Bridge negotiations drag on: Frustrations mount but Oak Park Heights agrees to some cost increase

Despite mounting frustration, Oak Park Heights and MnDOT may be nearing an agreement on the city’s share of costs related to the St. Croix Crossing bridge project after the city agreed to increase the amount it is willing to pay by $140,000.

The council unanimously approved a resolution March 25, that would raise its total contribution to $675,687. In a 4-1 vote, with Councilmember Mike Runk dissenting, the council also agreed to sign the eighth and final work order with certain stipulations. The work order, which is a contract among the city, MnDOT and the project contractor, is necessary for some aspects of construction to move forward.

But some council members were clearly frustrated with the negotiating process. Councilmember Mike Runk went so far as to say he no longer trusted MnDOT’s verbal commitments.

“They keep trying to change stuff on us,” Runk told The Gazette. “It’s just getting frustrating. … We’re trying to work with them. It’s just we have to advocate  for our people. … We can’t just allow outside agencies to manipulate our finances.”

MnDOT Project Director Jon Chiglo told The Gazette that Runk’s expression of distrust was “an unfortunate statement from a leader of the city when we’re trying to work through issues.”

“We have some disagreements, and I’m optimistic we can work through these issue,” Chiglo said.

But the city and MnDOT have so far been unsuccessful in resolving the issues, despite a March 21 meeting with representatives from, the city, MnDOT and Gov. Mark Dayton’s office.

Mayor Mary McComber compared the negotiation process to a hamster in a cage “going around and around.”

Ultimately the dispute is over the total amount the city will pay for the project. But there seems to be some disagreement over what the heart of the issue is.

Engineering costs

Chiglo says the main problem is the engineering costs that the city is asking MnDOT to reimburse, as well as other factors affecting the total cost, such as who is responsible to pay for traffic signals.

“The challenge that we’re having is trying to bridge the gap between what MnDOT believes is a reasonable engineering cost and .. the city’s expectations,” Chiglo said.

According to Chiglo, MnDOT has offered to reimburse up to $500,000 in engineering costs. The city expects its costs to be closer to $620,000.

“The city is not looking unreasonable engineering expenditures,” Johnson said. “We’re following our standard procedures.”

He said that’s important, because Oak Park Heights is responsible for maintaining parts of the project in the future and will be responsible for fixing problems.

Nevertheless, Councilmember Mark Swenson said the city is sensitive to MnDOT’s concerns over the engineering costs.

“We understand that our engineering fees are going above because the city is protecting our vested interests,” Swenson said.

That’s why he made a motion to increase the city’s contribution by $140,000 to help cover those costs.

Cost cap is the city’s concern

Johnson says that while engineering costs are a major factor, the crux of the matter is actually a dispute over a cap on the city’s contribution.

Council members seemed to agree that the cap was a major issue.

“The angst on the city’s part is we agreed to a certain amount, and that amount is going up and up and up,” Swenson told The Gazette. “If we would’ve known all this stuff going into the project, we would’ve budgeted for it. … The city does not want to, nor will it, try to stop the project. We just want to make sure that our city … of under 5,000 people (is) taken care of.”

According to Johnson, the city believes that letters from the former MnDOT commissioner and Gov. Mark Dayton guaranteed a cap of about $536,000. But Chiglo argues the letters only guaranteed a limit of approximately $1.52 million.

In a letter dated Aug. 23, 2012, former MnDOT Commissioner Thomas Sorel wrote, “MnDOT commits that the total City of Oak Park Heights financial obligation as a result of the St. Croix Crossing Project will not exceed $1,520,169.00.”

A letter from Dayton, also dated Aug. 23, 2012, states that Oak Park Heights agreed up front to pay for about $352,000 and that there was a $1.52 million gap remaining to be paid. Dayton went on to “personally pledge” to request the remaining $1.52 million from the U.S. Department of Transportation.

Dayton followed through on that promise, Johnson said, securing approximately $1.3 million in funds.

“That gap of $1.5 million was drastically reduced,” Johnson said.

The gap was reduced to approximately $205,000. Add that amount to the city’s up front commitment, and you get about $557,000, which the city believed was the cap for its contributions. Based on later estimates and agreements, the city said the cap was actually about $536,000.

But Johnson said the key was that the city believed a cap was in place.

“When the city provided its approval for this project, there was a cost cap applied,” he said.

Agreement possible

Despite disagreement about specific issues, Oak Park Heights and MnDOT may be able to reach an overall agreement now that the city has upped the amount it’s willing to spend.

The two parties may never agree on whether a cost cap is in place or whether the city’s engineering charges are excessive. But if they can agree on a final number, that may not matter in the end.

“MnDOT is pretty confident that, setting a cap discussion aside, … now that the city has increased their cap … we believe that we can very close to that, if not under it, as a total cost to the city,” Chiglo said.

Even though there are disagreements, Swenson characterized the city’s relationshp with MnDOT as good and said he has faith in Chiglo, noting that the entities are simply engaged in a “high stress project” and that each has specific interests to protect.

As negotiations continue, work on the bridge will move forward.

“The city and MnDOT have issued a number of interim agreements to keep the project moving forward steadily,” Johnson said. “And we’ll keep working on it, and we hope these financial positions sort themselves out.”

Contact Jonathan Young at [email protected]