City regularly underfunds bond projects

AUSTIN (KXAN) - As many as 15,000 people use the Hike & Bike Trail around Lady Bird Lake each day in downtown Austin. Jeff Yandle is a regular, who looked forward to a multi-million dollar boardwalk extension.

But now, the cost voters thought their bond approval would cover is about to go up by $3.3 million.

"Kind of raising the price after the fact isn't really fair,” Yandle said, as he walked along the trail. Its 1.1-mile boardwalk extension would prevent people from maneuvering that gap along the street instead.

The boardwalk had an original price tag estimated at $17.4 million. Now, the lowest bid is $20.7 million. That's a $3.3 million increase.

Austin City Councilman Mike Martinez said underfunding bond projects like this happens regularly.

The city's new animal shelter in East Austin needed about $4 million more beyond its original estimate before it was done last year.

The upcoming Central Library downtown could cost at least $20 million more than its approved $90 million bond amount, according to Martinez.

He said the city even shelved previous plans for a new municipal court and police substation in an old Home Depot in Northeast Austin, because it needed around $10 million more – money it could not find at the time. The council authorized negotiations to purchase the retail site and surrounding land in 2007.

"While I don't think we mislead, I don't think we spoke in real terms to the citizens about the actual costs of fulfilling those projects,” Martinez said, referring to increased construction costs since the initially-predicted boardwalk groundbreaking date of January 2011.

He added that the city is taking a closer look at the boardwalk numbers over the next week before deciding on a final bid. However, the $20.7 million bid from Austin-based Jay-Reese Contractors, Inc. was the lowest, though staff must still verify it as “qualifying.”

"Three years ago when these bids were contemplated, it was a different time in the economy,” he said.

Most of any additional money needed in past, underfunded projects came from interest earned on the bonds already paying for the projects or from other unused funds, according to Martinez.

The boardwalk project already had substantial funding - $3.3 million - from the Trail Foundation, a nonprofit group involved in improvement projects around the lake.

Martinez said additional private funding is another option, though the foundation has not said whether it will put forth more money.

"We're confident that the trail will be completed,” said Susan Rankin, the foundation's executive director. “From our point of view, it's full speed ahead."

If the city finalizes the bidding process soon, officials said the boardwalk groundbreaking should happen in May. After that, it is estimated completion will take 18 months, according to Rankin.

In the future, Yandle said officials should “be up front about the cost and do their best to stick inside that budget."

Martinez said he has already instructed city staff to do just that, as the Bond Task Force held a meeting Wednesday night. The group is considering more than $1.5 billion-worth of bond proposal for the November ballot, including another stab at the municipal court and police substation project.