MnDOT won’t fund entire paving overrun

At the Forest Lake City Council’s Aug. 21 work session, City Administrator Aaron Parrish reported that Minnesota Department of Transportation Aeronautics would not be financing all of the remaining cost of a construction overrun on last year’s Daniel DePonti Airport paving project. The project went several hundred thousand dollars over budget while it was being completed, and the project’s engineering firm SEH did not tell the city about the cost overrun until work had been completed.

This spring, SEH, the city, and construction contractor Dresel Engineering struck a deal in which the SEH and the city would pay Dresel $843,000 for its extra work – $74,000 from SEH (10 percent of the cost beyond the project contingency) and the remainder from the city, which would then ask for a reimbursement for its share from MnDOT. MnDOT has financed 90 percent of the project costs up to this point.

However, Parrish told the council that MnDOT representation informed him that the department typically only funds a portion of overage costs, which leaves the city on the hook for about $400,000. The city’s agreement with SEH allows it and SEH to discuss how to repay the rest of the money, and if an agreement can’t be reached, the city can pursue legal action against the engineering firm. Councilman Sam Husnik expressed his disappointment in the situation, saying that SEH had been expressing confidence that MnDOT would cover the remaining costs.

“I’m not surprised,” Councilman Michael Freer said. “SEH misled all the way though the project.”

With the report from Parrish, Freer’s concerns about the city fronting payment to Dresel earlier in the year were confirmed. Though he agreed with the rest of the council in March that Dresel should be paid for its extra work, he did not want to risk city dollars with no guarantee that MnDOT would pay all of it back. At the time, city staff believed it was likely that the department would reimburse the city the entire amount.

The council began to discuss retaining a separate attorney to deal specifically with the SEH situation but decided to continue the conversation in a closed session later.