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WTP4: Running on Overruns?

Austin Water wants more money for WTP4

By Mike Kanin, Fri., Oct. 19, 2012

City on verge of going in the hole on WTP4
City on verge of going in the hole on WTP4
Photo by John Anderson

The central conversation surrounding Water Treatment Plant No. 4 is no longer about environmental damage. Or siting. Or whether we actually need the thing. Or the environmental protections we'd like to see put in place to protect what lives, grows, and flows around it. Or the angst felt by neighborhoods affected by years of construction. At least, not for the most part. On Wednesday, the city's Water and Wastewater Commission found out that it is going to take another $15 million – or, at least another $15 million worth of construction authorizations – to put the long-running political nightmare that is WTP4 to bed.

So now the conversation is about cost overruns.

And with there being plenty of outstanding questions for all parties involved, it will probably be a volatile one.

Austin Water Director Greg Meszaros broke the news to water commissioners. Meszaros still wasn't ready to say that the utility would need all of the authorization. But he was clear about the nature of things. "In the end, I think [the cost is] going to be $366 million. Clearly we are over budget; the bids came in higher than expected," he said. But the commissioners, unmoved by Meszaros' request, declined to endorse the approval of the new funding (the vote was 3-1 against, insufficient for an official commission action, which requires 4 votes). If City Council members follow suit when the issue comes before them in the coming weeks, there could be trouble. Said Meszaros about the money available to complete the project: "We're hitting our head against the ceiling."

The chances are that the utility will get the money. By appearances, the question might be "What's another $15 million on top of $359 million?" – the estimated cost of the project at its start – but that's not quite accurate. For starters, the utility still believes it can bring the project in at slightly less than the $375 million it's asking for. Maybe, says Meszaros, it won't cost more than $366 million – just 2% more than the initial projection. There is also the fact that council members, in voting to continue the project even after the election of Kathie Tovo, signaled their collective belief that – even if they weren't all quite convinced that the project was necessary – it was at least too far gone to stop. The plant is now roughly 95% committed to contracts, and about half completed.

Still, you can bet there will be requests for pounds of flesh. Meszaros has maintained that, despite the utility's need for additional funds, the project wasn't quite over budget – that is, on paper, it's over the projected construction budget, but once money held in reserve for contingencies had been freed up by the completion of various portions of the project, the effort would cost only 1% to 2% more than projected. Council members have been skeptical of that – and it turns out they were right. This is the sort of thing that is almost sure to bring a troubled line of questioning from any one of the four members – Tovo, Laura Morrison, Chris Riley, and Bill Spelman – who have raised questions about the project in the past.

There may also be questions for city management. It seems, from a line of emails uncovered by In Fact Daily, that city brass – specifically Assistant City Managers Rudy Garza and Robert Goode – knew about the potential of a cost overrun as far back as December 2011. As Spelman wondered to In Fact, if Garza and Goode knew about the issue, "then why the devil didn't the city manager?"

Contractors MWH are also in line for a grilling. When the city signed a "construction manager-at-risk" deal with the company, many believed that the "at risk" portion of the deal would protect the city from cost overruns. It didn't. Council members will surely want to figure out where the blame lies for that one.

Spelman, Morrison, Tovo, and Mayor Pro Tem Sheryl Cole will have the opportunity to ask whatever questions they may have when the matter goes before the Council's Audit and Finance subcommittee in late October. From there, any request for additional funding would have to go before the full body for a vote – and, undoubtedly, more questions.

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