Report finds potential Bend water system savings

            An engineering firm contracted by Bend officials has determined several ways to cut costs on an initally estimated $58 million water system upgrade.

But the firm’s report did not consider the feasibility of switching from a surface water to all groundwater well project given study “constraints” stipulated by the city. A group of local business and professional leaders have argued the wells would be less a less expensive and more environmentally-sensitive alternative.

            The “value engineering” or VE draft report by Robinson, Stafford & Rude Inc. of Florida dated March 11, 2011 says Bend could save $12.3 millon on the project by making several changes.

            Among the most prominent of these would be to reduce the size of a new 10-mile surface water pipeline from 36 inches to 30 inches and to continue using the other, newer of two lines that was built in the 1950s.

            Not replacing the newer pipeline would also mean the city would be under less time pressure to build it concurrent with planned construction work by the US Forest Service on Skyliner’s Road in the Tumalo-Bridge Creek watershed. Bend has been informed by the federal Environmental Protection Agency that it needs to upgrade the water system by 2012 to meet Clean Water Act requirements, although it’s possible that deadline could be extended.

            The city and the engineering firm that designed the project have previously supported replacing both pipelines, in part to facilitate construction of a hydropower power project estimated to add another $15 million to the $58 million upgrade budget.

            RSD Inc. suggested the city reevaluate the proposed hydropower project given such variables as potential income from the sale of power to offset development costs.

            In a statement addressing “project constraints,” the RSD report noted it did not consider “aspects of the project that the city does not want scrutinized by the team, because they represent project elements that, in the opinion of the city, cannot be changed.

            “Constraints may result from a variety of political technical, or environmental issues,” the report said.

            Included in the list of constraints were requirements that the point of water withdrawal not change; that there must be a surface water supply and a membrame filtration system.

            Going into the future, the RSD report said Bend should continue to rely on a “two-source, integrated system” that combines surface water withdrawal and transmission and wells “in a complementary fashion, rather than viewing each supply as an independent system.”

            Either groundwater wells or surface water sources could face quality or quanity problems, according to RSD. 

            But having both sources, “provides the City of Bend with a substantially improved level of confidence in water availability.”

The Outdoors: So much to do

            The Central Oregon Spring dilemma…What to do?

            It’s still March. Last night the temperature dropped into the 30s but it will reach 70 by mid-afternoon.

Time for a quick 25-minute trip up for a few runs at Mt. Bachelor? There’s a 150-inch base at Mt. Bachelor.

On the way out to “the mountain” Widgi Creek is open with an early season discount on green fees for 18 holes.

Phil’s Trail on the edge of Bend is snow free and firming up for some mountain biking.

Fly fishing at Fall River is really good for nymphing and chasing some midday BWO hatches. 

What to do? Maybe try a little of everything. That proposal can wait another day. Will make those calls tomorrow.  

Rather than the exception these possible scenarios are commonplace in the Bend area as winter merges into Spring, sometimes hesitantly with a sunny 70s day followed by a few snow flurries the next.

On the first day of April  2011, the mercury topped 70 in Bend while less than a half hour away at Mt. Bachelor there were great Spring conditions—as well as excellent cross-country skiing out of several closer-by SnoParks on the way there from Bend.

Just this week PowdrCorp., owner and operator of Mt. Bachelor, announced it would extend grooming of its cross-country trails until late June, following earlier announcements that downhill runs would be open through May 29. And a new $149 Springtacular pass will cover a week of lifts for an adult and any “kid” under 18—for those who act before April 4.

Mt. Bachelor

As for golf, most of the area courses except Sunriver and Crosswater, at slightly higher elevations south of Bend, are now playing. Included are such premium courses as Tetherow, the links-style course on Bend’s west side, and Pronghorn, with courses designed by Jack Nicklaus and Tom Fazio.

Altogether there are nearly 30 courses in Central Oregon, about 20 of  these open to the public and most within 25 miles of downtown Bend.

Guide to Central Oregon golf courses

  

Spring ski deals from Mt. Bachelor

Mt. Bachelor Ski Resort - Mt Bachelor: "Springtacular Spring Season Pass Spring skiing & riding until May 29th for only $149. Pine Parties 5 scheduled Pine Parties. Lift tickets will be valid 4pm-7pm and priced at $20 for all ages. Concert Series Afternoon spring concert series on the mountain presented by Deschutes Brewery."

Bend approves contract for new water system

            Bend’s expensive and controversial water system upgrade is a step closer to moving ahead as the city council approved a contract with a Minnesota company to manage the project.

            In mid-March the council approved a $387,000 contract with Mortenson Construction of Minneaplis to serve as construction manager/general contractor for the project, which could cost as much as $73 million by initial estimates.

            The upgrade would involve replacing about 10 miles of deteriorating water transmission pipes and construction of a new water treatment system, at an estimated cost of $58 million. It’s also possible the city would build a hydropower sytem at a cost of another $15 million, and in turn sell the power to utilities to defray some costs.

            Mortenson potentially could also be hired to construct the system at fee of 5.45% of project costs.

            Although the water project has support of a city council majority, some council members and business leaders have argued that an upgrade relying on wells drawing groundwater in the Tumalo Creek-Bridge Creek watershed would be less expensive and more environmentally sensitive.
          Even with the city's recent contract decision, there could be more hurdles for the surface water piping system.  An environmental assessment is pending from the US Forest Service and there could be possible pressure for an independent cost analysis of alternatives that could include wells.         
(click below for more background in an earlier post)

             Bend water: where from and how much?

Investors attracted to discounts on distressed subdivsion lots

        It’s an axiom that developer-investors in most situations shy away from bare land that offers little cash flow potential, especially if there is debt to carry and the future potential is highly speculative.

            But the equation will often change when the price is right. And the Bend area’s inventory of bulk land, much of it with infrastructure in place, at deeply discounted prices is attracting patient buyers with views of a more distant market horizon.

            The Bend situation in a way reflects a national trend that emerged before home and land prices began to fall locally. Some large publicly-held national builders started selling land inventory to streamline their balance sheets, while securing options that would enable them to ramp up construction when the market began to recover. (Doesn’t it has to rebound some time?)

            Around Central Oregon many over-extended developers and builders haven’t enjoyed the choices available to better-capitalized national companies. They have been either forced to dispose of lots and land at substantial losses or move aside as lenders took over. In turn, lenders have begun cleaning up their distressed properties in bulk sales, prompting the analogy of flushing out the system.

            Subdivision lots that at one time were selling in the upper $100,000s and into the $200,000s have either sold or been listed in the $20,000 to $40,000 range, with many priced for even less. 

            Among the more visible investors stepping into the Bend market in the recent months was California Republican Congressman Gary Miller and associates.  Starting in 2009 Miller’s Group, acting as Long Term Bend Investors LLC, had assembled 390 lots in Bend and Redmond at a price of about $6 million.

            Another California investor reportedly bought 174 lots in two subdivisions for nearly $3 million.  A good chunk of the properties were sold by the lender, Sterling Bank of Spokane which  has been aggressively selling properties it took over from builders throughout the Bend area.

            A company controlled by the development partner in one of Bend’s most successful west side neighborhoods, Northwest Crossing, purchased a 74 lot subdivision in north Bend for $1.9 million.

In late 2009 a Salem investor purchased an 80-plus lot Sisters subdivision for $2.4 million after the developer had given it back to the lender which had held notes totaling more than $9 million on the property. The bank had initially listed the stalled project, envisioned as a showpiece neighborhood, at $6 million before reducing the price several times.

In January of  2011 there were more than 280 bank-owned lots in four subdivisions listed for sale on the Central Oregon MLS at average prices in each location ranging from under $13,000 to $83,000. Bulk prices the four subdivisions were from $750,000 to $3,258,000. 

However, these are only a sampling of lots, bank-owned or others, that were on the market in early 2011 as owners continued to face pressure from their lenders and the obstacles presented by lax market demand.

Contact me at rleehicks@rleehicks.com for more information on potential investment land ready to build throughout Central Oregon.