons' Iow bid of $1,093,249.20 is approximately 24 percent under the feasibility estimate. As the
feasibility study laid out, the Elk River Municipal Utilities are paying for all of the water improvements;
the remaining street and amenity improvements were proposed to be one-third assessed and two-
thirds funded by the City. With the Iow bid less than the feasibility estimate, the City share of this
project will be reduced.
Barbarossa and Sons, Inc., has successfully completed work in the City of Elk River in the past.
Therefore, we would recommend award to them as the lowest responsible bidder in the amount of
$1,093,249.20. Attached is a resolution for the City Council's consideration, which will make the
award to Barbarossa & Sons, Inc.
Ltr-051903-Council
1326 Energy Park Drive · St. Paul, MN 55108 · 651/644-4389 fax 651/644-9446 toll free 888/368-4389
City Council
May 19, 2003
Page Two
If you have any questions regarding this issue, I will be in attendance at your May 27, 2003 City
Council meeting.
Sincerely,
Howard R. Green Company
Terry J/~t~urer, P.E.
TJM:sw
Enclosures
Ltr-O51903-Council
Howard R, Green Company
RESOLUTION 03-
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION ACCEPTING BID AND AUTHORIZING
EXECUTION OF CONTRACT IN THE MATTER OF THE
PAVEMENT REHABILITATION IMPROVEMENT OF 2003
WHEREAS
pursuant to a City Council Resolution 03-24, passed at the April 14, 2003
meeting, competitive bids were solicited and received for the 2003 Pavement
Rehabilitation Improvement; and
WHEREAS
the City Council has considered the amount of the bids and the responsibility of
the bidders and determined that with Barbarossa & Sons, Inc., is the lowest
responsible bidder;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota:
The Mayor and City Administrator are authorized and directed to execute, on behalf of
the City, such contract with Barbarossa & Sons, Inc., as is approved by the City
Attorney, for the completion of the 2003 Pavement Rehabilitation Improvement
according to the approved plans and specifications designed by City Council Resolution.
The City Administrator is authorized and directed to forthwith return to all bidders the
deposits made with their bids upon execution of the contract specified above.
Passed and adopted this 27th day of May, 2003.
ATTEST:
Stephanie A. Klinzing, Mayor
Sandra A. Peine, City Clerk
Res-051903-a12
Pover
MEMORANDUM
*Item 3.5.*
TO:
FROM:
DATE:
SUBJECT:
Mayor and City Council
Lori Johnson, Finance Director
May 27, 2003
Resolution Accepting Bid and Authorizing Execution of Contract in
the Matter of the Pavement Rehabilitation Improvement of 2003
The assessment hearing for the 2003 street rehabilitation project was held recently, but contract
award and action on the resolution adopting the final assessment roll were withheld. This was done
because of pending legislation that would have eliminated the city's ability to levy for new public
improvement bonds. As you know, the city is paying approximately two-thirds of this project, part
of which will be paid with property taxes. Although at this point the structure of the bonds has not
been determined, the ability to levy to meet debt service as needed is crucial to this phase and future
phases of this long term project.
A recent Senate plan now gives cities a window of time in which to preserve their right to levy for
bonds. The League of Minnesota Cities Bulletin summarized the new language as follows:
"To achieve the freeze, cities would be prohibited from incurring new debt that would
require an increased property tax levy in 2004 or 2005 ........ The bill would allow bonds
issued before June 1, 2003, as long as: 1) an agreement for the sale of the bonds has been
entered into between a municipality and a purchaser or underwriter by that date; 2) the
municipality is party to a contract or letter of understanding entered into before June 1,
2003, with the state or federal government that requires the municipality to pay for a project;
or 3) the municipality has entered into a contract with a builder or supplier before June 1,
2003, for a project funded with the bonds."
As we all know, the Legislature is still working on the final tax bill so the above language is by no
means final. However, the best option now appears to be to meet the June 1 deadline by awarding
the construction contract so the 2003 street rehabilitation project can move forward in 2003. I have
discussed this issue with both Jim O'Meara, bond counsel, and Mark Ruff, financial advisor, and
have gotten their respective interpretations of the proposed legislation and their thoughts on how
this provision may change as the tax bill continues to be negotiated. Both agree that by having the
2003 street rehabilitation contract awarded, signed, and delivered to the city before June 1, the city
reserves its right to levy for the payment of the bonds. Of course, there is still some risk as to
whether or not this levy will be considered a special levy or part of the limited levy. For the past
several years, approximately $150,000 of the limited levy has been designated for infrastructure and
capital projects so there is some room in the current levy to cover debt service. However, this also
means that there may be less available for other funds. Bonds will not be issued until the tax bill is
finalized so that the bond is structured to accommodate the city's levy authority.
Action Requested
City Council is asked to award the 2003 pavement rehabilitation improvement contract as outlined
in Terry Maurer's memo with the understanding that the debt levy may not qualify as a special levy.
(Adoption of the assessment roll incorporating the changes made by the City Council at the
assessment public hearing will be requested on June 9, 2003.)
S:~COUNCIL\Lori\streetassessment.doc