City Parks staff presented a multi-year update July 21 on Pilot Knoll Park that moved the project from feasibility into design, and flagged failing potable-water and septic infrastructure that staff and Public Works say will require significant replacement before other site upgrades proceed.

The problem: Staff said portions of Pilot Knoll's potable water and RV-septic systems date to original plans from 1966 and septic installations from the 1970s, and that recent inspections and frequent repairs show the systems are undersized and failing. Phil (Parks staff) and Heather (Parks staff) told the board they discovered an older set of tanks and an aerobic leach field in an environmentally sensitive area that had not been documented in available plans, and that engineers recommend replacing the RV dump station, the exposed sewer line along the lakeshore and the multiple aging potable-water pipe classes serving the RV area.

How much it would cost: Public Works provided an opinion of probable cost for a full replacement and consolidation into a system managed by Public Works: roughly $1.1 million for a complete new water main; about $2.1 million for sanitary sewer improvements; and about $348,000 for engineering, for a total midpoint of about $3.5 million to $3.6 million (staff used a 5% inflation adjustment in the presentation). Phil said that the new estimate is significantly higher than earlier feasibility figures because of inflation and rising construction costs.

Why it matters: Pilot Knoll generates its own fee revenue under the Corps lease (federal land leased to the city), and that revenue must remain with Corps-lease parks. Staff said the park is used heavily by Highland Village residents and visitors and that system failure would reduce revenue, visitor experience and lake safety. Heather explained the city keeps a separate fund for Corps-lease park revenues and its fund balance target is 25 percent (about three months of operations); infrastructure replacement debt service would change the fund's year-to-year net balance under several scenarios discussed with the board.

Funding and the cabins business case: The presentation modeled several scenarios. The project already has some grant funding: staff reported an awarded Texas Parks and Wildlife local parks grant and a planning grant for the boat ramp; staff expects about $1.2 million in total grants tied to the project (construction and planning grants). The 2021 Parks bond carries the remaining budget items for gatehouse, restrooms and pavilion upgrades; staff proposed using bond proceeds and interest plus grants to fund design and early work.

Because of the cost of full utility replacement, staff revisited a previously proposed revenue strategy: a cabin rental program in wooded areas of Pilot Knoll. Staff presented financial models showing the cabins plus associated day-use and gatehouse upgrades could produce net additional annual revenue at higher occupancy rates that would help offset debt-service payments for a full utility replacement. Staff used three scenarios: 75 percent cabin occupancy (presented as the target used in earlier feasibility work), a 64 percent occupancy breakeven scenario, and a conservative 50 percent occupancy scenario (which would make the overall fund position negative under current assumptions). Heather said the cabins package in the base scenario assumed 16 cabins, cleaning and linen services, Wi-Fi infrastructure and operating costs and a bond-backed financing approach that would amortize construction over 20 years.

Procurement approach: Because conventional bidding returned few bidders on similar small projects in the region, staff recommended a construction-manager-at-risk (CMAR) delivery. The city presented a CMAR selection that resulted in council authorization to negotiate with Dean Construction; council directed staff to negotiate a guaranteed maximum price. Phil said the CMAR approach helps control schedule and costs by involving the construction manager during design and by producing a guaranteed maximum price.

Board concerns and technical limits: Board members asked whether utilities added to campsites (full-service hookups) had been analyzed. Staff said it had not completed a cost estimate for adding full-service hookups at each site but agreed to seek an opinion of probable cost for adding hookups where trenching would already occur. Staff also noted there is a technical limit to wastewater flow for the Pilot Knoll site (an engineer cited an approximate maximum wastewater capacity of about 5,000 gallons per day for the currently contemplated system), meaning any increase in wastewater usage must be assessed against system capacity and permit constraints.

Next steps: Staff will present updated numbers to City Council at the next work session and continue design work for the gatehouse, day-use area and boat ramp (some elements are grant-funded and advancing). Public Works must decide whether to include the full park water and sewer replacement in the city's utility capital improvement plan (CIP). Council staff have not yet set a construction schedule; staff said phasing would be important to avoid large revenue disruptions. Phil and Heather told the board they will return with more detailed cost breakdowns, payback calculations and a refined construction and phasing plan.

Ending: The board did not take a formal vote on the project at this meeting. Staff asked board members to consider the cabin revenue scenarios and allowed members to request additional analysis, including a focused estimate for full-service RV hookups on the line routes expected to be trenched.