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Road costs floor it in the fast lane

A catastrophic convergence of factors has officials struggling to meet growing road needs with dwindling resources.

By BILL COATS
Published May 5, 2006

So county transportation planners are scrambling to widen Lutz-Lake Fern. A year ago, they thought they could four-lane the busiest stretch for $27-million.

Then the price of petroleum, a key ingredient of asphalt, shot up. Ditto diesel fuel, steel and cement. Surging economies in China and India were competing for all these commodities. Not to mention the construction industry in Florida, already one of the hottest before hurricanes sparked a rebuilding binge.

The result? Hillsborough has been forced to quadruple its estimate for Lutz-Lake Fern's widening, to $110-million. Such sticker shock exists countywide.

"It's really kind of a perfect storm of issues," said Scott Passmore, the county's project manager on another pricey job, the widening of New Tampa's Bruce B. Downs Boulevard.

The Bruce B. Downs project, pegged last year at $173-million, is up to $211-million. The Citrus Park Drive Extension, a future four-lane connector between Sheldon Road and Linebaugh Avenue, has ballooned to $136-million from $20-million. In south Hillsborough, officials had hoped to six-lane a 2.9-mile stretch of Big Bend Road for $27-million; now the estimate is $111-million.

"It just kills me," moaned Lee Ann Pyron, design manager in the county's engineering department. "It just can't cost that much. We just can't pay it."

No they can't. The county for several years has maintained a list of more than 100 needed road projects, with money envisioned for fewer than 10. The latest inflation has forced officials to inject new money into projects they thought were fully funded, at the cost of other work that is waiting in line.

County commissioners, meanwhile, have refused for years to raise taxes for transportation, despite pressure from commuters, study groups and the business community. Commissioners decided last fall to begin earmarking sales tax money expected after 2008. But their budget advisers recently urged a six-month delay in such discussions, as there is a chance costs will drop.

Something has to give. Most of the county's busiest roads are officially "failed," and a new state growth management law sets a deadline of Dec. 1, 2007, for all counties to list what road work is needed and how they will pay for it.

Joe Zambito, a senior planning manager with the county's Planning Commission, has been educating local governments about the change.

"It's going to be hard to achieve," he said.

Watching Venezuela

Last year alone, the costs of road construction rose 18 percent in the United States, according to the Federal Highway Administration. In Florida, they soared 45 percent.

"The unfortunate thing is, this year is turning out to be like last year," said Ananth Prasad, chief engineer for Florida's Department of Transportation, which has postponed projects because of prices.

Prasad said Florida always has suffered higher-than-average construction costs because of its outlying location. Materials must be transported farther to get here, and higher fuel costs have magnified the problem.

"We can get rock from Alabama and Georgia and so forth, and we also get a lot of rock from Nova Scotia," he said.

Lately, demand has far outstripped such supplies.

Florida's growth boom has forced road builders to compete for materials with subdivision developers. After the past two hurricane seasons, they also have been competing with the rebuilding industry all over the Gulf Coast.

Prasad said the state DOT alone spent $1-billion on hurricane repairs in 2004 and another $700-million last year.

So Prasad worries about things such as a liquid asphalt shortage from Venezuela, and a judge's ruling that threatens to halt large-scale lime rock mining in the Everglades.

The lime rock problem is painfully familiar to Doug Ebbers. Ebbers, 50, is executive vice president of Pepper Contracting Services, a Clearwater company that began widening 1.6 miles of Race Track Road early last year. Ebbers had submitted his winning bid of $9.6-million in August 2004, just as hurricanes began ravaging Florida and materials prices began climbing.

Now, with a December completion deadline looming, Ebbers' lime rock supplier is rationing the stuff, which forms a supporting layer under a road's asphalt.

"Currently, I can only receive 500 tons a day," he said. "I need 11,000 tons for the last portion."

So Ebbers ordered his lime rock early. Instead of delivering the rock directly to the road bed, trucks dump it in a storage yard. Ebbers' crews must fetch it later, at an unbudgeted handling expense of $3 a ton.

Ebbers also ordered Nova Scotia granite for his pavement mix. His supplier has run out twice. The price of fill dirt has doubled around the state. Asphalt, which cost $68 a ton when Ebbers bid the widening job, is running at $110 now, he said.

It's an experience Ebbers never has faced in his 25 years in construction.

"We're standing there saying, 'Well, are we going to be able to get dirt? Are we going to be able to get lime rock, and if so, how much?' "

Ebbers' company absorbed the cost increases. But in March, the county enlarged the scope of the job, stretching it from a 15-month project to 22 months. Ebbers is requesting reimbursement of some $133,000 in higher materials costs experienced in the added seven months.

Meanwhile, Ebbers prepares to bid on a second segment of Race Track's widening. He's seeing unprecedented warnings on the prices faxed by his suppliers. "Good for three months," they say. Or, "Good for six months."

Road widenings typically take more than a year.

$1-billion more

Part of Hillsborough's current price shocks stem from changed methods of projecting road costs. After a series of major bids came in above expectations, the county decided to follow formulas developed by the state DOT's regional office. These are updated twice a year based on the latest construction bids in the Tampa Bay region.

Applied a year ago, the DOT's formulas caused projections on many of the county's future projects to double. Then in November, with inflation accelerating, the list was run through the formulas again. Another doubling.

Officials note that such estimates are educated guesses. When money finally becomes available for a project, a detailed design study refines the cost estimates. Such a study raised the Bruce B. Downs estimate within 22 percent of the subsequent DOT estimate.

But for the roads that haven't been closely studied, the DOT numbers shattered expectations.

"We're going to have a smaller cost-affordable plan," said Ned Baier, a top transportation planner. "But it's going to be real."

County commissioners' chief response came last fall, when they targeted future revenues from the Community Investment Tax, a half-penny sales tax best known for financing Raymond James Stadium. The revenue, now exceeding $40-million a year, is committed until 2008, so commissioners began earmarking the $410-million expected between 2008 and 2016.

But on March 30, County Administrator Pat Bean urged commissioners to suspend discussions given the current price inflation.

A year has passed since the Florida Legislature put more teeth in the law that requires local governments to block new development unless the roads, schools and other infrastructure will be sufficient to accommodate it. It requires that money must be committed for the first three years of the necessary improvements and planned for the following two years.

In response, Bean last year said the county would pursue a mixture of remedies, particularly searching for more state "partnerships" and greater contributions from developers. The county will make more intersection improvements and revisit some roads that are considered off-limits to widening, she told the Planning Commission in a letter.

Bean did not suggest raising taxes, an idea that county commissioners have repeatedly voted down.

Since then, the recalculation of prices alone added more than $1-billion to the cost of the county's wish list, sending it to $5.4-billion. The county recently hired a consultant to look more closely at the estimates.

"I don't know what's going to happen if they're unable to find new revenues," said Zambito of the Planning Commission. "I'm not sure where the new money will come from."

Bill Coats can be reached at 813 269-5309 or coats@sptimes.com.

[Last modified May 5, 2006, 08:21:06]