DETROIT LAKES — The cost for the West Lake Drive Phase Two street and utility project, scheduled to begin this summer in Detroit Lakes, jumped to $4.2 million, a 50% increase from preliminary estimates, after a bid for the construction work was accepted by the Becker County Board.
On May 4, commissioners unanimously accepted the low bid of $3.4 million from Hough Inc. of Detroit Lakes to complete the construction work for the project scheduled to begin in June or July.
An additional $800,000 is being included in the project cost to account for engineering, permits, legal, easement acquisition and compensation, a contingency fund and materials purchased outside of the construction contract, like parts for the water main improvements, which needed to be ordered in advance due to longer delivery times.
Becker County Highway Engineer Jim Olson said the county's $1.5 million share of the joint project cost with the city of Detroit Lakes is limited to the street and storm sewer improvements.
The city is picking up the cost of the multi-use trail, sanitary sewer, water main and a lift station, totaling $1.4 million.
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And the remaining $1.2 million is expected to be assessed to the property owners along West Lake Drive between County Road 6 and the Pelican River.
"The city had a public hearing last year with the residents out there and we had an estimate that was significantly lower," said Olson, during the meeting. "We did see an increase in expected street costs from last year, but we've been seeing that in our bids this year as well."
The street costs for the project rose 34%, from $863,000 to $1.2 million, compared to the preliminary estimate conducted in the fall. On the plus side, the total storm sewer cost for the project decreased 15%, falling to $390,000.
Jon Pratt, city engineer for Detroit Lakes, said, while the project bid from Hough Inc. came in under his spring design estimate by about 9%, the total cost is "significantly higher" than they initially estimated last fall, which will lead to larger assessments for Detroit Lakes property owners along the project route.
"It's basically a 50% increase," said Pratt. "Some of that is attributed to an increased project scope. The city added utility replacement ... the sewer force main and things like that ... so that accounts for some of that, but, in my opinion, that 30% to 40% of that increase is related to inflation."
The project costs rising the most will be felt by the city of Detroit Lakes and assessed property owners along the construction route. Those increases include:
- Sanitary sewer costs rose from $182,969 to $433,301, a 137% increase.
- Sewer service line costs soared from $51,625 to $224,940, a whopping 336% increase.
- Watermain costs rose from $349,961 to $721,683, a 106% increase.
- Water service line costs went up from $86,542 to $156,877, an 81% increase.
- Lift station costs spiked from $334,627 to $818,148, a 144% increase
"The city's increase is more significant simply because we are seeing more increases on the items the city has to pay for, like the pipe, all the underground stuff, the fittings, the knuckle-iron fittings, the hydrants, the valves, things like that — that's where we're seeing the significant increases," Pratt said.
Pratt added they were also forced to take some of the construction materials and other items out of the bidding process because of longer lead times to receive the items.
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"The suppliers are telling us it can be up to 25 weeks to get fire hydrants," said Pratt. "So, if I wait and include all of (the longer-wait-time items) with the bid, we're going to be sitting around, twiddling our thumbs, waiting for fire hydrants to come before we can start. So, we tried to be smart and we took bids separately on fire hydrants."
Even with the higher construction costs, Pratt said moving forward with this project is still the right move, because waiting on a project for prices to come back down may backfire.
"In my experience, it doesn't generally work out where you go, 'oh, I'm glad we waited,' it almost never works out," said Pratt. "Nobody knows for sure, reading the tea leaves, ultimately, the city council is going to have to evaluate that and they are going to have to make a decision — is this something where we move ahead, or not?"
West Lake Drive is a joint project between Detroit Lakes and Becker County. The county has accepted the bid, but the city has not yet done so and is expected to take up the issue at its next meeting May 10. The city is expected to set a new special assessment hearing for the project because of the sharply higher costs to property owners.
