City faces $2.2M insurance shortfall amid rising construction costs and hurricane impacts

The City of Lakeland Utility Committee meeting on December 13, 2024, revealed significant budget overruns primarily due to unexpected costs in builder's risk insurance and fire system installations. The committee discussed the builder's risk insurance, which was initially budgeted at $856,108 but ultimately cost $900,715. An extension of this policy, necessitated by unforeseen circumstances like hurricanes, added another $2.2 million to the budget, highlighting a critical financial oversight.

Committee members noted that these insurance costs, along with a single-bidder situation for the fire system that exceeded the budget by over $1 million, accounted for approximately 42% of the total budget allocation. The discussion emphasized the need for better forecasting and contingency planning in future projects to avoid such financial pitfalls.

In response to these challenges, the city managed to reduce the budget for cable purchases by $2.1 million by leveraging a sales tax exemption, although the actual costs still exceeded the budget by 4.47%. Additional overruns were reported in other projects, including a $500,000 excess for groundwork on the Casey project and $653,000 in change orders for the Mann project.

As the committee prepares for upcoming commissioning of units and potential further costs, they have set aside contingencies totaling $617,000 to address any additional financial needs. The meeting underscored the importance of thorough budgeting and proactive financial management as the city navigates these unexpected expenses.