Lakes Project Special Report

Report to the Loch Alpine Home Owners

By the Lakes Project Management Team

And approved by LAIA Board of Directors

August 6, 2003

Lakes Project Management Team:

Fellow homeowners, please understand that we have an urgent significant problem to solve on our Lakes Restoration and Recreation Project. The MDEQ advised us that we are in violation of our permit for the project. Last fall, Greenook Lake sediment material accidentally flowed into Boyden Creek and the Huron River. As a result, we were required to install and maintain costly silt filtration dams to prevent another incident. A Huron River Watershed Council publication stated “Boyden Creek is a mess” and pointed out that their evidence could be used by MDEQ in court if LAIA does not agree to a combination of restoration measures and possible fines.

We are still at risk of further violations and costs. A heavy rain event will result in more lake bottom material entering the river. Significant rainfall would likely cause the Huron River to backup water into Boyden Creek so that the filters would be over-topped with water, making them basically useless. Simultaneously, with considerable sediment remaining in the lower lake, silt could be washed through the sluice gate and into Boyden Creek. Following a 0.7-inch rain on August 1, 2003, the risk of silt overtopping the filtration dams was evident. The project management team built and installed siphons to lower the upper lake (Bridgeway) by a few inches to reduce storm water-flow through the lower lake.

In short, we can expect fines from the first incident and more fines in future incidents unless we act quickly to finish the sediment removal and reduce our risk related to bad weather.

The five person Lakes Project Management Team has developed a sound plan to finish the lakes project. It requires the support of all of us. An outline of the plan is provided below.

The Plan

The Plan is based on the reality that all available project money is committed to work that is completed or in progress. We are directed by MDEQ to maintain a stream bed in the lower lake and also maintain the integrity of six silt filters in Boyden Creek. However, existing filtration dams provide limited and short-term protection – they are not absolute. Closing the sluice gate would have little or no value because ultimately the lower lake would fill, water would flow over the top of the spillway box, and wash new and existing trapped sediment in Boyden Creek into the river resulting in a major cleanup problem.

The project management team concludes that much of the sediment remaining in the lake should be removed as fast as possible to minimize silt flow risks and to promote the long-term health of the lake.

In essence, the plan will provide for the following:

New Plan Milestones are based on the fact that no additional funds will be spent until all issues are resolved on the tasks of removing 10,000 cubic yards of sediment from the lower lake, cleaning the river, and paying any fines. The project management team believes there are shortcomings in the work completed to date. We are reviewing potential insurance recovery and negotiating with the contractors to correct items of concern, either through additional work or refund of monies spent. It is too early to predict the outcome of this process.

Nevertheless, it is the policy of the project management team and the LAIA Board that all realized cost savings from the restoration components will be applied toward completion of the recreation components of the plan and potential reduction in expense (and assessment). Those components have been priced for budget purposes, based on bids previously received from various contractors. Those bids will be updated and new bids obtained prior to work.

Scope of Work for Remaining Lower Lake Restoration and River Cleanup

Based on estimates and/or bids from various contractors:

Total $202,850

Funding Sources

Obtain loan from existing lakes project Accounts Receivable	$66,900
First payment of special assessment (448 residents x $315)	$141,120
	$208,020

The approximate $5,000 excess portion of this budget would serve as contingency for MDEQ fines (not yet specified) and for any unknown additional cleanup requirements. Any unused contingency funds would be applied toward the costs of the recreation elements of the project. It is the plan of the project management team to negotiate the terms of remaining work with the current contractor and/or other bidders. We also will seek clarification from MDEQ about precise requirements for cleanup. Based on those requirements and bids from solicited contractors, we also will pursue recovery of cleanup costs through insurance claims.

Scope of work to complete Recreation Components, per Original Project Plan

We believe it is vital to deliver to the community the complete “package,” that is, we should address everything the community approved in the vote in 2000 to make the lakes accessible and enjoyable for the whole neighborhood. When the lake restoration work is completed and the Huron River is cleaned per MDEQ specifications, the project management team will begin the recreation components, such as pathways, landscaping, fishing dock, etc. Existing bids will be updated, and new bids will be obtained. Targeted completion of these components is summer 2004.

Work on the recreation components will be guided by value engineering and by community input from the recent survey initiated by the LAIA Board. Wherever possible, we will be cost-effective in completing items (for example, parking area paved versus chip seal versus stone). Community participation will be encouraged, where feasible, to assist in completing items (for example, some people have volunteered to build boat racks).

The total estimated cost for this work is $176,819 based on original project estimates and bids received for some items. Funding sources for this effort include $129,920 from a second installment, not to exceed $290 per each of 448 homeowners. That leaves a $46,899 shortfall to complete work as budgeted previously. Fulfilling the whole project as originally approved by the neighborhood will require careful new budgeting decisions and even more careful bid selections. Cost-control considerations such as alternative designs, materials, and potential volunteer labor will be factored into budgeting for each recreation component.

For example, the budget for fish restocking could be reduced a few thousand dollars, without eliminating that element. Similarly, we can reduce budgets several thousand dollars through alternative design in a fishing dock, volunteer labor in landscaping and boat rack construction, and economizing on materials for pathways and parking areas. Budgets will be based on the funds available and the priorities cited in the community survey.

Also, cost management savings from the lake restoration work is another resource for completing the recreation components – even potentially reducing the amount of the second installment from homeowners. This includes unused contingency funds, reduced engineering expense, and potential insurance recovery. However, those are unknowns at this time.

The bottom line is, the recreation components will be executed as cost-effectively as possible through value engineering – i.e., getting the most out of available funds – budget management, specific bidding, as well as cost-savings applied from the lake restoration. Excess savings will be used to deal with fines and to reduce the second installment.

Milestones

Date	Milestone
20 July	Approve notification for special election on 18 August. (complete)
21 July	The Board authorized a budget for maintaining the sediment filters, the sluice gate, and engineering if our contractors fail to act during a heavy rain condition. (complete)
21 July	Approve letters to contractors stating that funds are not available to continue the project and include a list of contract noncompliance. Ask for final billing on the contracts.
8 August	Meet with MDEQ to ascertain final requirements to clean up the Huron River. Submission of claims for potential insurance recovery will follow.
10 August	Begin public meetings on special election. Start accepting absentee ballots.
18 August	Special assessment vote by the community
20 August	Execute contract changes, new contracts, and commence removal of sediment.
15 September	Fill the lower lake and begin cleaning Boyden Creek and Huron River.
1 January, 2004	Determine the final cost of the recreation phase on the project. Not to exceed amount stated at the assessment vote – less with project savings and insurance recovery
March, 2004	Begin completion of recreation elements for lower lake and unfinished elements on upper lake

What Must Be Done On An Urgent Basis?

Why Should The Community Believe That The New Project Management Team Will Complete The Project Without Asking For More Money?

Several thousand volunteer hours by many people with good intentions achieved a great deal on the Lake Project. The upper lake is clearly a more attractive and useable area for Loch Alpine homeowners. Unfortunately, the engineers and contractors under-estimated the adverse conditions in the bottom of both lakes. As a result, sediment removal costs and accidents caused excessive overruns. Sediment was allowed to enter the Huron River and resulted in MDEQ mandate. That could cost upwards of $40,000. In short, the project management tasks grew in proportion to the budget overruns and the threat of MDEQ fines.

The Board of Directors appointed a five person Project Management Team to study the situation and advise them on a different course of action. See Attachment for details.

Members of the team have experience in engineering, contract management, and construction management (including the original road paving project in Loch Alpine). Some have MDEQ and insurance experience. Above all they have demonstrated that they all will devote a great deal of time to the project. As a result, the Board of Directors has become resolute on completing the project as developed in 2001.

The following is a list of primary duties of the project team:

The Support Of The Community Is Vital

In order for us to avert further liability from sediment wash into Boyden Creek and the Huron River, to fulfill our obligations to MDEQ, and to properly complete the lakes restoration and recreation project, the full support of the community is needed. The LAIA Board is fully behind the efforts to protect and preserve the priceless assets of the lakes, and to make them again a focal point of recreation and leisure for the whole neighborhood.

The assessment vote on August 18 requires your participation. The previous vote did not have the needed participation from residents. In order to move forward in the lakes restoration and recreation project, the vote must garner the support of a simple majority of Loch Alpine homeowners, i.e., 50% plus one.

Please consider the vital importance of this project for the whole community. Know that there are dedicated residents working to bring this project to a productive and cost-efficient conclusion.

Attachment

Lakes Project Management Team Experience

The members have more than 150 years experience in Loch Alpine.

Bill Ince is past president of LAIA and AACC and was Chair of the LAIA committee that accomplished the original pavement of our roads. He has extensive experience as a consultant in the field of Environmental Engineering. Bill is vice chairman of LASA.

Neil Gerl is Chairman of the Board, LASA. He has 8 years experience on LAIA boards and twenty-five years in contract management, teaching experience in Engineering and Management. During the past 8 years, he managed similar sized construction projects. Neil has experience in negotiations with MDEQ.

Herb Earle has Engineering background and recent experience in the construction planning of the new AACC clubhouse and pool. He is extremely knowledgeable in value engineering and quality control. For 25 years he was president and CEO of his own company, until retiring in 2000. Herb is on the Board of Directors at AACC.

John Forrester was project leader for the original road paving project in Loch Alpine. This effort was unmatched in scope and success. He is also a Chemist and has extensive experience with MDEQ negotiations and compliance.

Peter Logan is the group’s insurance resource and organization person. His experience in organizing the construction of the new pool at AACC is invaluable. He also served as a LAIA Board member and has served on the Dams and Lakes committees. Pete is currently on the Board of Directors at AACC.