The Nisswa City Council on Wednesday, July 18, had to decide how to pay for its share of the Highway 371/County Road 18 project after the awarded bid was higher than engineers' estimates.
After the bid for the $7 million project was awarded to Anderson Brothers of Brainerd, the city's total cost, including 2013 inspections and landscaping (which weren't part of the bid), was $1,683,187, or $183,187 more than the city projected.
The city, Crow Wing County and Minnesota Department of Transportation (MnDOT) all will pay for the joint project.
While the total project bid was $15,000 to $20,000 over engineers' overall estimate, the majority of the increased items in the bid were city cost items.
The city's cost was $240,000 over the engineers' estimate for bid items.
And it was $65,000 over the city's Transportation Revolving Loan Fund amount.
However, MnDOT included the wrong quantity of materials needed for a retaining wall in the bid, so after talking to the contractor the city's monetary share could be reduced.
"We have to be doggedly determined to stay on top of that mistake. I can't see the city paying for a mistake we didn't make," said council member Lenny Hodgson.
The city received $1.5 million at a 1 percent interest rate from a Transportation Revolving Loan Fund bond to pay for its share of construction costs. That leaves the city $183,187 short after the bid was awarded.
That number includes $40,000 for landscaping of the pedestrian tunnel access area in 2013 and $77,500 for construction inspection services for the pedestrian access area and utility relocation, most of which will be due in 2013.
In the end, the council agreed to use cash reserves to pay for the overage amount. The council has saved approximately $460,000 for this project and future road projects in Nisswa. Interest rates remain low so the city isn't earning much on that savings.
Plus the city is budgeting for $260,000 per year for city road projects.
Other options to pay the extra amount were to request an increase in the Transportation Revolving Loan Fund loan amount or approach the contractor about value engineering some of the project and replacing and/or removing items.
Breaking down costs after the bid was awarded, the city's share is: Highway 371 work, $1,332,456; County Road 18 work, $233,231; landscaping, $40,000; and construction inspections, $77,500, for the total cost of $1,683,187.
The city is partnering with Crow Wing County on County Road 18 work and with the Minnesota Department of Transportation for Highway 371 work.
About 100 people attended an open house last week to ask questions and share comments about the project, which will be done in two phases. The first phase began Monday and will run through this fall. The second phase will begin next spring with the goal to finish before the Fourth of July.
The project will include removal of trees north of the Highway 371 stoplights in Nisswa between now and Aug. 10.
"That's when it will get interesting," said council member Gary Johnson.