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Preliminary auditor’s report verifies much of WTP4 cost analysis

Monday, September 12, 2011 by Michael Kanin

City Auditor Kenneth Mory has made a preliminary finding that verifies many of the costs outlined by Camp Dresser McKee for mothballing the city’s Water Treatment Plant 4, currently under construction. According to a document obtained by In Fact Daily, these figures include $18.2 million in litigation costs, between $2.5 and $4.4 million for site protection, $11.2 million for administration and consultant costs, and between $68 million and $135 million for inflation—depending on whether the site was shut down for five years or 10 years.


However, the preliminary report leaves conclusions about several estimates outstanding. These include costs for site shutdown and restart engineering, as well as restart mobilization and construction figures.


The auditor’s full report is expected at a meeting of the Austin City Council’s Audit and Finance Committee on Thursday. Council Member Bill Spelman, a critic of the plant who has placed high value on an objective assessment of the costs associated with a shutdown, led an effort to get the auditor involved.


In their efforts to stop the plant, some environmentalists, particularly Bill Bunch of the Save Our Springs Alliance and Roy Waley of the local Sierra Club, have questioned the objectivity of Camp Dresser McKee because of its ongoing relationship with the city. In their report, city auditors made special note of the fact that they had found “no evidence” of such trouble.


The City Council authorized the construction of the plant in a series of 4-3 votes, with Council Members Spelman, Laura Morrison, and Chris Riley consistently voting against the project. New Council Member Kathie Tovo reluctantly saw the facility brought to the center of her campaign against now-former Council Member Randi Shade, who was a steady supporter of its completion.


Tovo’s election brought hope to opponents, who pushed for the perceived new majority to immediately stop work on the plant. Instead, amid concern that such action would have broad negative effects, the Council asked for a report that would detail the total cost of such an action.


Mayor Lee Leffingwell and Council Member Mike Martinez voted against the request for the report. At the time, Martinez argued that it would do little to provide a definitive answer. He echoed that sentiment in a tweet when the report was released. “Let the debating continue,” he wrote. “No one will agree on (the numbers).” 


Camp Dresser McKee was initially asked by the City Council to look at what it might cost to shutter work on the water treatment plant for periods of five and 10 years. It concluded that direct costs associated with that sort of work stoppage would be at least $645 million for a five-year delay, and $714 million for a 10-year break.


The firm also suggested that additional infrastructure would be needed to plug service gaps until the plant is completed. The extra expense, Camp Dresser McKee wrote, would bring the total cost of a delay to $760 million for five years, and nearly $1 billion for 10. However, the auditors will not be analyzing those costs in this week’s report.

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