Commission concerned about WTP4 cost overruns

The Water and Wastewater Commission was unable yesterday to recommend approval of $15.5 million in additional construction funds for Water Treatment Plant 4, citing “opaque” reasoning from staff as to why that money is necessary. If City Council approves the additional funds, that would bring the total price tag for construction of the plant to $374.5 million, well above the city’s $359 million target and even above the highest estimate made by the head of the Austin Water Utility (AWU) last month.

During the hearing, AWU director Greg Meszaros admitted that the utility was over-budget on the project. “In the end I think [the cost is] going to be $366 million. Clearly we are overbudget; the bids came in higher than expected.”

The utility has thus far been reluctant to admit that the project was running over-budget. In that respect, Meszaros’ comment is something of a reversal.

In a memo sent Sept. 7 to Mayor Lee Leffingwell and his fellow City Council members, City Manager Marc Ott informed the Council that AWU would be requesting additional funds for the project, but he didn’t state what the number would be. At the time, Meszaros guessed that final construction costs would probably come in the $360s, “or maybe $370” million (See In Fact Daily, Sept. 12, 2012).

In the Sept. 7 memo, Assistant City Manager Robert Goode wrote that the need for additional funds stemmed from the investment the city has made to “minimize community disruptions and to ensure that the project is protective of the environment,” specifically the decision to tunnel the entirety of the Jollyville Transmission main, rather than leaving one-third of it to open cutting.

At last night’s commission meeting, Meszaros said the city won’t be able to complete construction of WTP4 without the additional authorization of funds. “We’re hitting our head on the ceiling,” he said. 

Several commissioners took Meszaros to task for the budget request. Vice Chair Dale Gray worried that it could be viewed as confirmation of longtime public skepticism over the viability and value of the WTP4 project.

“As part of the process of authorizing construction of Water Treatment Plant 4, you made a preliminary estimate, and there was some strong concerns in the community that that budget was going to get blown up, as sometime public works projects do,” Gray said. “What I’m hearing is, you guys basically said you were going to try to commit to that preliminary estimate and hopefully resolve some of the citizenry concern of the budget going haywire.”

Commissioner Mickey Fishbeck appeared exasperated by staff’s request for more money and by their inability to explain clearly why the additional funds are needed. She asked Meszaros to explain in “simple terms” why the project was coming in over budget, and she pointed to a line-item budget as apparent evidence that each budgetary item – such as the pump station and the marine, underwater work — had been bid higher than originally estimated.

“I’m not looking for somebody to blame; I just want to know why we need more money,” Fishbeck said. “And I think it’s because the bids came in higher than the original $359. I don’t think it’s that hard, but it’s being made hard by all these other extraneous explanations.”

Meszaros responded by saying he believed when he went to Council originally that the project could be completed for $359 million or less. Meszaros doesn’t believe the project will require the full request $374.5 million but said a cushion will allow for future contingencies.

In the end, the commission voted 3-1 against the recommendation, with Gray voting for it, Commissioner J. Michael Ohueri abstaining, and Commissioner Chien Lee recusing himself. Though sentiment was clearly against the additional funding, the tally was not enough to register an official vote.

The request now goes to the Audit and Finance Committee Oct. 24, before heading to City Council Nov. 1. WTP4 is still on schedule to be operational by mid-2014, according to the water utility.