Costs for Waller Creek Tunnel may rise to $163 million

The cost of the Waller Creek Tunnel project keeps rising.

The Austin City Council will consider Thursday adding $5 million to its agreement with Oscar Renda Contracting for delays and other costs city officials say stem from a major flaw in the Waller Creek Tunnel intake’s original design. The council will also weigh an additional $2 million for other contracts to fix what city officials say are smaller, recently discovered design gaps and problems, as well as $500,000 in contingency funding.

Along with other expenses the council approved last June, that would bring the total cost of the project to about $163 million, up 9 percent from the $150 million budget when construction began.

Austin Public Works Director Howard Lazarus said the city likely won’t be on the hook for all the added costs. Lazarus said he expects the two engineering firms that designed the tunnel system, Espey Consultants and Kellogg Brown and Root, to pay much of that cost once the project is completed next year.

Scott Dunaway, a spokesman for the engineering firms — called the “the joint venture” or “JV” — disagreed with that assessment.

“The city has failed to produce any claims or supporting documents which connect any failure by the JV to damages suffered by the contractors,” Dunaway said in a written statement. “Therefore, we vigorously object to the misleading suggestion that the City staff’s most recent request for additional funds will be shouldered by the JV.”

Two years ago, city officials said they discovered that the design of the Waller intake facility, which was under construction at the time, was about 16 feet too tall, violating a city and state policy preventing new buildings from blocking certain views of the Capitol. Part of the facility was torn down, and the engineering firms redesigned the intake at a lower height.

The project is supposed to lift 28 acres on the eastern edge of downtown out of the flood plain. The intake facility at Waterloo Park, just north of 12th Street, will divert water from Waller Creek into an underground tunnel that empties into Lady Bird Lake. Two other inlets — one between Eighth and Ninth streets, and the other between Fourth and Fifth streets — will pull in water downstream of the intake.

Since the tunnel, which is 60 to 70 feet underground, will always hold water, the city can also pump water back into Waller Creek to ensure a stable flow that will help revitalize the ecosystem. The nonprofit Waller Creek Conservancy is working with the city to create a series of new and upgraded parks, such as a new performance venue at Waterloo Park, by the creek.

Who’s to blame?

Under recent negotiations, the city determined it should pay $5 million to Oscar Renda Contracting, in part to cover the cost of having staff and equipment on-site — including paying staff to do work below their pay grade just to keep them on-site instead of losing them to other jobs — while redesign drawings took longer than expected, Lazarus said. It also covers the contractor’s costs of demolishing parts of the facility, among other things, Lazarus said. The city said Oscar Renda Contracting requested $8 million.

Also, the city says it wants to add $1.5 million to a separate Oscar Renda contract for the Eighth Street inlet because of design errors and to relocate underground utility lines. Lazarus said there were problems where “things didn’t fit together the way they should,” such as stairways that couldn’t be built as designed.

The city hasn’t yet determined why the errors weren’t caught in the quality assurance process Espey Consultants and Kellogg Brown and Root use, he said. Lazarus also said old city records might not accurately reflect where utility lines are.

Dunaway said Espey Consultants and Kellogg Brown and Root had “not been notified of these concerns.”

These additions would increase the amounts of Oscar Renda’s city contracts by more than 25 percent. Though state law says cities can’t increase contracts through change orders by more than 25 percent, the city said the changes are permissible because they are “non-value added costs,” such as demolition, which don’t add any extra value to a project.

City officials are also asking the council to approve adding $500,000 to the contract for S.J. Louis Construction of Texas, which is building the Fourth Street inlet designed by Espey Consultants and Kellogg Brown and Root. Creek stabilization work should have been included in design and bidding documents, but it wasn’t, Lazarus said. Dunaway said the designs were done in coordination with the city.

Lazarus said he was “not going to assign blame in public” and wanted to sit down with the engineering firms before commenting on who’s responsible.

Up for consideration

There are two other Waller Creek Tunnel items the council will consider Thursday. One asks the council for $119,221 to acquire a construction easement, and the other asks for permission to use a certain method of soliciting companies to remove water from the tunnel so it can be inspected.

Though the intake facility is incomplete, the tunnel has been receiving water since last spring.

Revenue from a special taxing district is the project’s primary source of funding, though bonds and money from the drainage utility fee residents pay have also contributed.

Council Member Don Zimmerman, who acknowledged the complexity of the tunnel project during Tuesday’s work session, said he thought last year’s added costs were the final ones.

“If we can build trust that we can deliver stuff on time and on budget, that helps the taxpayers have confidence that we should approve it, because we can get it done the way we said we would,” Zimmerman said. “I don’t want to ruin our reputation with our constituents.”

Lazarus responded, “I think there’s a great track record of the city delivering projects on time, within the scope and within the schedule. Unfortunately, every now and then, something happens, and I think the manner in which staff has handled this does keep that faith with the public, understanding that nobody likes to see things cost more than they initially said they would.”

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