Soaring costs of materials delay city projects
Public, private sectors suffering from rapid hikes
Rising prices for steel, concrete and oil are swelling the city's capital improvement budget, forcing the delay of dozens of projects, city officials said Friday.
"Steel and cement are crazy," said James Tillman IV, director of the city's Capital Improvement Program. "In previous CIPs and previous years we could build a pretty nice fire station for $3 million. Now, we're having trouble building one for less than $5 million."
Tillman said there are many reasons for construction delays and cost increases, including unforeseen problems that appear mid-project or changes in codes and laws. But material construction costs seem to be a prevalent problem challenging both the private and public sectors nationwide.
Rebar prices have risen from $700 per ton to $1,000 in four months, said Ken Simonson, chief economist for the Associated General Contractors of America, a construction trade group. Diesel prices are rising faster than gasoline prices, he added, forcing governments to pay more to operate dump trucks, concrete mixers and cranes.
On Wednesday, the City Council could adopt a new five-year $4.43 billion capital improvement plan.
Despite the construction challenges, the city is working to keep the capital planning process running smoothly. A study of 245 projects that were carried over from last year's CIP shows more than two-thirds remain on schedule. But 44 percent of the projects increased in costs, while almost 19 percent dropped. The cumulative effect was a 7 percent increase worth $91 million, according to Webb Mitchell, the city's CIP manager.
Among the projects in the proposed five-year plan:
•$12 million for utility and street upgrades on the east side of downtown for a "new multipurpose sport and entertainment venue."
•$125 million to replace bridges along Sims and Brays bayous.
•$34 million for a new police radio system.
•$10 million to renovate the Julia Ideson Library.
•$10 million to restore the Gregory School as an African-American archives and cultural center.
More than 60 percent of the capital spending will occur within so-called enterprise funds involving airport, convention and entertainment facilities, water and wastewater. Those funds operate separately from the city's general fund.