Six years into its biggest public works project ever, the city is on pace to spend $34 million more than projected.
So far, $154 million has been spent on the Antelope Valley Project — a massive undertaking in the heart of Lincoln that will build six miles of roads, two miles of creek channel improvements, 12 street bridges, three rail bridges and three pedestrian bridges.
All that work is expected to reduce flooding in Lincoln’s core, beautify a swath of the city center and improve traffic around the university.
Today, 20 semitrailer trucks carry dirt out of Antelope Valley every hour as the project grinds toward completion of its first phase — at a cost of about $1,352 per hour.
But has the city delivered on promises made before a single spade of dirt was turned?
Few people seem to be keeping track.
Ask city officials whether the project is on budget, and you’ll have trouble getting answers.
So the Journal Star examined cost projections released to the public in 2000 and compared them to actual spending.
Here’s what we found: The city now expects to spend $264 million by the time the first phase of Antelope Valley is finished, about three years from now. That’s more than the entire city budget.
Cost estimates varied in the years the project was studied, but Antelope Valley proponents published a newspaper insert in 2000 projecting the first phase would cost $175 million.
But those were 1999 dollars.
Adjusted for inflation, that would be $230 million today.
City officials say since construction costs have skyrocketed in recent years, those dollars should be adjusted using a construction index, rather than the Consumer Price Index.
Adjust for construction inflation, the cost would be $327 million today. So city officials say they’re pleased costs haven’t gone up significantly more.
City Engineer Roger Figard called the city’s tracking with original estimates “outstanding.”
“I am amazed at how remarkably well we’ve done … that we have come as close as we have,” he said.
Wayne Teten, the city’s Antelope Valley project manager until he retired earlier this month, said the cost of Antelope Valley has grown due to increases in the cost of materials such as oil, cement and steel, and higher land costs than projected.
Early estimates didn’t take inflation into account, he said.
“There was an estimate,” he said, “but as with any project, they get better as it goes along.”
But if phase one was projected to cost $175 million and will end up costing $264 million, does that mean cost estimates for other city projects, such as the proposed new arena, will end up similarly inflated?
“If I knew that, I’d be rich,” City Finance Director Don Herz said.
He’s using 2009 dollars to estimate the arena’s cost, but expects to use some kind of inflationary factor. But since the arena will be built much faster than Antelope Valley, and prices locked in up front, he doesn’t anticipate such ballooning figures.
But, he said, “It’s hard to predict.”
Journal Star analyzes every dollar spent
To understand where and how taxpayers’ dollars are being spent, the Journal Star analyzed the prices paid for every piece of property bought to make way for the project.
It also examined all Antelope Valley payments to vendors and hundreds of pages of consulting contracts, addendums, invoices and expenses.
Among the findings:
* Taxpayers were told that, in the best case scenario, they’d have to kick in only $35 million over 20 years of construction. But the city passed that mark long ago. Taxpayers have contributed $68 million so far, as the city funnels gas taxes, wheel taxes and railroad safety taxes into the project.
* Parsons Brinckerhoff, the New York consulting company hired to manage both design and construction of Antelope Valley, has a “cost-plus fixed-fee” contract in which it’s paid for its costs, plus a fixed fee. Such contracts are often criticized, most recently by presidential candidate John McCain, because they don’t encourage cost savings.
* The new projected cost to complete the first phase of Antelope Valley, $264 million, dwarfs initial estimates of the cost to do both the first and second phases of Antelope Valley, $225 million.
* The project doesn’t have a set-in-stone budget. Instead, each year the city approves Antelope Valley funding in its capital budget, which is overshadowed by the municipal budget. This year, the City Council passed the capital budget with no questions or discussion about Antelope Valley.
* Kent Seacrest, the Lincoln attorney who was hired to help shepherd Antelope Valley, has earned more than $2 million working on the project since the mid-1990s. For his work gathering public input and guiding the project from study through near completion, he has charged the highest hourly rate of any subcontractor, asking $280 an hour. But some of his work is menial, such as guiding bus tours, talking to city officials and attending meetings.
* Lincoln consultant Rick Wallace has earned $251,500 being what Teten described as a liaison to nearby neighborhoods and minority populations. Wallace worked in the construction industry much of his career and owns a consulting business that helps small businesses.
His billings indicate he’s spent much of his time working — at the current rate of $175 an hour — on an assisted-living facility in or near Antelope Valley that would cater to minorities. But after years of meetings, they’ve yet to even settle on a location.
* The good news is the city has received more federal money than anticipated. So far, 41 percent of funding has come from the feds — compared to 28 percent projected. But state funding is lagging behind projections, at 14 percent, compared to estimates of 22 percent. Which means local taxpayers are picking up more of the tab than expected.
As costs rise, other street projects delayed
If you add up every kind of local tax dollar spent on the project, the city long ago passed the $35 million maximum it hoped taxpayers would contribute.
Using the city’s method of calculation, local taxpayers have contributed more than $49 million so far.
But the city doesn’t count gas tax dollars as local dollars, even though gas taxes are paid at Lincoln pumps, sent to the state and then returned (in part) to the city.
If you count the $19 million the city has diverted to Antelope Valley rather than used to repair and build other streets, the local share climbs to $68 million.
“I guess that’s one way to put it, but it has been spent on streets,” Teten said.
“Lincoln prioritizes which streets to spend its money on … It was a choice that was made. It wasn’t that Antelope Valley was taking away from other projects, it was that this is the project that is number one priority.”
Local tax dollars have also come from the Railroad Transportation Safety District (funded by a county property tax) and the Lower Platte South Natural Resources District, which combined have pitched in more than $26 million.
But that hasn’t been enough to keep the Antelope Valley beast satiated: Last year the city began borrowing against future keno revenue to pay for an Antelope Valley park.
In addition to gas tax revenue, more than $12 million in wheel tax dollars have also been funneled into the Antelope Valley Project.
Meanwhile, other street projects have languished.
When the wheel tax was bumped up $15 in 1995, city officials said they would widen Old Cheney Road from 70th to 84th streets, 56th Street from Old Cheney Road to Pine Lake Road and Pine Lake from 56th to Nebraska 2.
Before the Antelope Valley Project began, Figard promised it wouldn’t raid money from other street needs. He blames rising construction costs and shifting city priorities, not Antelope Valley, for delaying other street work.
Meanwhile, city officials complain they are woefully short of street dollars. Aside from nine blocks of South Street, the city hasn’t resurfaced an arterial street since 2004.
The city says it has a $56 million backlog of street work waiting to be done within the city limits.
That’s why some developers have become increasingly agitated as they watch Lincoln’s street budget get poured into Antelope Creek.
Development attorney Peter Katt said developers are disappointed the city chose to devote so much to Antelope Valley at the expense of other infrastructure needs.
Councilwoman Robin Eschliman recently groused that Antelope Valley is “costing us out the ears.”
“There’s no accountability on that project,” she said. “And it’s gonna take decades, if not centuries, to recoup our money there.”
Lincoln officials will soon decide whether to embark upon phase two of Antelope Valley.
The chairman of the Joint Antelope Valley Authority, Glenn Johnson, is pleased with the progress so far.
“This is a remarkable example of intergovernmental cooperation when one realizes that during this span of history, there have been five mayors, 19 City Council members, four UNL chancellors and eight NRD chairs,” he said in a prepared statement.
Mayor Chris Beutler said the project has inspired unprecedented cooperation and will be a key driver of growth in Lincoln, when complete.
“We can take the valuable fiscal management and project oversight lessons learned from this large multi-year project and apply those lessons to future city projects to obtain even greater results,” Beutler said in a prepared statement.
However, asking what the second phase would cost is like asking what the budget for the first phase was: Nobody seems to know.
“It’d be premature to discuss,” Figard said. “I wouldn’t want to guess.”
Reach Deena Winter at 473-2642 or firstname.lastname@example.org.