Council probes $8.6 million SR 104/Fortieth Place NE project financing; construction contract low bid $5.4 million

Lake Forest Park staff and councilors spent the Sept. 11 City Council work session reviewing funding and contract details for the SR 104 and Fortieth Place NE (Brannabough) transportation project, which staff described as an $8.6 million undertaking whose lowest responsive construction bid was $5.4 million.

Director Dickinson told council members that the city's total project cost includes previously incurred design and right-of-way expenses plus the construction low bid and an anticipated contingency. "Previously, when we were going out to bid, that was for the $7,500,000. So there's the $1,100,000 delta," Dickinson said, describing the increase from the engineer's earlier estimate to the bid total.

Councilors focused much of their questioning on clarity about which dollars represent grants, reimbursements and direct city exposure. Staff said the funding package includes:

- a Public Works Board loan originally approved for $2.0 million and eligible to be increased up to $2.5 million pending final approval; - a Transportation Improvement Board (TIB) grant (staff said the TIB executive director has indicated $384,000 of additional grant funding will be awarded once the contract is in place); - reimbursements for design work the city has already paid, with staff saying about $1,046,000 was spent on design to date and roughly $550,113 has been reimbursed to date by TIB and WSDOT; and - the remaining construction and contingency funded from a mix of the city's Traffic Safety Fund (Fund 002), Transportation Benefit District and other local capital funds.

Council members repeatedly requested a single-page budget that shows the full $8.6 million project cost, how much of that total has already been spent, and how much is funded by grants versus city funds. One councilor said the presentation as circulated risked understating the city's total exposure to taxpayers if viewers read only the construction funding slide. Staff acknowledged the presentation could be clearer and said they would prepare updated slides for the upcoming council meeting where the contract will be considered.

Numbers discussed on the record

- Total project cost discussed by staff and council: approximately $8,600,000 (includes prior design costs, right-of-way, construction bid and contingency). - Lowest responsive construction bid presented: $5,400,000. - Previously budgeted estimate before bids: about $7,500,000 (difference $1,100,000). - Public Works Board loan: originally $2,000,000 approved; staff said board has approved eligibility to increase to $2,500,000 pending the contract. - Estimated annual debt service (for $2,000,000 at 1.72% over 120 months): about $217,835; estimated additional revenue created by sales tax and fee changes: about $259,000 per year. - Design costs spent to date: about $1,046,000; reimbursements received: about $456,885 (TIB) and $93,228 (WSDOT), totaling about $550,113; remaining design costs are covered by city funds.

No final contract authorization or council vote occurred at the work session. Staff said their goal is to bring a contract authorization before council at a forthcoming meeting (staff mentioned a target date to have the contract on the agenda), and they cautioned that certain grants (TIB) require construction milestones to retain eligibility. Staff also noted that reimbursements typically occur on a reimbursement basis as project costs are incurred.

Council direction and next steps

Councilors asked staff to prepare clearer budget materials that show the full $8.6 million project cost, itemize which portions were already spent and reimbursed, and present the proposed contract award and funding sources together when the contract is taken to a formal council vote. Staff said they would update slides and supporting spreadsheets and return with the contract packet for formal consideration.

Ending

Staff and council agreed to resume discussion at the upcoming regular meeting where the contract award and related funding authorization will be on the agenda. No vote or formal approval of the Johansen Construction contract was recorded during the Sept. 11 work session.