The District of Houston is forging ahead with the project to place utility lines underground on Hwy. 16 between Buck Creek and Butler but at a cost exceeding the original budgeted amount.
It’s coming up with the money by dipping into the District’s operating surplus to the tune of $406,505 to set a planned expenditure now of $2,164,505 which is more than the $1.758 million allocated earlier this year.
And that $1.758 million was already bolstered by monies from the District surplus.
Council’s decision was reached May 4 after considering complete project costs when just one contractor, Western Industrial Contractors, submitted a bid of $1.604 million for conduit placement, streetlighting and restoration.
“This bid is over the total budget amount for this project by $562,005,” noted District operations manager Chris Lawrence in a memo to council.
With the Western Industrial bid price added in, the project cost then became $2,347,005 for a budget deficit of $562,005. But council deleted $182,500 that had been allocated to quality control costs.
That reduced the project cost to $2,164,505 and with the $1.758 million already allocated, the decision to take another $406,505 from the operating surplus has closed the financing gap.
In addition to the Western Industrial Contractors cost, specific amounts tied to items such as design and a contingency allowance are included to arrive at the $2,164,500 figure.
This is the second time council has been faced with projected costs exceeding budgeted amounts for this project, which is considered a key part of the District’s longterm plan to improve and beautify the downtown core area.
The District had wanted the project to proceed last year but when it asked for bids just one was received and, like now, at a price over the budgeted amount. Council then put the project on hold pending discussions this year regarding its 2021 spending plans.
With the latest project cost set, the figure is roughly double what the District had anticipated when it first began planning for the project several years ago.
The project involves placing BC Hydro, Telus and CityWest lines underground with accompanying new street lighting. There are provisions for eventual traffic lighting.
BC Hydro, through an internal program, is covering a portion of the costs relating to its own lines but that value is not reflected in the District’s budget figures.
In a further bid to smooth out expenditures, council decided that a companion sidewalk project from Butler to 9th St. be done next year at a cost of $375,000, a figure that is separate from the 2021 budgeted amount.
The sidewalk construction from Buck Creek to Butler that is connected to placing lines underground comes under the 9th St. budget.
In approving the undergrounding work, council twice went against the advice of its staffers because using the District’s surplus to cover increased costs meant reducing the surplus total.
In March, when council was considering its spending plans for this year, Chief Administrative Officer Gerald Pinchbeck cautioned against using the surplus to account for rising costs, saying the move “would place the District in a much weaker financial position than it is today.”
Last week, operations manager Chris Lawrence’s memo noted that staffers recommended shelving the project.
The result of the surplus drawdown “limits the ability to prepare for future risks to the operating and capital budgets, including unexpected emergency response costs, unexpected infrastructure failures and other urgent capital/operating priorities,” his memo stated.