POA faces steep cost increases on grinder systems; Cost of installation questioned; Small fee on utility bill covers homeowner repairs/replacements
Bulk Purchase of Residential Grinder Pumps, Grinder Control Panels, and Grinder Tanks
Robert McLeod, Board Director, presented three motions to the Board on March 16, 2022, regarding the bulk purchase of residential grinder pumps, grinder control panels, and grinder tanks. Jason Temple, Director of Public Services, was on hand to answer any questions.
Although these purchases are routine, Board approval is required before the GM can sign off on these purchase orders. (What follows is not a transcription.)
Bulk Purchase of Residential Grinder Pumps
McLeod said that the big issue here is year-over-year, the price went up by 31% due to inflation. Inflation is affecting the POA in all different areas. “This happens to be a big one and Jason’s done everything he can to keep the price down. We got three bids.” Jack Tyler Engineering firm’s bid was in the middle. It is the only company that would guarantee the bid to last for the full year. “We are going to go through this problem every year. This is how we are solving it this year. That’s it. 150 [grinder pumps] forecast for new homes and 60 for replacements.” Total of $243,514.69.
The motion passed.12_MEMO_BOARD_2_HP_GRINDER_PUMPS
Bulk Purchase of Residential Grinder Control Panels
McLeod moved to authorize the GM to execute a purchase order for the bulk purchase in the amount of $78,400 to Jack Tyler Engineering for the purchase of 160 grinder pump control panels – 150 for new homes and 10 for replacements.
There is a 4.5% increase over 2021 for the control panel.
Temple clarified that the $78,400 does not include taxes. With taxes it will be $83,790.
The motion passed.13_MEMO_BOARD_GRINDER_CONTROL_PANELS_V2
Bulk Purchase of Residential Grinder Tanks
Again, Jack Tyler Engineering won the bid in the amount of $152,190 for 150 grinder tanks for new homes and 10 replacement tanks. This price is 34% higher than last year.
McLeod said that because of inflation, we are happy to have a guaranteed price for a year.
This third motion eventually passed, but before it did, discussion ensued about whether the installation of these systems is costing the POA money.14_MEMO_BOARD_TANKS_V2
Does the Installation of the Grinder Systems Cost HSVPOA Money?
Temple said the tanks, control panels, and the pumps are the three major and most expensive parts of a grinder system. There are 62 components used to complete a Simplex Grinder Pump. All of the other pieces are purchased locally.
Vice-chair, Tucker Omohundro, asked about the total costs of the systems. Temple said we charge the builders $5,720 for parts and installation of these systems. “Multiply that by 150 new homes and that is how we came up with the budget price of $858,000 this year.”
Omohundro asked if that covered the POA’s costs.
Temple said this covers material costs – the pumps, all of the components, sand, and other materials. The staff labor is not part of the $5,720. We do in-house installs which are supplemented by the contractor, Jack Tyler. If we contract the installation with Jack Tyler, it costs anywhere from $5,800 to $6,500, depending on the installation costs. “That is a turn-key cost,” said Temple.
Omohundro said we need to get out of the business if we are not charging builders enough to cover our cost. “We do not have to install these tanks for builders.”
Omhundro said, “so, we are eating the labor…We need to relook at this. This can’t be. It has never been this way before.”
GM Hale said we have already had the discussion about whether we are charging the correct amount. We are looking at around a $550 increase over last year for the three major tank components. Hale said he has Temple working on determining the cost of installation to see if we should use a vendor or if we should continue the installation. “The math that we have does not add back up to that. We’re going to purchase the tanks now and go through his [Temple’s] labor costs…”
Omohundro said that he wants people to understand that the POA has no obligation to put these systems in. “This is no different than buying a refrigerator for your house. This is something you own, but yet we take it on ourselves to do this and that’s fine as long as we are getting the money [reimbursed] for it. No other community puts in the tanks [systems] for these people. They use the same systems in Hot Springs. Hot Springs doesn’t put these things in.”
Omohundro asked, “But why in the world would be installing the tanks [systems] for people [builders]?”
Omohundro said when he was building homes, he stopped using the POA to install the systems because he could save $700 per system doing the installation on his own.
Temple said the material costs are $5,242 and we are charging $5,720, so there is almost $500 going toward the labor costs.
Hale said the utility fees go into the general fund and are not intended to cover the labor costs for installation of these systems.
Omohundro said he doesn’t feel we need to contract out any of the installations. “If we can’t do this ourselves and make a little money on it or save people money, then we need to get out of the business.”
Board Director, Gary Belair, said, “I wouldn’t want to get out of this business until we determine the availability of contractors.”
Omohundro stated, “That’s not our problem.”
Belair responded, “If we issue a building permit and our new owners can’t find somebody to do the work, then we are creating problems.”
Omhundro said, “No, we are not.”
Belair said it needs to be investigated.
McLeod said, “I think Kelly [Hale] will handle this. We need to purchase these things now and this is probably a discussion we need to have at a different time.”
Omohundro said, “I am not convinced we need to buy them now, if we’re going to lose money by buying them. Let the builders put their own tanks in.”
Corry said, “If you do that, Tucker, then its no longer the same manufacturer…”
Omohundro stated that we will have requirements on these systems that the builders must meet if it is decided that they handle the purchase and installation of these systems.
Hale said he would address this issue.
POA Provides Repair/Replacement Service for Property Owners
This discussion has to do with replacements of grinder components and not new installs. Residents pay a small fee on their sanitation bill and if their system needs repaired or replaced, the POA does this for no additional cost.
Omohundro said, “Now, it’s a great service that we provide for people, that we replace their pumps. That’s a great thing. We charge a little bit on the sanitation bill. They don’t get hit with $2,000 all of a sudden… That’s great. It is an insurance, if you will.”
CHERYL DOWDEN, Hot Springs Village People Gazette, March 18, 2022
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