Chris Caskey, The Union Democrat

A major Tuolumne Utilities District water project is facing delays as district leadership looks for a way to fund it.

The TUD Board of Directors held off Tuesday on awarding a $681,000 construction contract for a water pipeline to connect the Big Hill and Columbia water systems.

District officials say the project is among the top priorities for the TUD water system, as it will ease demand on the Columbia treatment plant and improve water quality.

But directors say they don't want to move on the project until they're sure there will be enough money in next year's budget to fund it.

"As far as taking (the funds)out of our pockets right now, I don't know if we have it," said Board President Michael Sarno.

The lowest bidder on the project was Sonora contractor Njirich and Sons, which submitted proposals with four other firms. The project calls for laying down about 7,200 feet of pipe between Columbia and Big Hill.

According to meeting documents, the project would take up most of the money available in next year's capital projects budget.

Tom Scesa, head district engineer, recommended the board accept the bid but delay issuing a notice to proceed on the project until the board has a better sense of next year's budget and capital projects.

The project would take roughly 150 days, he said.

Scesa also pointed out that district water projects do not qualify for most of the state loan programs the district has been able to use in the past for such projects. Sarno stressed he still wants to see the district seek outside funds.

"We're going to go ahead and apply for funding anyway," Scesa said.

The delay comes as directors push to cut costs, both in operating and capital expenses. Board members - most of whom started terms early this year - voted against a scheduled 2.78 percent water rate increase in March and are also looking for considerable cuts in the coming budget.

Sarno repeated Tuesday that the board only wants to spend money on projects identified as critical.

"Unless it can be deemed necessary, absolutely necessary, I think I'm going to have to say we're going to have to hold off until we're sure we have the money in place," he said.

The vote to delay awarding the contract was 3-1, with Delbert Rotelli dissenting. Jim Grinnell resigned from the board over the weekend for health reasons.

The board's decision was met with criticism Tuesday, as multiple members of the public said they should move forward now on the project.

John Feriani, a local contractor and director on the Tuolumne City Sanitary District board, called the decision "unbelievable." Feriani said the cost of the project will likely increase as it is moved back, adding that the money wouldn't be as big of a problem if they had approved the previous rate increase.

"Seven months, and you guys have done nothing," he said.

Mark Banks, president of the Building Industry Association of Tuolumne County, also warned of consequences.

The contractor lived up to everything the district required "in good faith," when he prepared the bid for the contract, he said

"You let this opportunity slip by, and you're going to be looking at higher costs. And you're going to be answering to the ratepayers for that," Banks said. "The reputation of TUD is at stake, also."

In other action:

• Johnson said he is looking into the financial records kept for the district's water and sewer funds. He claimed on Tuesday that past practices at TUD have involved funding water projects and operations by borrowing from the sewer fund, which is significantly stronger than the water fund. Johnson claims those practices could be illegal under state law.

"The TUD board should not be approving any water projects that may further implicate past boards or potentially implicate this board" before the matter is resolved, Johnson said.

However, TUD Financial Director Steve Sheffield countered those claims, saying that those funds have never been commingled as is often claimed.

"The records are available. They have been audited," he said.

• The TUD board will likely hold a special meeting on June 18 to discuss how they are going to fill the director position previously held by Grinnell.

• Voted 4-0 to seek proposals from law firms to handle upcoming union negotiations.