MODESTO — Modesto has agreed to pay $9 million to allow the Modesto Irrigation District to complete the botched upgrade of the districts water treatment plant, which provides the city with much of its drinking water.
MID and Modesto entered into an agreement in 2005 for the irrigation district to more than double the capacity of its Modesto Regional Water Treatment Plant at Modesto Reservoir from 30 million gallons of drinking water per day to 66 million gallons. The city is paying for the expansion, while MID would continue to own and operate the plant.
The upgrade has taken more time and cost more money than expected. MID fired project designer and construction manager Black & Veatch in September 2010 after finding more than 100 deficiencies in the work. The district and Modesto eventually recovered $14.9 million from Black & Veatch and other firms involved in the project for the additional costs to finish the work.
But that left a $9 million shortfall to complete the project and led to a dispute between MID and Modesto over which of them would make up the shortfall. In August, MID sued Modesto over the issue.
Thursdays agreement does not end the litigation, but it allows the project to continue.
This ensures the plant will get completed, Mayor Garrad Marsh said. If we had not been able to reach a settlement, construction would have stopped.
He said thats because there was no more money for the project. He said any delays could have doubled the amount needed to finish the plant expansion, from $9 million to $18 million.
Modesto is not necessarily out the $9 million. The city and MID also agreed to settle the lawsuit and their differences including which of them is responsible for the $9 million shortfall through the use of a reference judge, who is a retired judge or neutral attorney picked by the parties to hear their dispute. The process is expected to be faster and cheaper than resolving the lawsuit through the courts. Other details are not available.
The expansion was expected to take about two years and be completed in 2009 at a cost of about $62.9 million. The completion date now is projected to be mid-2015 at an estimated cost of $107.5 million.
Marsh said it does not appear the citys water users will face rate increases even though the plant expansion has taken more time and money. He said thats because Modesto refinanced the bond debt it issued for the project. The refinancing will save Modesto about $500,000 annually.
Marsh added that the city gets about half of its water from the MID plant and half from wells. Some of those wells produce water at more cost than the water from the MID plant. He said the city can save more money by using more water from the MID plant as it becomes available and less water from its wells.
The agreement between MID and Modesto calls for Modesto to pay up to an additional $2 million if the cost to finish the treatment plant exceeds $9 million, according to an MID news release. MID is responsible for any costs above $11 million.
Marsh said despite their differences, the relationship between the city and irrigation district has been respectful and amicable.
Bee staff writer Kevin Valine can be reached at email@example.com or (209) 578-2316.