Palo Alto Weekly

News - April 4, 2007

Storm drain projects threatened by skyrocketing construction costs

Ballot estimates made in good faith, city leaders say

by Becky Trout

With four of seven planned Palo Alto storm drain projects threatened with cancellation or severe cut backs due to escalating costs, Vice Mayor Larry Klein is the proposing the city plug the financial hole.

His suggestion comes after a memo from the city's Storm Drain Oversight Committee last month alerted the community that storm drain projects to be funded by a 2005 ballot measure will likely be affected.

Several other City Council members said they haven't had a chance to study the issue yet.

The storm-drain committee was set up to ensure the approximately $35 million to be collected over the 12-year life span of the fee increase would be spent properly.

The committee suggests eliminating a project that would link Clara Drive's pipes to a pump station and leaving the Southgate neighborhood without drainage. A $1.5 million project to improve drainage on Alma Street would be scaled back by 67 percent, while 33 percent fewer pipes on Channing and Lincoln avenues would be lowered, according to the committee's memos.

Constructing a new pump station for San Francisquito Creek, widely considered the most important of the seven projects, would still be completed as planned, although a preliminary estimate has added more than $1 million to the pump station's estimated cost of $4.5 million.

Under the adjusted plan, the Matadero Pump Station would also be expanded as anticipated.

"We presented the projects in the ballot in good faith. Events have worked against us," said John Melton, chair of the committee. "With the money available, we can't do it all."

The ballot proponents had no way of anticipating cost increases of 30 to 50 percent over three years, City of Palo Alto Senior Engineer Joe Teresi said.

Although the committee and Public Works staff saw construction costs climb soon after the measure was passed, they didn't know for sure until the first of the seven projects was bid, Teresi said.

It was expected to cost $650,000 to hook up 280 acres in the Charleston Terrace Greenhouse and Greenmeadow neighborhoods with a pump station. The lowest bid came in 58 percent higher than anticipated in August 2006, Teresi said.

Teresi said the costs of fuel, raw materials such as concrete and steel, and the bustling local construction market have worked to push up prices unpredictably.

"China, Hurricane Katrina -- you can pick your villain in this thing. It's a whole worldwide series of events. It's not a local thing. We're just caught up in it," Melton said.

When the costs of the ballot projects were calculated, staff used past projects, cost-estimating guides and information from other projects and agencies, Teresi said.

"Our hope is that they are accurate, and maybe even on the high side," Teresi said. "(But) it is called an estimate for a reason."

He said they felt confident of the ballot estimates at the time.

"None of us really had a sense that this was going to happen before the ballot," Melton said.

Klein agreed the cost increases couldn't have been anticipated, but he said the City Council should use some of the $3 million it is setting aside for infrastructure this year to ensure all seven projects promised to the voters are completed.

Mayor Yoriko Kishimoto acknowledged that was an option.

The 2005 ballot measure raised the average monthly fee for a single-family house from $4.25 to $10.

A previous measure failed in 2000. To gain greater approval, the second storm-drain ballot measure included a 12-year time limit, an oversight committee and a cap on fee increases, Teresi said.

The annual fee can be increased by the council only on par with the local inflation rate, Teresi said.

The council boosted the fee by 2 percent last year. This year, staff plans to ask for a 3.4 percent increase, Teresi said.

The Oversight Committee's proposal will go before the Finance Committee in May before it is considered by the council.

A little more than half of the money raised by the fees is slated for the seven projects. The rest is being used to fund routine maintenance and to obviate the need for subsidies from the city's general coffers. Before the ballot was passed, necessary storm-drain fixes that exceeded the budget of the storm-drain fund used general city money.

Staff Writer Becky Trout can be e-mailed at btrout@paweekly.com.

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