Finance committee creates new CIP and shifts funding after discovery of underground oil tanks on Fourth Street

The Annapolis Finance Committee voted to create a new capital improvement project and transfer funding to remove multiple underground oil tanks discovered in Fourth Street, approving an amendment that reduces the immediate hit to the general roadways program.

The committee approved an amended fund transfer that will move $330,000 from the city’s general roadways allocation and $300,000 from the capital reserve into a new CIP for the Fourth Street oil tank removal project. Committee members adopted the amendment and then gave the amended fund transfer a favorable recommendation.

The issue arose after public works staff began emergency road repairs and excavation for a pavement failure and found fuel tanks under the road. Allison DiMaggio, a Department of Public Works engineer, told the committee that crews discovered additional tanks while removing an initial one and that the Maryland Department of the Environment (MDE) Oil Control Program opened a case to monitor corrective measures. DiMaggio said the tanks are located within the city right-of-way and are so old that ownership could not be determined. She said the environmental team estimates the tanks were “installed somewhere in the early 1930s.”

DiMaggio explained the work will include excavation, testing for contaminants and, if necessary, remediation. "Environmental testing also needs to test for contaminants. And then if any downstream contaminants are found, then remediation measures will have to be executed," she said.

Finance staff explained the mechanics of the transfer: the work began as an emergency road repair but the scope exceeds routine resurfacing and therefore needs its own CIP. Finance Director (referred to in the meeting as Miss Moran) said the transfer will create a separate CIP and move funding from the general roads program into the new project. Committee members pressed for alternatives to drawing the full amount from general roadways; one alderman proposed and the group adopted an amendment to fund $330,000 from general roadways and $300,000 from the capital reserve.

Committee members repeatedly noted the effect on the city’s resurfacing program: public works reported the city’s general roadways allocation is roughly $3 million, and using $330,000 will reduce near-term resurfacing capacity. Staff said that any long-term impacts could be addressed in next year’s budget if needed.

The committee discussed whether MDE could take enforcement action if the city delayed the removal; staff said they could not predict MDE’s next steps but emphasized the open MDE case requires corrective measures. DiMaggio said MDE allowed crews to close the lane temporarily to avoid disrupting events and nearby businesses, but staff said the state will expect the city to address the case sooner rather than later.

The amended motion to transfer funds and create the new CIP carried without recorded opposition. Committee members directed staff to track the contingency/general fund impacts and report back with updates on remaining balances and projected costs.

The new CIP will be used for tank extraction, environmental testing and any remediation required by MDE. Staff said they will explore whether available grants or tax-credit programs apply but cautioned that state support for these costs is not guaranteed and often takes a different form than direct funding.