Town Manager’s Report to Mayor and Town Council

July 19, 2010

New Positive Developments on East Chilhowie Street Bridge and Bid Schedule

There have been some very positive developments on the property insurance coverage through the Virginia Municipal League Insurance Programs (VMLIP). As you recall I reported sometime after the May, 2009 car crash that damaged the bridge that the VMLIP did not offer coverage to transportation structures.

I had the opportunity to meet with Mr. Greg Dickey, Director of Membership Services of VMLIP, in Virginia Beach at my Virginia Local Government Manager’s Conference in June. At that meeting I had the opportunity to talk with Greg at length about the bridge situation. I first asked Greg about any excess coverage or uninsured coverage provision the VMLIP might have in addition to the compensation we received in the amount of $100,000 from State Farm Insurance on behalf of their insured. He said he would check into the matter and get back with me when he returned from the conference. I also told him that I was surprised that VMLIP didn’t cover bridges for property damages. Greg said that that VMLIP in fact did cover bridges. I responded that I had been told that they did not by a member of the VMLIP staff, and again Greg said he would get back with me when he got back to his Richmond Office after

the conference.

Greg called me around the 23^rd of June and said that they were hoping to work something out. He stated that he was going to try to cover the town under the Unscheduled Property Portion of the town’s policy. He stated that VMLIP was going to do this in spite of not receiving our Renewal Questionnaire for 2010. I stated that that was not the case we had sent the Renewal Questionnaire in and referenced my file. (We send a lengthy renewal questionnaire the end of each calendar year or the start of each calendar year for the coming year. The questionnaire has a general information section, budget section, general exposure section, employee practice section, payroll section, special events section, automotive section, property section, etc. etc. The Clerk / Director of Finance, Purchasing Agent and I go over this renewal every year very closely to make sure that everything vehicle, piece of equipment, building, etc. etc. is included or deleted as best we can. For example, about five years ago we found that we had only three water tanks covered under Scheduled Property and immediately valued and insured the rest of the water tanks.)

I referenced the files and found where we had send them the document on January 28, 2010, ahead of the January 31, 2010 deadline. Greg asked me to send that information to him. The

next day he said they found the renewal document in the office, but we sent it to them anyway. Greg said that either his staff had been looking for our renewal document via electronic mail, or had misplaced it during their office move around that time.

I pointed out in the Exposure Information Section of the renewal that we checked Yes to having bridges and said there were nine bridges. That section of the renewal contract has about 19 operations or exposures listed including bridges, dikes, golf courses, day care centers, landfills, lakes, nursing homes, swimming pools, tunnels, etc., etc. Greg said that that section was for liability purposes and not property damage, but said he could understand the confusion. He also said, in fact, that the next Renewal Questionnaire from VMLIP would be changed to avoid

any confusion like that in the future. He further asked that we formally list the bridges under the property schedule and list the value of each. Engineer Cecil Hicks was able to provide that information to me. We estimated the steel and concrete bridges at a $1.2million replacement value and the East Chilhowie Bridge at a $500,000 replacement value. I sent that information to Greg Dickey and the VMLIP on June 30, 2010, a copy of which is attached. Additionally, I sent a July 2, 2010 letter outlying the costs the Town of Marion has incurred to date, and cost we estimate to incur, and other supporting information. That letter is also attached.

On July 1 we received an email from VMLIP officially binding the brides to the town’s coverage at a cost of $6,204. I n further conversations, VMLIP has agreed to cover the additional costs on the bridge up to $100,000, which is obviously great news! That amount will be determined and sent either when the bids come in or when the project is completed. I want to thank Greg Dickey and the staff at VMLIP for working with us during this process. This is another example of their outstanding customer service.

Concerning the bid schedule on the East Chilhowie Street Bridge, Cecil Hicks and I met with Mr. Steven Campbell of Mattern and Craig to discuss this on or about June 30. The bridge was / will be advertised on July 11 and 18, with a pre bid conference on July 29 at 2:00. Bids will be opened on August 12 at 2:00.

Situation on Biogas Sewer Treatment Plant Engineering Contract and Related Projects at Sewer Treatment Plant

As I reported earlier, Thompson and Litton was the only responder to our Request-For-Proposal

(RFP) for the Biogas Project at the Sewer Treatment Plant. The project is estimated at $500,000 comprised by a $250,000 grant and a $250,000 0% percent loan at 20 years. At this writing I am awaiting the contract from Thompson and Litton so the process of beginning the Preliminary Engineering Report (PER) can begin. If they are within the range of the budget in their proposed contract, which I anticipate they will be, I will take the contract to our attorney for review and then the Council for their approval.

According to Thompson and Litton’s RFP, the time between their contract approval and completion and approval of their PER will be 60 days, with construction documents and permits another 60 days, then bidding another 30 days. Construction is estimated at 180 days beginning in June of 2011 ending in December of 2011.

Lane Engineering has finished the PER on the first phase (Phase I) of the sewer plant improvements (UV lights replacement, influent pump replacement, lab roof replacement and biotower media replacement). You have a copy of that PER in your agenda packet. These improvements are estimated to cost around $1,000,000. The PER has been submitted to Rural Development and is awaiting their approval. However, I am told that this approval could be several months down the road because of the number of a backlog of applications for the loan money available (The Biogas Project was not listed as a Phase I priority. However, since we were able to get money from DEQ for this project we are moving ahead with this project at this time).

Because of not being able to move forward as quickly on the Phase I items projects as I had hoped is potentially going to cause some problems. The UV lights, which disinfects the finished water, are failing and replacement parts are getting harder to find and impractical to install. We received a Notice of Violation (NOV) from DEQ on the effluent in June and potentially we could get more in the future (as a related note, I applied for $100,000 grant from the Mt. Rogers Water and Wastewater Fund for the UV lights last month that was included in the July 6^th agenda packet).

Additionally, and as importantly, the influent pumps at the plant are aging. Only two of the three pumps are now operational. We manually switch the pumps back and forth and in the event of high water we need both to keep up with the flow. As you may remember, the county supplied us with three new influent pumps last November. They were able to get the pumps through some stimulus project. Because they had to spend the money before November, 2009 they purchased the equipment before the Phase I project was underway. The pumps have been sitting crated up at the plant since that time. The county has a 17.8% interest in the sewer treatment plant and is also responsible for 17.8% of the capital outlays. The value of the pumps will come close to, surpass, or meet the county’s obligation for the $1,000,000

Phase I improvements.

Because of the availability of the pumps, the poor condition of our existing ones, and the far off time frame in the future when the entire Phase I Project will be implemented, I believe we should look seriously at moving forward to install these pumps in a separate, town-financed project. I am going to be discussing this at the council meeting on July 19 and with the sanitation committee.

1908 Old School House Project Developments

The work on the Old School Project, and accompanying streetscape and facades project, continues to move forward and has past the half way point at least in expenditures. According to the latest numbers presented at the progress meeting on June 25, $683,585.74 has been spent on the $1,000,000 project.

As we discussed at the last meeting, we are now in a position to start the process to declare the property surplus and to once and for all establish the use of the building after it is completed. As you are aware, even after the building is completed there will be hundreds of thousands of dollars of internal improvements needed to be done on the building before it can be utilized. Council, at least in the past, has taken a position that these improvements must be done with private money or grant money. Additionally, while the generic best use of the building has been established through a planning process as an Appalachian School of Arts / Music, we have been advised that we now must advertise a Request-For-Proposal (RFP) for a specific best proposal for an Appalachian School of Arts / Music.

Working with Community Development Director Ken Heath and Attorney Mark Fenyk, we have come up a schedule to move forward on the project. First, the property will have to be declared surplus. A public hearing will be advertised on July 17 and July 24 for an August 2 public hearing date. Assuming the property is declared surplus at that meeting, a RFP / Bid will be sent out for the transfer of the building. It is limited to a 501C3 of the IRS Code organization, and must conform to stated milestones involving tourism efforts listed in a transfer agreement. This public hearing will be advertised on August 7 and 14 for a September 7 public hearing date.

I was somewhat uneasy about mixing a bid and RFP together for the building. However, the variables will be weighted on a set scale giving priority for the proposal value over the bid price, in all likelihood. By putting the two variables together would fast tract the project and make the project better prepared in applying for Appalachian Regional Commission money this Fall.

Respectfully Submitted,

John E. B. Clark, Jr.

Town Manager