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13/150th intersection costs come in $3.3 million over projection

The cities of Savage and Prior Lake will have to find some extra room in their budgets after receiving the final cost estimates for the intersection improvements at Highway 13 South and 150th Street.

When the project was approved in September 2014, officials estimated the cost to be $6.5 million. Due largely to a series of changes during the concept-to-final design process, however, the final costs came in this past fall at over $9.8 million. Prior Lake will be hit harder due to a cost sharing agreement that had them paying for property acquisition costs that went above the original estimate. The numbers aren’t entirely final, but officials believe they are close.

“We didn’t have a good number on the concept,” City Administrator Barry Stock said at a Jan. 9 Savage City Council work session. “That’s kind of a distinction that people really need to understand: the negotiated cost share was based on the concept plan. Those numbers should have never really been taken to the bank as the final numbers.”

The project, stretching about a mile down Highway 13 and highlighted by a signalized intersection at 150th Street, started in fall 2014 after a long back-and-forth between the Prior Lake and Savage city councils (they ended up going with Prior Lake’s preferred design, which was more expensive). Had the cities not agreed on a plan at that time, they could have missed out on more than $2 million in funding from the Minnesota Department of Transportation (MnDOT).

The project’s purpose was to reduce potential dangers to drivers and pedestrians around Highway 13 and 150th Street, as that particular intersection had been a problem area for a long time, but particularly after nearby Prior Lake High School opened in 2003. The project was completed in October 2016.

“I don’t think anyone would argue there wasn’t a need for a project in that area,” Stock said.

REASONS FOR INCREASE

Though the total figure wasn’t known until fairly recently, officials knew in late 2015 that the cost was going up significantly due to changes in scope. A left turn lane was added on northbound Highway 13 at Rustic Road — something strongly suggested by MnDOT that wasn’t included in the original plans — and road impacts on the Prior Lake side were expanded.

“In order to lessen the severity of a sag vertical curve (low point), the local road impacts extend about 250 feet further on both 150th Street and Estate Avenue,” wrote former city of Savage public works director John Powell (who has remained as the city of Savage’s point person on the project) in a Dec. 29 memo to Prior Lake city officials. “The work involved to build this intersection to MnDOT State Aid Standards was extensive and includes additional property acquisition [in Prior Lake], construction costs, and engineering design costs as a result.”

Other changes included additional pavement rehabilitation, the relocation of a storm water filtration basin, and added support for a retaining wall along the lake.

Most of the changes were approved by the cities’ staff members, though at least one of the changes — a water main relocation that cost roughly $124,000 — required approval from both councils. Powell wrote in that Dec. 29 memo that “Prior Lake has been extensively involved in all design and construction decisions, including consideration of the expected cost ramifications of those decisions, particularly for the project areas within Prior Lake. Processes were put in place that helped ensure that extra work requests and contractor payments were reviewed and approved by Prior Lake staff prior to Savage approval.”
But some of the most significant impacts on costs were in relation to property acquisition. Officials initially expected the project to only impact seven private properties, but that number ballooned to 18 due to the design changes, significantly increasing costs.

The cost sharing agreement had Prior Lake paying $857,000 more than Savage, as Prior Lake agreed to pick up the difference in cost between Savage’s preferred plan and its preferred plan. Prior Lake also agreed to pick up any additional costs for property acquisition above and beyond the $862,000 included in the engineers’ original estimate.

The updated figures now have Prior Lake paying about $4.7 million total (which $2.1 million more than projected), and Savage paying about $3 million ($1.2 million more than projected). MnDOT’s contribution of $2.1 million remains the same.

Prior Lake City Engineer Larry Poppler wrote a memo to Savage officials this past November asking them to consider sharing more of the costs related to property acquisition. He said that the original estimate of $862,000 for property acquisition didn’t include administrative costs, and he said Prior Lake officials believe that demolition did not count as a property acquisition cost, as Savage officials had indicated in their numbers. He also added that “it was unknown at the time of the cost sharing agreement approval that additional properties would be impacted substantially and require acquisition.”

In his Dec. 29 memo (which was technically a response to Poppler’s memo), Powell wrote that the changes that caused the additional properties to be impacted were on the Prior Lake side, and that Savage officials “had limited control over this change.” He also said that the original property acquisition estimate was based on the market value of what was believed to be the impacted area plus 20 percent, and that the additional 20 percent covered administrative costs, among others.

Powell said at the Jan. 9 work session that because “assumptions have changed,” Prior Lake is within its rights to ask for a renegotiation. But he told Savage council members that “there are agreements in place and are executed, so I think that’s entirely up to you if you want to show any flexibility.”

Powell added that Prior Lake knowingly took some financial risk when it insisted on its preferred design with the signal at 150th Street.

“They were basing their decision and their cost sharing on essentially four or five properties identified for easements, and it ended up being 18,” Powell said.

The Prior Lake City Council still needs to sign off on the costs so they can make their final payments to Savage, which was in charge of administering the project. The issue was initially on the agenda for the Jan. 23 meeting. Poppler wrote in an email to the newspaper that Prior Lake’s staff is “continuing to work with the city of Savage on the numbers and plan to bring the 150th Street project before the city council as soon as we can, hopefully early February.”

Please read more at the Prior Lake American:
http://www.swnewsmedia.com/prior_lake_american/news/local/th-intersection-costs-come-in-million-over-projection/article_e5912b74-5c32-5a34-a08e-135e2abe009d.html

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