Council tables going out to bid for BID projects

Gray Hughes

The Hill City Common Council decided on May 26 to table going out to bid two projects.

Brett McMacken, city administrator for Hill City, brought the two projects to the council after it previously tabled going out to bid in March.

“It’s still difficult to determine the hotel tax money because this is a slow time for us,” he said. “We won’t see that money until June 20.”

Despite the COVID-19 pandemic and the economic slowdown caused by it, McMacken said Hill City has been “ahead of the curve” financially — especially compared to other municipalities. Going forward with bidding the BID Board project would be a decision based on the council’s comfort level.

McMacken did say, though, there is concern that the $2 per night hotel room tax — which helps fund the BID Board — would be down compared to other years.

The BID Board project, though, is ready for bids. Earlier in the year, the city bid out the first portion of the project: paving the alleyway behind the Hill City Senior Center. There was one bid for that project, and it was rejected by the Hill City Common Council in March. The second part (renovating the Hill City Senior Center) is ready, as architectural designs are ready.

With the economic slowdown and decrease in oil prices (oil is used in the production of asphalt), McMacken said contractors might be “hungry.”

McMacken reported that Kale McNaboe, city engineer for Hill City, had reached out to contractors who expressed interest in bidding but ultimately did not.

“The predominate reason why (contractors) didn’t bid is because they were awarded several other projects, and their calendar was filling up,” McMacken said of McNaboe’s findings. “That’s one of the biggest concerns I have: getting us on the calendar.”

Steve Jarvis, Hill City alderman, wanted to know how the hotels have been doing so far this year.

McMacken said — at that time — he hadn’t spoken with hotels for two weeks.

Victor Alexander, who operates the Super 8 Motel in Hill City, said it’s slow from a reservation standpoint, but that has been the trend for a while.

“They’re coming later and later (in the season),” Alexander added. “Even last summer it was the same thing. …It could be our best July, August and September we’ve ever had.”

And from talking with local businesses, many reported a strong Memorial Day Weekend, he added.

McMacken said he heard similar reports from businesses and that Main Street Hill City was packed on Sunday. Jarvis said it would be interesting to see how this past Memorial Day Weekend fared versus other Memorial Day Weekends.

“I think people were ready to get out this weekend,” Jarvis added.

If the city does go out to bid, McMacken said there are some aspects to consider. If the construction window is altered to 2021, that would help the overall price of the project because more people would bid, and the financial burden is pushed to 2021 and not just in 2020.

But going out to bid too many times without accepting a bid could cause trouble, McMacken warned.

“We already put the asphalt project out once,” he said. “So how many times can you test the waters without (contractors) losing interest. …There’s a balance in it. It’s like the stock market. You aren’t going to buy at the lowest and sell at the highest.”

Bill Miner, alderman for Hill City, said he looked into asphalt prices for South Dakota but couldn’t find the trend; however, he found the price trend for asphalt in neighboring Wyoming, where, Miner said, prices have been relatively stagnant and have not changed since February — down 3.7 percent since February.

That hope that asphalt prices would follow gas prices didn’t happen, he added.

When asked by Miner when McNaboe hopes to go out to bid, McMacken said the asphalt plant is only open so far into the fall, so if the construction window is extended into the spring and early summer of 2021 that would allow more contractors to bid because contractors should have openings.

McNaboe wants bidding to happen as soon as possible, McMacken added, so that the construction window could start in July and completion date could be June 15 of 2021.

Jarvis, though, said he had concerns about a rough year for the $2 per night hotel tax.

The estimate for the alleyway project done by the engineers, McMacken said, is roughly $220,000. Stacia Tallon, finance officer for Hill City, said the BID Board budget as it stands now is around $170,000.

The bid that came in on the alleyway project came in around $340,000, McMacken said, which was roughly one-and-a-half times more than the engineer’s estimate.

That bid, though, was done with a main bid for the alleyway project along with four alternates for projects related to the alleyway project. Next time the city goes out to bid, McMacken said all of the projects would be combined into one bid.

“I think that you would get a better price. But again, I think expanding the construction window — which would help us get one or two more people — we can have a better bid process. We might not like the price, but at least we’ll have more people bidding.”

An issue with replenishing the BID Board budget, though, is that for the hotel tax the city does not know where they stand for one month until the month after, meaning the city won’t know the May tax haul from the hotels until late June.

Dale Householder, president of the Hill City Senior Center, said the council could wait to make a decision on the senior center itself for a couple more weeks, saying that they aren’t in a hurry.

Along the alleyway, McMacken said there’s employee parking for the businesses that occupy Main Street. The city would need to coordinate with those businesses for parking if the alleyway project is done in the summer.

“If you table this, it will be two more weeks and you won’t have an answer until mid-July,” McMacken said.

When it came time to vote, the council took up both projects separately. Both the alleyway paving project and the senior center remodel were tabled by a vote of 3-0.

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