SHELBY — Shelby is asking voters on Nov. 8 to allow more flexibility in the bidding process on city projects.
Shelby voters will decide whether to amend Section 46 of the Shelby City Charter, specifically one sentence that states, “No contract shall be let which exceeds the estimate for the improvement contemplated.”
In layman’s terms, the city is asking voters to remove this requirement and adhere instead to the Ohio Revised Code, which provides a 10 percent cushion between the pre-bid price estimate and the actual bids received.
Officials said this amendment would reduce the number of times projects would have to be re-bid, and would be in line with current state language.
As it stands, the City of Shelby can’t accept any project bid that is even a penny over budget.
“Our charter doesn’t have any wiggle room,” said Councilman Garland Gates. “We’re trying to make things easier at City Hall, but still have the necessary safeguards regarding the bidding process.”
In a 4-0 vote on Aug. 1, Shelby City Council approved an ordinance proposing the amendment to Section 46 of the Charter, therefore submitting the proposed amendment to the voters.
The ordinance was first discussed in council on July 5, and passed its second reading on July 18. Councilman Steve McLaughlin was not present for any of the readings.
According to project manager Joe Gies, the current process of bidding a project starts with a detailed list of all materials needed, creating an estimated price for the project.
After that, a public bidding process takes place. The city can then accept one of the proposed bids, or they are forced to re-bid the project if the proposals are over the estimated project budget.
This process of re-bidding a project can sometimes take up to three or four months, Gies said.
“The way have to do it now is, if (the bids) are all over, we can’t accept one. So we have to go back and find out, ‘Why are they all over?’ And this has happened to us several times,” he said.
“At that point, you either throw more money at it, or you take away something and lose the integrity of the project to get it back below the estimate.”
To Gies’ knowledge, the city of Shelby is the only city that does not adhere to the 10-percent buffer.
“And in this environment right now, prices on materials are going crazy by the day,” he said. “This really came to light during COVID and the supply chain got thrown. Time is definitely money.”
The drawbacks of this charter requirement were on full display during the recent process of bidding for Phase 2 of the Black Fork Commons project. The project was put out to bid three separate times because two bids came in over estimated costs.
In December 2021, Shelby had raised $1.4 million for the second phase of the project, and estimated construction costs came in at $1.1 million. However, when the first bid results came in January 2022, the lowest number was $1.6 million.
At the time, Gies attributed this to inflation, rising steel prices, and the complexity of the project. Shelby leaders were forced to ask for an extension of the spending deadline for $350,000 from the state capital budget, and request an additional $500,000 in ARPA funds from the Richland County Commissioners.
The second round of bids were opened on April 6. The estimate was set at $1.7 million. And again, both bids that came in that round were over budget — however, one bid was only over budget by 3.7 percent.
“If we were following the Ohio Revised Code, we could’ve accepted that, and we could’ve hit the ground running back in the spring,” Gates said.
Instead, the city was forced to go through a third round of bidding. The final bids were opened in May, and Simonson Construction Services of Ashland was awarded the contract on May 19.
By that time, the project estimate had gone up another $100,000 — fortunately, Simonson’s final bid came in under budget at $1,737,000.
The second phase of the Black Fork Commons project eventually broke ground on Sept. 8. Without the rigid requirements of Shelby’s charter, that groundbreaking could’ve happened months earlier.
“We’ve never really been hit with a situation like this,” Gates said.
If approved by the electors, the amendment would go into effect on Jan. 1, 2023.
Gies said members of council have disapproved of the charter amendment in the past, but have since changed their tune now that current times have made it a very real and present problem.
Councilman Nathan Martin voiced his disapproval of the issue during council on July 5, though he still voted to put the amendment on the ballot.
“I am not necessarily in favor of this, however, I feel administratively it’s well within our bounds to take it to the electors, and then I can make a decision in the ballot box like everyone else in the city of Shelby,” Martin said.
“Unless it were absolutely egregious to the charter, I can’t see a situation where as a council member, I would vote against taking a charter amendment to the electors.”
Gates noted that amendments to the city’s charter are few and far between — he even guessed that the U.S. Constitution has been amended more times than the Shelby charter.
Ultimately, Gates said, this decision rests with the voters because it was voters who approved the charter in the first place, more than 100 years ago.
“This particular amendment, is it going to affect the average citizen in Shelby on a daily basis? Of course not,” he said. “But when you think about the overall picture, yes, it’s very important.”
Full language of Section 46 of the Shelby Charter. The bold sentence highlighted below is on the ballot to be amended:
“No contract, agreement or other obligation involving the expenditure of money, shall be entered into, nor shall any ordinance, resolution, or order for the expenditure of money be passed by the council or by any officer of the city, unless the director of finance and public record shall first certify to the council or to the proper officer, as the case may be, that the money required for such contract, agreement, obligation, or expenditure, is in the treasury, to the credit of the fund from which it is to be drawn, and not appropriated for any other purpose, which certificate shall be filed and recorded in the records of the council. The sum so certified shall not thereafter be considered unappropriated until the city is discharged from the contract, agreement or obligation.
All moneys actually in the treasury to the credit of the fund from which they are to be drawn, and all moneys applicable to the payment of the obligation or appropriation involved, that are anticipated to come into the treasury before the maturity of such contract, agreement or obligation, from taxes or assessments, or from sales or services, products or by-products, or from any city undertakings, fees, charges, accounts and bills receivable or other credits in process of collection; and all moneys applicable to the payment of such obligation or appropriation, which are to be paid into the treasury prior to the maturity thereof, arising from the sale or lease of lands or other property, and moneys to be derived from lawfully authorized bonds, or notes sold and in process of delivery, shall, for the purpose of such certificate, be deemed in the treasury to the credit of the appropriate fund and subject to such certification. No contract shall be let which exceeds the estimate for the improvement contemplated.”
