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$15 Mil. Project: Lender needs a letter about the utilities

J

Joker

Bronze Member
Joined
Jun 26, 2014
Messages
58
Location
Midwest
Hello,



The City has sold a former Fire HQ to a developer who is investing $15 million to turn it into a restaurant on the first floor and a 99 unit hotel on the upper floors.Plans have been reviewed and approved. The request from the architectural firm of record is as follows:



*****Typically, the letter issued to us from the Building Dept stating that their plan review is complete and our building permit is ready to be paid for and picked up would suffice, but in this case we are being asked for a more clear letter relating to utilities. As we near the closing we ask for your assistance in clearly stating in a short letter that the Building Dept has reviewed the change in use of the property, the proposed design, all supporting information and finds that the existing surrounding water, sewer, gas and electric infrastructure will support this project.*****



My request for supporting documentation from the utlity companies haven't given me anything much more than "Yes we provide service in the area in question subject to the rules of the commision in effect at the time" or "The determination of the acceptable level of electrical reliability is the responsibilty of the building dept. Not the the electrical company."



My question is: Has anyone dealt with this situation before? If so, how did you resolve it? It seems like if the utility companies wont give anything substantial, signed and sealed letters from engineer(s) to support my letter would be the way to go. Thoughts?
 
CDA/ICE You guy's are always "Johnny on the Spot" and very much appreciated. We are being put in the midlle supposedly because the bank wants us to be. It looks like I'll be asking for signed and sealed docs from their engineers.
 
These questions are always answered by the consultants. The architectural firm might just want you to tell them this in writing so they can send that to the bank.
 
Post#4.....I would ask for a letter from their engineers, based on information from the utilities. No way would I personally make that assessment..."Based on information provided by X and the utility, it seems as though the existing infrastructure should be adequate, but without complete plans and calcs, I have no way of verifying this absolutely"...Or something like that...
 
Here is my response

The existing surrounding water, sewer, gas and electric infrastructures are supplied by private utility companies. The building department does not have the proprietary information it would take to determine if the existing utilities will support this project. As the designer of record I recommend you contact each utility company for verification.

It is not the building departments responsibility to determine the level of utilities provided only that they are available to the site
 
It is not the building departments responsibility to determine the level of utilities provided only that they are available to the site
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Unless you're me; where your City owns the water and sewer, and your Building Dept. is also the Zoning/Planning Dept., so all development approvals come through you. It's not my responsibility to determine the levels, but it is to verify that they're sufficient.

If the water and sewer are City properties, you'll need your City engineer and/or your Public Works director to sign off on the load for the new development. Then you'll need a different engineer to sign off on the electric and gas, assuming they're utility-owned.

Whatever you do, listen to mtlog and Steve and DO NOT put your building dept. on the hook for any verification. Make the developer hire the necessary engineers, and have them sign off on adequacy.
 
totally agree with mtlogcabin,

In the opposite vein though I have had designs submitted where I made the RDP change the sanitary sewer since I had been involved for other reasons in calculating existing pipe capacity for the nearby area. I knew the mains they were intended to discharge into were already at maximum flow capacity. In that instance they had to redesign and come out of the facility at a totally new direction and at their expense to extend mains to them at that location. The same became evidently true for water capacity when we looked at that also due to the original service was found to be off of a 6" fire hydrant leg. So the project, a hospital, wound up with the secondary sewer and a newer better sized water service both of which came off newer piping systems that did have the capacity for them to grow and I think they scored for earthquake preparedness due to secondary water source capability via valve management.

A brand new sewer study this year by outside consultants reconfirmed that I was correct all those years ago. So just saying that if you as the BO or plan reviewer have knowledge of any inadequacy I think you should get involved - however that may happen. But that is only for those utilities supplied or controlled by your jurisdiction. At that time this happened I was a part of the public works department which then included the water, sewer and storm utilities - that is now not the case today since they were separated out..

​It is very often that we have need for increased water service lines to be put in due to adding fire sprinklers.
 
I find the responses interesting given some of the statements that building departments "require" design professionals to sign.
 
I find the responses interesting given some of the statements that building departments "require" design professionals to sign.
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Maybe it was worded wrong? In my case, for zoning stuff / development approvals, the guy required to sign anything (other than stamped plans) is the applicant. If they have to have an RDP draw something up so they can sign for me, that's on them. In the OP's case, the only way to correctly/acceptably verify the systems that are in place for his project is for him to require his applicant to hire an RDP.
 
Sorry, late to the game on this thread, as usual. The issue has to do with regional infrastructure capacity, and it is a common request. For example, HUD for many years required developers to obtain "will serve" letters from utility providers, to confirm their systems had adequate overall capacity to serve a proposed project.

If the city happens to be in the utility business (as is often the case with sewer, water and/or power), then those respective departments (e.g. Public Works, Water & Power, etc.) would be the ones to provide the "will serve" letter, NOT the building department.

In recent years in California, this has become a critical issue due to the drought. For example, some cities are so concerned about maintaining adequate supply that they are restricting issuance of water meters for new service - - at least until they can find additional water sources.

It is important for a lender's due diligence to know that the project won't be held up due to lack of overall capacity from the utility provider; but it's not the building department's role to provide these letters.
 
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