Staff seeks more funding to finish Waller Tunnel

City management is asking City Council for the authority to issue $5.6 million in Certificates of Obligation in order to finish construction work for the main inlet facility of the Waller Creek Flood Control Project. But they are hoping to never have to use those funds.

If all goes as the city hopes, it will be able to use money from the settlement it is seeking from the engineers who did the original design work on the facility.

In the meantime, the city is experiencing a cash-flow problem, according to Assistant City Manager Robert Goode. He explained the situation in a memo to Mayor Steve Adler and Council on Friday. The problem goes back to the engineering consultant’s failure to figure in the state law governing Capitol View Corridors when designing the project’s main inlet at Waterloo Park.

The project is designed to reduce the risk of severe flooding and stream-bank erosion from 12th Street to Lady Bird Lake. The total construction budget is currently estimated at $106.7 million and the current overall budget for both the city and the county is about $150 million. The majority of the funding comes from money collected in a city and county Tax Increment Financing Zone and bonds approved by voters in 1999.

KBR-Espey Joint Venture and the city learned in 2014 that their plans for the inlet directly conflicted with views of the Capitol and would therefore be in violation of state law. Construction was well underway in April 2014 when the city had to tell the contractor that was hired to build the inlet, Oscar Renda Contracting, to stop work, Goode said.

In his memo, Goode noted that the city, the joint venture and Oscar Renda Contracting are currently “negotiating over potential increased construction-related costs.”

The contracting firm, which was required to stop constructing the inlet through no fault of its own, undoubtedly suffered some damages. That company has submitted a damage claim for $5.8 million, the memo states. The city has not agreed to pay the claim, but is still negotiating with the contractor over construction costs and with KBR-Espey “on the overall financial responsibility for the (Capitol view corridor) issue,” Goode wrote.

Council members will hear more about the legal aspects during a briefing in executive session today. On Thursday, management will ask for authorization for the funds to pay the contractor to complete construction of the redesigned inlet. Goode wrote, “This additional authorization may also be used to pay ORC for delay damages … if those damages are indeed proven to be valid. We are working with the city Law Department as well as outside counsel to pursue recovery of damages associated with the design deficiencies.”

Although the engineers initially estimated that it could cost between $15 million and $45 million to redesign and reconstruct the facility, Goode said, they have now decided that they can construct the redesigned structure “within the current construction costs for the original structure.”

Goode said the city will be seeking to recover damages, presumably from the joint venture that designed the project, “with the intent of never having to issue the Certificates of Obligation and instead utilizing the settlement proceeds as the cash to support the various expenditures funded through the budget amendment.”

However, Goode wrote, “The funding authorization for the contract and additional services is needed because of the cash flow issue. … Not knowing where the damage claim negotiation and the legal process will land, we will need to increase their authorization to finish the construction work.”

During a storm, “the creek channel and new pond structure is designed to direct flood waters to a maintenance and debris handling facility for filtering and introduction into the tunnel,” Goode noted.

One unfortunate aspect of the unit requires city staff to move and load debris from carts into a compactor. The previous design, which was too tall, allowed for the debris to be placed directly into a compactor without the use of carts, according to Goode’s memo.

The city is continuing to work with the joint venture to get the completed design drawings, which are expected in August. It is not clear exactly how long it will be before construction of the inlet is completed. Goode noted that there were no flooding issues on Waller Creek during the recent Memorial Day floods.

Photo by Dan Keshet.