City councilors sitting around a table at City Hall
The Philomath City Council opted to contribute $300,000 toward streetscape project budget overages. (Photo created through screenshot of city’s YouTube broadcast)

Construction-related cost increases are hitting the Philomath Downtown Safety and Streetscape Improvements project hard to the tune of $1.7 million over the budget that had been established a year ago, City Manager Chris Workman said during the May 9 City Council meeting.

Some of the most dramatic price increases are being seen in petroleum-based products, such as asphalt, which is a major component of the project. But there are also a lot of other price hikes for everything from pavers to concrete.

“Other than the cost of asphalt and concrete and all that going through the roof over the last six months, we’d be sitting right where we needed to sit,” Workman said. “The real difference in this has been the increased costs that have just skyrocketed and gone through the roof that nobody foresaw.”

Workman said the Oregon Department of Transportation has committed to covering most of those cost increases, which amounts to about $1.4 million, but the city is being asked to kick in an additional $182,879.

“At first flush, that doesn’t sound great but at the same time, you’re talking about a $1.7 million increase and ODOT’s looking to us for under $200,000,” Workman said.

However, an additional $100,000 was put on the table for the city to contribute because of city-owned water hydrants that will need to be moved — something that wasn’t initially scoped. Workman said that amount could come out of the city’s water fund but could push the city’s total commitment up to around $300,000.

The city has already been paying for engineering on the project, which ran $1 million over budget from $1.1 million to $2.1 million.

Thus, Workman was looking for a vote from the council that gives him the green light to negotiate while assuring ODOT that the city is committed to paying for a share of the overages. Once that’s completed, then the project could move forward with the next step in the project.

Workman emphasized that the project was on schedule to submit its final plans by the end of the week to reach the important “plans, specifications and estimates” part of the process. 

The initial project estimate was $14,311,384 and at the beginning of last week, the cost was projected to be $15,999,000. Another late fluctuation brings the cost up another $400,000 (which includes the $100,000 for moving the city-owned hydrants).

The city’s portion of the original construction budget added up to $4.5 million — a little more than 70% of that amount coming from Urban Renewal Agency dollars. CAMPO (Corvallis Area Metropolitan Planning Organization) committed to $520,000. ODOT was covering the other $7.1 million out of various funds.

Workman went through all of the numbers with the council and illustrated what changed to increase the project cost. He also said that contingency funds that started out at 30% have dropped to 3.5% with the increased costs over the past six months, including that engineering expense.

Discussion among councilors and the city manager continued for the next 30 minutes with several questions revolving around the finances and the substantial drop in contingency funds. Councilor Catherine Biscoe expressed concern over the contingency fund level and commented that the higher costs can also be attributed to labor and not just materials.

The latest timeline, based on information the city published on its website, is for the project to go out to bid on July 28 with construction beginning in September and the estimated completion in June 2024.

If costs continue to climb out of control between now and the estimated late-July bid date, then the project could be put on hold. The council actually could just say no to the project entirely and save money on more engineering expenses because bid documents need to be prepared.

“If we’re adamant to not do it, then we just won’t do it and either ODOT will try to find that extra money to kick in in our stead or they won’t and the whole project will just be tabled,” Workman said.

If that happens, taxpayer money that has already been spent on the project to date could be wasted.

Workman explained the thought process that he went through over the past couple of weeks and came to the conclusion that it’s best to negotiate with ODOT and move the project forward.

“I believe this is a very important project to the city; it’s a very visible project we’ve asked for community input on the theme of the project,” Councilor Ruth Causey said. “We have an ad-hoc committee that has been working hard to design our inlays and bike racks … We have business owners who are committed to build the kiosk that will go on 13th Street.”

Causey also reminded everyone that the project has been in the works for 15 years.

“From my perspective, I think it would be heartbreaking to not move forward,” she said. “Based on your comments, I’m comfortable with committing to the $300,000, assuming that we do get reasonable bids — which is probably a big assumption at this point.”

Workman said the project will go out for bid as an ODOT project because of the network it has in place, which will likely bring in more responses.

Councilor Matt Lehman shared strong feelings about his perspective on working with ODOT.

“Now I don’t know if this is just my perception, but it almost feels like they’re suggesting that they’re doing us a favor by completing the project that they started 15 years ago that none of us actually wanted and it rankles me,” Lehman said. “I’m not going to vote against moving forward with the extra $300,000 because I think it needs to be done.”

Added Lehman, “It just irritates me to no end and I think that should be pointed out when you’re negotiating with ODOT — that they’re the ones who forced us to have the couplet, they’re the ones who increased heavy freight on our Main Street and we’re the ones that have to drive on the crappy road and they’re responsible for it.”

In the end, the council unanimously voted (Chas Jones, Teresa Nielson absent) to approve the $300,000 request to go toward the project’s budget overages.

In other news out of the May 9 meeting:

• Workman guided councilors through a 20-minute presentation on regional partnerships related to economic development, including details on REAL (Rural Economic Alliance) and a preview of a to-be-published website. Workman also shared an Oregon RAIN video that features Philomath.

• The council on a roll-call vote approved 4-1 (Lehman nay, Jones, Nielsen absent) the first reading of an ordinance that outlines an agreement with Benton County to administer the city’s tobacco retail licensing program and enforcement.

• The council approved a resolution on a 5-0 vote to authorize the city to apply for a state grant that would help finance the planning process of a new action skate park. Applicants anticipate notification of recipients sometime this fall.

• On questions that originated with Councilor David Low over status of the Inclusivity Committee, co-chairs Christopher McMorran and Jessica Andrade said members want to continue its association with the city and provided examples of why that connection is important. The committee plans to focus on establishing goals and objectives.

• Workman said he received notice from Benton County that Philomath applications for American Rescue Plan Act grants had been rejected. The city tried for a grant to finance the total cost of constructing a new skate park and for another grant to look at homelessness in the city which could lead to the establishment of a related policy. The county indicated to Workman that it received three times the requested amount of money that it had available to be awarded.

Brad Fuqua, Philomath News

Brad Fuqua has covered the Philomath area since 2014 as the editor of the now-closed Philomath Express and currently as publisher/editor of the Philomath News. He has worked as a professional journalist since 1988 at daily and weekly newspapers in Nebraska, Kansas, North Dakota, Arizona, Montana and Oregon.