The City Council, in September, 2020, approved Ordinance #2310 to form the Local Improvement District #322.  LID #322 was formed after nearly two years of coordination with property owners and the US Economic Development Administration.  LID #322 will help pay for paving several un-developed streets in the area of SE Campbell Drive, and SE 10th street; as well as installing water and sewer main in SE 10th.  The property owners in the LID will pay approximately 40% of the project costs, the US EDA will pay for approximately half of the costs, and the City of Hermiston and Umatilla County will make up the remaining 10%.

The intention of this project is to help facilitate economic development, and specifically economic diversification, by ensuring that an adequate supply of "shovel ready" smaller-acreage industrial parcels is available for small businesses to locate or expand in Hermiston.  The existing supply of <5 acre parcels in the South Hermiston Industrial Park along Kelli Blvd and Campbell Drive, has been experiencing development of about one parcel every two or three years, and is now approximately 80% full.  By installing paving and utilities past several existing parcels, and extending them in to a 40 acre parcel owned by the Port of Umatilla, this project will result in approximately 16 new "shovel ready" parcels which are ready to accept a building.

The target market for the resulting parcels is very similar to what exists in that area around Kelli and Campbell already.  Those operations are small manufacturers, building trades (i.e. electricians, plumbers, etc.), warehousing, and other primary employers with less than 50 employees.  Although the large-scale industrial operations like Pioneer Seed, Lamb Weston, Wal-Mart DC, etc. are easy to identify, the vast majority of employment occurs in smaller businesses which ultimately provide products and services to those types of operations, and industries like the agriculture sector in general.  This project was designed so that the City can maintain several very large (100 acre+) industrial parcels south of Penny Avenue, while still allowing for this type of parcelization to accommodate the needs of smaller businesses in an efficient pattern.

City Staff began working with the Federal Economic Development Administration about grant funding for light industrial park development in this area in November, 2018.  In light of the closure of NORPAC's Hermiston Foods facility, the City was invited to further develop a proposal for funding.  City Staff worked with Anderson Perry & Associates to develop an Industrial Park Master Plan of improvements in the South Hermiston Industrial Park (SHIP), which came out to approximately $9 million.  Based on the maximum EDA Grant Award size, and the fact that all EDA grants require a 50% local match, staff worked to prioritize and scope-out the project in to phases.  City Staff held two workshops with property owners in the SHIP area in the Spring of 2019 to solicit their feedback about the most valuable investments to support that area.  That feedback helped refine the final project scope to what is proposed here, at an estimated cost at the time of just under $3 million.

City Staff submitted a grant application for $1.46 million in September, 2019.  City Staff coordinated with EDA in response to questions throughout the following 11 months, and was finally notified of a positive award in late August, 2020.  Formation of LID #322 was finalized in September, 2020, and full design engineering began.  

As the project was getting ready to advertise for bids in March, 2021, City Engineers and staff began to worry about potentially volatile supply chains discouraging qualified bidders from submitting on the project.  COVID-19-induced factory shut-downs continue to cause supply challenges while massive government stimulus is driving demand; however for this project in particular, the greatest concern is tied to acquisition of PVC Pipe.  Significant winter storms in Texas in February shut down the main source of plastic pellets used for making PVC pipe, and pipe suppliers have only been holding prices for two days.  As a result, this project was bid with an Escalation Clause, which allows bidders to pass-through their additional cost if their costs for specific items (PVC Pipe) rise by more than 10%.

Four qualified bidders submitted bids for this project.

1. Tapani, Inc.-  $1,614,161.00

2. Nelson Construction-  $1,626,929.57

3. Sineco Construction-  $1,779,836.70

4. Granite Construction-  $1,796,215.08

Engineers with Anderson Perry & Associates, in conjunction with engineering staff from the Economic Development Administration have reviewed the bids, and recommend awarding the contract for this work to Tapani, Inc.

In addition to the $1.6 million construction contract, this project has incurred $150,000 in engineering, environmental, and cultural consulting costs, and is slated to incur $130,000 in construction management costs.  Due to the continued volatility in plastic pipe supply, coupled with strong indications of generalized construction cost inflation due to federal spending, it is very possible that the Escalation Clause may come in to effect.  However, it is very unlikely that the total project cost will reach the original cost estimate of $2.9 million.

1. Award the contract to Tapani, Inc.

2. Reject all bids and Re-Bid the project.