County faces $30 million shortfall on road projects

cconley@ilsandpacket.comDecember 8, 2012 

Traffic heads east Wednesday morning as construction crews continue to work on widening the road on the U.S. 278 bridge in Bluffton.

DELAYNA EARLEY THE ISLAND PACKET

  • The flyover would connect U.S. 278 with Bluffton Parkway near the bridge to Hilton Head Island. The county has about $40 million of the estimated $45-million cost.

  • The Bluffton Parkway realignment, estimated to cost $25 million, would straighten the roadway between Buck Island Road and Buckwalter Parkway near the Buckwalter Place development. The project is currently unfunded. The final design is not yet finished.

  • The county is considering borrowing money to cover some or all of the remaining costs of both projects.

  • As Beaufort County grapples with a $30-million shortfall for the Bluffton Parkway flyover and realignment projects, all options are on the table expect one -- asking voters to approve another penny sales tax.
  • County staff are seeking additional state funding for one or both of the projects and considering short and long-term borrowing as a last resort.

    Another option would have the county borrow the money and the state ultimately assume some or all of the debt.

    The one item not under discussion is an extension of the 2006 penny road tax that expired in October.

    "There is nothing I see on the horizon that would justify extending the penny sales tax," said acting Beaufort County Council Chairman Paul Sommerville.

    THE PLANS

    Voters approved the tax to raise money for ten highway projects across the county, including the widening of U.S. 278, the extensions of the Bluffton Parkway and the widening of U.S. 21/S.C. 802 on Lady's Island, among others. The tax expired in October, six months early, after hitting the $152 million limit on collections.

    County staff planned to combine that money with tens of millions of dollars in state and federal grants to offset construction costs.

    The county also planned to raise $54.5 million through impact fees on development.

    All told, the county planned projects costing about $300 million.

    To date, only the flyover and Bluffton Parkway realignment projects are unfinished.

    The flyover project is expected to cost $45 million. The county faces a $5 million shortfall there.

    The parkway realignment project, which would build a straighter section between Buck Island Road and Buckwalter Parkway near Buckwalter Place, is expected to cost $25 million. It is essentially unfunded, said David Starkey, the county's chief financial officer.

    HOW WE GOT HERE

    The question some are asking is this: why is the program running out of money with two projects unfinished?

    Rob McFee, the county's engineering director, said there are three key reasons:

  • The steady, 5- to 7-percent annual rise in the highway construction costs since the projects were approved.

  • Outdated, inaccurate cost projections dating from 2005-2006.

  • The economic downturn and subsequent slow recovery, which hit the building industry hard. Of the $54.5 million in impact fees the county had anticipated getting, only $4.5 million has been collected.

  • The funding projections were made based on development continuing as it had before the recession hit, McFee said.

    "That really was the key," he said.

    Neither Starkey or McFee worked for the county when these projections were made.

    There were also cost overruns along the way.

    The U.S. 21/S.C. 802 widening and bridge construction project, for example, came in more than $12 million over budget.

    The widening of the Savannah Highway from S.C. 170 to Parris Island Gateway was over budget by about $2.4 million.

    While calling those overruns "significant," McFee said they didn't have a major impact on the package of projects funded by the penny tax.

    Several projects have come in under budget, while others were scaled back significantly amid concerns over funding.

    Those explanations made sense to Councilman Jerry Stewart, who acknowledged the challenge of planning projects years in advance.

    "I think the engineering department and everyone involved in this has done a decent job," he said last week, noting that his only concerns were related to the cost overruns, which he said siphoned money from other jobs.

    WILL THEY BE FINISHED?

    Sommerville notes there is no deadline to finish the projects paid for with the sales tax money.

    "It's certainly possible we can do the flyover in the near term, or we (may) have to put it off until funds become available from impact fees, the state infrastructure bank" or another source.

    "We don't have a date when (the projects) will be finished, but we will try to get it done as fast as we can," he said.

    County staff are expected to present a plan to pay for the flyover sometime early next year.

    Once that happens, county council can begin debating how best to address the shortfall on both projects.

    Follow reporter Casey Conley at twitter.com/EyeOnBeaufortCo.

    Related content:

    Complete list of the 2006 sales tax referendum projects

    Cost breakdowns for projects funded with 1-percent tax money

    Hilton Head asked to help fund Bluffton Parkway flyover, Nov. 28, 2012

    Flyover no longer seen as a certainty, Nov. 3, 2012

    Hilton Head councilman vows to block 278 flyover project, Oct. 26, 2012

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