City officials took the first step toward financing the proposed Duck River dam Friday — though they are no closer to choosing a project manager.

The proposed 640-acre reservoir will be located east of Lake Catoma and north of U.S. Highway 278, and will include a six-mile pipeline with a 32 million gallon-per-day capacity.

With land acquisition scheduled for completion around April, the Cullman utilities board has been looking at possible financing options over the past few months, and hired an underwriter this week. The Raymond James firm will be the lead underwriter for the approximately $70 million secondary water source project, with Frazer Lanier and Merchants Capital both handling 25 percent of the work. Frazer Lanier will also assist with the presentation to investors, and all three companies will help sell the 30 year bonds to fund the project.

Project liaison Dale Greer said all three underwriters have done significant work on the project over the years, as it evolved from the initial plans in the 1990s. The project has started and stalled several times due to environmental lawsuits over the years, though those have since been resolved.

City council president Garlan Gudger, Jr. said he believes all the firms involved will do an excellent job moving forward.

“As lead, I think with their sales force at Raymond James, that would be my selection, but all three are viable options,” he said. “But, I’d also like Frazer Lanier as co-manager and involved in the presentation.”

The board is also debating whether to fund the project with one large bond, or two smaller bonds, though no decision has been made in that regard.

Bond counsel for the project Nick Greenwood, with Hand Arendall, LLC., sad the choice of an underwriter would actually have little bearing on the eventual decision on how to fund the project.

“That’s not really something to concern yourself with now,” he said. “I don’t believe the choice of an underwriter will have any real impact on the cost of the project, but it will impact the process ... My advice is to go with an underwriter you feel will do the best job in getting this sold.”

The exact cost of the project — which is currently only an estimate — should also play a part in the funding decision, Greenwood said.

“I wouldn’t recommend you do any part of the project until you know you can pay for the whole thing,” he said. “The best thing to do is get a definite feel for how much this is going to cost, and if you will be getting any federal funds. The worst thing you could do is go into this thing thinking it’s going to be a $60 million project, then find out it’s going to be $70 [million], $80 [million], or $90 million once you’ve gotten started.”

Greer said a more definite price tag — as the current estimate of $70 million is based on U.S. Army Corps of Engineers estimates — should be available in the coming months as engineer of record CH2M Hill works through the plans developed by the Corps. CH2M Hill became engineer of record for the project last year, in an effort to expedite the construction process.

“If they [CH2M Hill] would have been able to get the documents transferred from the Corps a little sooner, we’d already have a much closer number for the cost,” Greer said. “CH2M Hill didn’t get those until just recently, so in the next two or so months we’ll get a whole lot closer to having a real solid number.”

Thanks to the evolution of construction processes over the past decade, Greer said some cost-savings are also likely in the offing as CH2M Hill adjusts the plan.



Project manager

The board has also spent the past month interviewing and considering potential Duck River project managers — though they have now put the process on hold temporarily.

The board had been considering engineer Eric Thomas, Hoar Program Management and local engineer Dwight Moss for the position. But, after some debate Friday on exactly what role the project manager will play in construction, the board has decided to table the decision.

Gudger said he would like the project manager to be entirely over the construction process, and report directly to the utilities board.

“We should take construction management and move that over under the project manager,” he said. “The project manager would be over the construction firms and work with the engineer on change orders.”

The option of hiring a manager “on contract” to keep tabs on the project is also under consideration.

Thomas was reportedly the front-runner for the job, but could not meet the city’s start time of April 1 due to a previous contract commitment.

With a meeting set between the Corps and CH2M Hill later this month to go over phase I of construction, officials have elected to take a consultant engineer along to the meeting in the interim, as opposed to a project manager.

Board member Wayne Fuller said he hopes a more definite construction schedule and cost estimate can be assembled soon, which will play a role in the selection of a manager.

“That’s really the problem right now, that we don’t have a schedule and we need a schedule,” he said.

The utilities board’s next regularly scheduled meeting is set for Jan. 25.



* Trent Moore can be reached by e-mail at trentm@cullmantimes.com, or by telephone at 734-2131, ext. 220.