“Trust” was the word of the day Thursday and tempers flared when it came time for the Pagosa Springs Sanitation Improvement District board to approve an update to an agreement with Briliam Engineering.
An update of a 2007 contract with Briliam Engineering is required by the USDA in order for the town to receive funding for construction of a new wastewater treatment facility involving a USDA funding package.
The USDA funding package includes $3,145,000 in loans (at 2-percent interest) and $787,000 in grants.
In addition to the USDA funding, the town secured other funding two years ago — a $2 million loan from the Colorado Water Resources and Power Development Authority (CWRPDA) and a $1.25 million grant from the Department of Local Affairs — giving the town just over $7 million to construct the plant.
The update in question needed to reflect the change from the original wastewater treatment plant facility design and location to a newer design the town is pursuing.
The agreement was brought into question by members of the board at a June 23 meeting and a subsequent work session with Briliam staff.
Considering the item for approval again on July 21, the board was joined by town attorney Bob Cole, who discussed various changes made to the agreement following suggestions from the board and work with Briliam engineer Patrick O’Brien.
Cole outlined the changes in the agreement, through which he said he tried to decrease the town’s exposure, while still making the agreement acceptable to the USDA.
Many of the changes Cole discussed dealt with indemnification and insurance clauses, in some places increasing the coverage and clarifying a lack of coverage in others. In other portions of the contract, compensation amounts were lessened following negotiations with Briliam, Cole noted.
The new iteration of the agreement, Cole explained, also gives the town the right to approve material substitutions to the project, instead of lesser consultation rights in the prior iteration of the contract.
Sanitation Director Phil Starks said many of the changes were not completed prior to the contract’s appearance on the June 23 agenda due to the trust established between Briliam and the town, noting O’Brien’s subsequent willingness to compromise on the document and his status as a resident.
Town Manager David Mitchem echoed the sentiment that Briliam was very responsive to the changes.
“I have been impressed with this project,” said board member Don Volger, admitting that large contracts “overwhelm” him and that he was pleased members of the board were able to review the document and contribute to the revisions (Shari Pierce and Bob Hart).
Volger also praised the debate process that led to the current contract.
Mayor Ross Aragon echoed Volger’s comments, adding that he appreciated O’Brien’s positive demeanor throughout the discussions.
The tone of the meeting then changed, as Hart, first, admitted his construction company is currently serving as a subcontractor to Briliam, then asked for more time to review the updated contract, and expressed concerns.
The first concern Hart raised was that the resident project representative in the contract is a staff member of Briliam Engineering. Hart added that he was “adamant” about having a representative who would watch out for the town — preferably someone paid by the town.
Hart indicated that an employee of the engineer, in that capacity, would watch out for the engineer.
Hart then delved into the contract amounts, noting that a month ago the town considered an agreement for more money, and he voiced concern over an “open-ended budget” for the project.
“It seems like we’re just being loose with thousands and thousands of dollars,” Hart said.
Starks said the amounts Hart was discussing were incorrect and clarified that some of the costs were related to a required relocation of the project (not because of Briliam, he noted) and that a lot of work relating to dollar amounts discussed by Hart had occurred outside of the contract in question.
“Quit comparing it,” Starks said, “We can’t relate it to that contract.”
Mitchem backed Starks up, saying that additional expenditures were mandated by the Department of Health and that Briliam worked within the town budget.
Hart said that it seemed like the town had likely exceeded its original budget for the project, but admitted to not knowing what that budget amounted to, adding that, to him, it seemed like there is, “no limit as to what’s being spent. It’s open-ended.”
Hart also indicated there was a lack of accounting for the work product being provided before invoices were paid, at which point Starks left the room.
Volger said it was impossible to answer every question, but said that if Hart’s points were accurate, they were worrisome.
Volger continued, noting that if the attorney believed the contract process should proceed, he would trust that.
“You have to trust someone,” Volger said.
As Cole explained that he thought the contract struck a reasonable balance and went on to clarify portions of the contract that give the town control before the project would be allowed to exceed its budget, Starks returned with an armful of bound documents.
Starks, stacking the documents on a table, said he took offense to Hart’s comments and said there is an identifiable product for each invoice paid. “I do my job,” he said.
Mitchem again backed up Starks, stating that staff did have work product and evidence that work was “reasonably done.”
Hart continued, noting that the project was not originally bid out, making it “open-ended for costs.” Mitchem responded, saying the contract could not be changed retroactively and the town would seek to make good decisions in the future.
Pierce asked Starks if Briliam had stayed within the contracted amounts, to which Starks responded, “Yes.”
After Aragon stated that he felt the contract is balanced and it was time to move on, Pierce motioned to accept the document with changes discussed at the meeting.
In response to further questioning by Hart about trusting a project representative from Briliam, Volger said his trust stemmed from the fact that it would be problematic to change the representative now, stating he didn’t think the town had staff capable of taking on the job.
Starks pointed out that he will have daily meetings with Briliam Engineering and oversight during the facility’s construction.
With the motion approved by all but Hart, Starks said the project timeline is unknown at this point because the USDA has to approve the contract, at which point the town will be authorized to bid out the facility’s construction.