BARRE — The city’s water and sewer funds will have to absorb more than $900,000 in unanticipated costs associated with a massive road reconstruction project that was completed in 2012.
In a move they were told will enable the state Agency of Transportation to complete “final billing” for the project known as Barre’s “Big Dig,” city councilors on Tuesday approved three separate six-figure adjustments to agreements involving the project.
Two of those agreements were executed in 1999 as part of a federally funded project that was coming soon to downtown Barre for decades, but didn’t actually arrive until construction started in 2011. That’s the year the third agreement, amended by councilors Tuesday night, was executed.
All three agreements involve utility work that wasn’t eligible for the federal funding that financed most of the project. Crews ripped up and then rebuilt the half-mile stretch of North Main Street that runs through the heart of the city’s central business district.
Based on the combined adjustments, the city will be billed nearly $1.3 million more than reflected in the earlier versions of those agreements, but City Manager Steve Mackenzie said the “net cost” to the city will be closer to $900,000 based on the $1.75 million it budgeted for the work.
According to Mackenzie, that budget included $1.5 million to cover construction costs and a $250,000 contingency.
The actual cost of the ineligible work, which included replacing century-old sewer and water lines buried deep beneath North Main Street, far exceeded that figure, but not by the amounts reflected in the dated agreements.
The projected costs included in two of the agreements were based on estimates that were more than a decade old when the project was put out to bid. Inflation was cited as the primary factor for the increases, which ranged from a low of nearly $115,000 to a high of more than $921,000. The latter figure involved subsurface utility work and the former involved costs incurred by relocating private utilities.
The third increase — roughly $257,000 — was tied to higher than anticipated engineering costs.
Councilors, who were briefed on the situation in executive session last week, approved the three supplementary agreements without much discussion.
Now that the council has acted, Mackenzie said the state can complete billing for the Big Dig and prepare a repayment plan for the $900,000 the city still owes.
“We’ll have to plan how to deal with that,” he told councilors.
Though Mackenzie didn’t elaborate, he said Wednesday there are two possibilities. One would involve building the unanticipated cost of repaying the state over four years into water and sewer rates, he said. The other would involve bonding to cover that cost over a longer period of time.
Mackenzie said the council was months away from needing to make that decision and the conversation wouldn’t start until the repayment plan is in hand.
In other business Tuesday night, councilors declined an unsolicited offer to buy 35 acres of city-owned land in Orange for $50,000. The property is part of a much larger tract that includes the Orange Reservoir and the city’s water filtration plant.
The offer was received more than a year ago and Public Works Director Bill Ahearn urged that it be rejected given the potential future use of the land to expand the city’s water supply.
Mackenzie asked councilors to formally act on Ahearn’s five-month-old recommendation Tuesday night.
Councilors agreed the land is not for sale and noted even if it was, they would likely be required to seek competitive proposals.