The City of Sitka will spend $12 million to buy a new diesel turbine. The massive piece of equipment will generate 15 megawatts of electricity. That’s enough to prevent rolling blackouts should the city be unable to use either of its two hydro plants.
Now that the city has purchased the turbine, it needs a place to put it. And making room for the new generator at the Jarvis Street Diesel Plant means clearing some rock. The city has found a way to do that at a fraction of what it normally costs, but not everyone is happy about it.
S&S General Contractors will remove about 25,000 cubic yards of rock near the city’s Jarvis Street Diesel Plant. Sitka already has agreements with S&S, and so, instead of getting bids from other companies, it simply amended its deal with S&S.
The company will do the work in exchange for credit toward the $107,000 it owes the city on a quarry lease.
City officials say it’s a great deal. If you do the math, S&S is removing the rock at a price of $4.29 per cubic yard. Remember that number: $4.29 per cubic yard. Now compare that to the going rate for the work.
“We find an average price of about $80 per cubic yard,” said Sitka Public Works Director Michael Harmon. “And when you do the math on that, for this work, you’d be facing somewhere around $2.5 million to contract this out in the normal market with the prices we typically get.”
The city calls it a rare opportunity — a win-win for a tight city budget that saves some major money, and a local contractor who gets to shed some debt. That is exactly why Sitka resident Vaughn Hazel has a problem with it.
“There is a statement here that this is a rare opportunity that will greatly benefit the city and a local contractor. Well that’s very true,” Hazel said. “But I don’t think you should benefiting a local contractor. I think you should benefit all local contractors by giving them all a chance to bid on it.”
Sitka resident Connor Nelson wrote a letter to the Assembly protesting the move as well. He calls it illegal, saying the city is misinterpreting its own rules, and that the exceptions the Assembly is using to approve the deal aren’t right.
Sitka Conservation Society Executive Director Andrew Thoms, on the other hand, wrote in a letter to the Assembly that the deal was brokered in the best interest of the city and its citizens, and that the cost savings made it worthwhile.
City Code says Sitka must accept bids on any contract worth more than $50,000. But the code also gives the Assembly some wiggle room.
“This is a very unusual situation,” said Municipal Attorney Theresa Hillhouse. “The Assembly doesn’t need competitive bid if they find it’s inappropriate because of two items: one, the nature of the property, and two, the circumstances surrounding its disposal.”
In this case, Hillhouse says, projects dealing with existing local government contracts can be exempted from the competitive bid process.
Thor Christianson said it makes sense to take advantage of the savings offered by the S&S deal.
“And I don’t have any problem with this, other than just a general nervousness, I guess it would be, about not going out to bid for something,” Christianson said. “It’s obvious why we’re not doing it. Let’s just say in the future, I ask that we avoid it if possible.”
Assembly members ultimately approved the deal with S&S. Pete Esquiro and Mike Reif voted no.