Abilene City Council debates $5.6 million increase in airport project costs

ABILENE, Texas ( KTAB/KRBC ) — Mixed views were expressed during the Abilene City Council meeting as council members debated whether to approve the notice of intent to issue certifications of obligation for the airport ramp project following a $5.6 million increase in the city’s costs .

On August 22nd, the city council approved the notice of intent to issue certifications of obligation of $2.7 million in Combination Tax and Surplus Revenue Certificates of Obligation for the Public Safety Communications Microwave Project and the Airport Ramp Project.

According to the City Council Agenda Packet, this project “is being funded with a grant from the Texas Department of Transportation to help aid with the congestion on the Terminal Ramp caused by the increased size and number of aircraft over the past years and resolve conflicts between the air carrier, Forest Service, military, and general aviation operations”

Subsequently, bids were received for both projects. The ramp project requires an additional $5.84 million, while the microwave project was under budget by about $260,000. This results in a net increase of approximately $5.6 million, bringing the total amount needed to $8.3 million.

The previous resolution set a maximum amount of $2.7 million for issuing Certificates of Obligation, so the process needs to be restarted. This cost is separate from the $20 million in grant money from the State of Texas for the airport ramp project.

The council inquired about obtaining more state funding or reducing costs. City Manager Robert Hanna said they would do everything possible to lower costs.

“The legislative session is about to happen, and I think we should go back and ask for more money. Number two, TXDOT Aviation, which is the entity administering this state grant for the benefit of Abilene Regional Airport, will not let us negotiate or value engineer the project at this time. Weber has agreed to hold that bid for 90 days while we go through this process to issue more money, at which time, the council can choose to award the bid and issue the debt. We will work with Weber to make sure that we bring the project down to the extent we can,” Hanna explained. “The project is more expensive than was anticipated. The process used to estimate the cost was sound and involved third-party engineering with experience in these projects, but it just came back higher.”

Councilman Blaise Regan questioned why the city’s share of the price tag increased so rapidly in such a short amount of time.

“We had a very long meeting over the late summer about saving $1 million by doing the rec center. Here, we are looking at issuing $5.6 million, roughly 4, 5 million extra. If this project was 2.7 and now we are a little over 8 million, it would be like shopping for a $300,000 house, and now it is $1 million,” Regan said. “That is a huge jump. This is something that I would like to know. This isn’t just an extra 100,000 or inflation of 2% or 5%; this is a massive increase. Where was the ball dropped?”

Hanna mentioned that experts conducted cost analysis and pricing during the last legislative session, which took place two years ago. He noted that there has been significant inflationary pressure in construction since then.

“It’s stabilized, but the pricing has not come down; it just stopped increasing as rapidly. That is part of it. I also think they just missed it; it’s as simple as that. This happens from time to time. We are not in a position where we can ve [Value Engineering] this project prior to the bid being awarded. But, Mr. Green and I have every intention of visiting the contractor if the award is eventually awarded by the city council to Weber to make sure they are prudently spending the money.”

Regarding inflation, Hanna shared that the city typically aims to reduce the impact of inflation on pricing, but that would not be possible in this case.

“We can add additional contingencies for future proof in pricing and add more to the budget. That is something we can do… Where we can, we certainly try to cut the project back down to the original pricing. We made every effort to do that, but we cannot do it in this situation. The grantor will not allow it,” Hanna shared. “Council has the option of doing this so that if we decide to move forward with the original bid, we will have the funds to fund the project. The council could say they are not going to do this, and we would not award a bid, cancel the bids, and redesign the project for something that may not meet the actual needs. My concern is that we would lose the window of the state funds. We are under a little bit of a time constraint with this, and that is the reason why they are putting some sense of urgency on it. To the best of my knowledge, those funds are not there next year.”

The council mentioned that the meeting on October 2nd is solely to approve the notice of intent to issue certifications of obligation and does not indicate that the city is committed to paying for it. The decision for approval will be made 90 days later.

Regan stated that he would approve the notice, provided there is a thorough discussion regarding the funding and the potential consequences of the decision.

“If necessary, I am fine with approving it now with the understanding that there will be a meeting in November where there will be a very good discussion about this and whether we approve it or not and whether the number and matching still work, and I hesitate because it is difficult to stop the train,” Regan shared. “This is a great project, and I want it to happen. I just think we have to make sure that the funding makes sense. My other hesitation is, and this is for future reference, and I can only speak for myself, I don’t like starting the train towards approval on this without knowing our long-term consequences on the budget.”

Hanna also plans to review the cost escalator scales to ensure their accuracy with up-to-date information, preventing a similar situation in the future.

All council members voted to approve the notice of intent to issue certifications of obligation , except Beard, who abstained due to his involvement at the airport. The city council meeting to vote on the project’s approval is scheduled for November 21, 2024.

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