By LeAnn R. Ralph
COLFAX — It’s kind of a conundrum.
Instead of the Village of Colfax paying $40,000 toward a $1.6 million project to stabilize the Red Cedar River bank so the river does not wash out the wastewater treatment lagoons, the village is now in the position of paying $540,000 for a $2.6 million project.
The U.S. Army Corps of Engineers has been working on a plan for many years to stabilize the river bank, said Lynn Niggemann, village administrator-clerk-treasurer, at the Colfax Village Board’s January 24 meeting.
Over the last several decades, the Red Cedar River has steadily eroded the river bank and has come much closer to the wastewater treatment lagoons. Estimates are that perhaps one hundred to two hundred feet of river bank have disappeared.
Although the Army Corp of Engineers came to Colfax to view the erosion problem in December of 2014 and wrote the report in 2016, the village noticed a problem with the river bank eroding near the lagoons long before that.
In August of 2010, a thunderstorm that dumped up to eight inches of rain around the area in a couple of hours caused the bank to erode even more from stormwater run-off.
The wastewater treatment lagoons were built in 1982.
CDBG
The initial estimate to stabilize the river bank was $1.6 million, with the Army Corps paying 65 percent of the cost and the village paying 35 percent of the cost.
In 2019, Colfax was awarded $592,000 in Community Development Block Grant funds to cover the village’s 35 percent of the project.
The Colfax Village Board unanimously approved accepting the CDBG funds of $592,000 in August of 2019.
The money from the Army Corps of Engineers is considered to be matching funds, so with the award of the $592,000 as CDBG funds, the only cost to the village for the $1.6 million project was expected to be $35,000 to $40,000 to CBS Squared for the grant application, grant administration and project oversight.
The U.S. Department of Housing and Urban Development recently recalculated the income eligibility of Colfax residents. People in the village are now considered to be low to moderate income, which qualified the village to apply for CDBG funds.
The deadline for closing out the project to install rip-rap to keep the Red Cedar River from washing out the wastewater treatment lagoons was December 31, 2021, but in July of 2021, the village board approved an agreement between the Wisconsin Department of Administration and the Village of Colfax to extend the deadline to December 31, 2022.
Niggemann and representatives from CBS Squared have been working all along with the Army Corps of Engineers to try to get the project up and running.
To date, no one, either from the state or federal government, has provided an adequate explanation as to why the project has been delayed, although the COVID-19 pandemic may have contributed to the delay, along with communication problems between agencies, such as Housing and Urban Development and the U.S. Army Corps of Engineers.
$2.6 million
Contractors that planned to bid on the project came out to look at the wastewater treatment lagoons and the river bank a few months ago, Niggemann told the village board at the January 24 meeting.
The preliminary cost estimates are much higher than the initial $1.6 million, and the cost is now $2.6 million, or $1 million more than expected, she said.
The village has two options, Niggemann said.
The first option is to do nothing — but if the Red Cedar River floods and washes out the lagoon banks, then it is an emergency, and the village has no wastewater treatment plant, she said.
The second option is to find financing so the $540,000 can be wired to the Army Corps of Engineers by the deadline of April 30 so construction on rip-rapping the river bank can start, Niggemann said.
Colfax could apply for a Clean Water Fund loan, but the Clean Water Fund loans are paid out after the project is finished, so the village would need interim financing in the form of a bank loan, she said.
According to a letter dated January 20 in the village board’s packet from a grant specialist with the Wisconsin Department of Administration, if the village cannot find additional funds to cover the higher cost estimates to complete the project and have the bank stabilization construction start on time, which is no later than April 30, 2022, then the Wisconsin Department of Energy, Housing and Community Resources would cancel the 2019 CDBG award.
If the 2019 CDBG award were cancelled, Colfax could apply for a 2022 CDBG award, but much less funding is available this year than in 2019, when nearly all of the eligible applicants were able to be funded. The available money this year could fund 10 to 15 projects, or about 25 percent of the applications, so Colfax’s grant score would have to be much higher, the letter states.
Payments on a Clean Water Fund loan would amount to about $30,000 per year over the next 20 years, according to an analysis from Ehlers and Associates, the village’s financial consultants.
The payments would be covered by the village’s sewer and water utility and would not come out of the property tax levy.
Clean Water Fund
Jon Strand of CBS Squared told the village board he’d had a conference call with the state Department of Natural Resources, which administers Clean Water Fund loans for the U.S. Environmental Protection Agency.
The DNR is aware that the Army Corps of Engineers is involved and that the goal is to preserve and protect the village’s wastewater treatment plant, he said.
If the river bank is not stabilized, the wastewater treatment lagoons will fail and will wash out into the river, and the DNR “cannot allow that in good conscience,” Strand said.
The rip-rap project will cover 1,400 feet of river frontage, and a Clean Water Fund loan would be a good match for the project, he said.
The deadline to apply for a Clean Water Fund loan is October of this year, and the money would be awarded in June of 2023. The application would require a facility plan, specifications and paperwork from the design-build contractor, Strand said.
Protecting Colfax’s wastewater treatment lagoons from washing out into the river “would score well,” he said.
The Clean Water Fund has a grant fund available for “principal forgiveness” of a loan. That could be a “silver lining” for Colfax, but the village will not know until 2023 whether the loan will be forgiven or whether it will be low interest loan, Strand said.
Does the DNR take any responsibility for the situation of the river coming closer to washing out the lagoons? asked Jody Albricht, village president.
“No,” Strand said.
Although the DNR decided the lagoons should be located next to the river to begin with, DNR officials may realize the village is in a bad position, which may lead to principal forgiveness on the Clean Water Fund loan, he said.
The sewer and water utility needs a certain debt ratio to fund the payments, but the analysis shows that “should be able to happen,” Niggemann said.
Stopping erosion
Rand Bates, director of public works, wondered why the village could not do some rip-rapping on village property to stop the erosion around a washout near the lagoons, rather than embarking on a long and expensive Army Corps of Engineers’ project.
Colfax would still need a permit from the DNR, even though the rip-rapping would be above the water line, Strand said.
The wastewater treatment facility is located on an outside bend of the river, and the river will eventually take out the lagoons, he said.
The plan from the Army Corps of Engineers is intended to solve the problem permanently, Strand said.
Would the Army Corps of Engineers guarantee the river bank would not wash out the lagoons in a 500 year flood? asked Carey Davis, village trustee.
Government is not very good at making guarantees, Strand said.
If the financing is for 20 years, then the design plan is for the project to last longer than 20 years, Niggemann said.
The Army Corps of Engineers is designing the project so the river bank holds for many times more than 20 years, Strand said.
The river has been “moving” recently, and the main channel has now moved back to the other side, Bates noted.
In 2011, SEH (the engineering firm of Short, Elliott, Hendrickson) estimated it would cost $275,000 to rip-rap the river bank, Bates said.
The village could arrange to do the work, and it would not cost a half a million dollars, he said.
The $275,000 from 11 years ago would be double today, and that would be just for the washout, Strand said.
The Army Corps of Engineers is spending more money up front, but it’s for a permanent solution, he said.
Erosion is a strange thing and does not occur at a constant rate, Strand said.
There could be very little erosion of the river bank for a long time, but then a major flood could come along and consume more of the bank than in the past, he said.
The Army Corps of Engineers is trying to stabilize 1,400 feet of river frontage so the whole bank does not slip away in a flood, Strand said.
The washout is a “cosmetic symptom,” but the entire bank along the wastewater treatment lagoons is sandy material, and since the slope is mostly sand, “it will keep eroding,” he said.
$1 million miss
How could the estimate for the project be off by $1 million? Bates asked.
When CBS Squared, or any other engineering firm, compiles an estimate for a street project, the estimate is within $20,000 or $30,000 of the entire cost, he said.
In recent years, street projects for Colfax have ranged from $300,000 to $400,000.
Strand said he did not know why the project estimate was so far off.
“CBS tries to be close. This is not close,” he said.
Over the past eight months, pricing has increased drastically. The cost of construction materials has increased, and contractors are having a harder time finding labor, so they have to pay their workers more and provide more benefits, Strand said.
The increase in material costs and the increase in labor costs could account for the additional $1 million for the project, he said.
Rip-off
The increased project cost is because of the delay in getting started, so taxpayers are being ripped off because two government agencies could not communicate (HUD and the Army Corps) and then there was the COVID-19 pandemic, said Gary Stene, village trustee.
Stene noted that the village could get interim financing for the project but that it may be of some benefit to also involve state and federal legislators to see if there is something they can do to help the village.
Strand said he would recommend a parallel track — apply for the Clean Water Fund loan, and at the same time, contact legislators.
Colfax will lose the CDBG funds if the project is not done by October, Albricht said.
Colfax will lose the CDBG funds if the project is not started by April 30 and finished by October, Strand said.
What if Mother Nature does not allow starting on the project by April 30? Davis asked.
The contractor can always start some work, such as moving equipment and materials to the site, Strand said.
In response to a question from Bates about what happens if Colfax does not get a Clean Water Fund loan this time around, Strand said Colfax can apply for a Clean Water Fund loan over multiple years.
There will be money from the infrastructure bill that was just signed into law, too, for wastewater and drinking water, so more funds will be available, he said.
“We gotta boogie or we will lose out,” said Jeff Prince, village trustee.
Damages
If the project is stopped today, the village is out the $100,000 that has already been spent, Niggemann said.
Colfax will spend $1.1 million total — $592,000 in CDBG funds and $540,000 in the form of a loan, she said.
Is there a guarantee that the project will be finished according to the timeline? Niggemann asked.
The Army Corps of Engineers has a penalty written into the contract that if the project is not finished by October 30, then the village will receive a payment for liquidated damages, Strand said.
If there are supply chain issues for materials, and the project is not done by October 30, then the village could always apply for an extension, he said.
On a vote of four “yes” to two “no,” the Colfax Village Board approved moving forward with finding interim financing for the $540,000 and moving forward with a Clean Water Fund loan application.
Voting in favor of the motion were village trustees Jen Rud, Gary Stene, Margaret Burcham and Jeff Prince.
Village president Jody Albricht and village trustee Carey Davis voted against the motion.
Village trustee Anne Jenson was not at the meeting when the vote was taken.
