Sea level project over budget, running behind
City of Norfolk says it has a plan to fix it
NORFOLK — For years, Norfolk’s most ambitious project has just been lines on a map.
As the banks of the Elizabeth River encroach just a little more with each passing tide, residents in Chesterfield Heights and Grandy Village have been waiting for the start of a fix that has been framed as revolutionary. Dirt is finally moving on the Ohio Creek Watershed Project, the city’s largest effort to protect its citizens against flooding and sea level rise.
Gov. Ralph Northam and other state officials were on hand in late February for a ceremonial groundbreaking, praising the plan. By that point, crews already had been at work for weeks.
What went unsaid there: Even after a $112 million assist from the federal government, the effort to protect these two neighborhoods is millions over budget. It’s also way behind schedule, which could imperil that federal money the city is relying on.
Laying the groundwork
Norfolk, threatened more by sea level rise than almost any other place in the country, has committed itself to being on the forefront of the response. One major front in that fight is the Ohio Creek project, designed to keep two neighborhoods dry — and habitable — for decades to come.
The effort — a first of its kind in Hampton Roads — includes higher berms along the water, pump stations, tidal gates, new stormwater and road infrastructure, green spaces meant to absorb rain, plantings along the shoreline to prevent erosion and more.
It will also be a testing ground, with what’s learned there being used to help other threatened Norfolk neighborhoods down the road.
Building on work done by local university students, the city won a huge grant from the federal Department of Housing and Urban Development in early 2016.
That $112 million was supposed to pay for the entire project, including the roughly $89.5 million in construction costs.
The final vision was rolled out in early 2019. At that point, officials were expecting to break ground that June. Even then, the construction process was being described as a furious sprint to beat the federal grant’s deadline. If the city can’t “substantially complete” the project by September 2022, it will have to pay back the grant, city spokeswoman Lori Crouch said.
It only made things more complicated when last year, contractors told them construction actually would cost $130 million — a whopping 45% more than expected. That pushed the groundbreaking back as the city spent much of the past eight months slashing costs.
Officials now say they’ve got the cost under control, while keeping the project just as effective and innovative.
But Norfolk still faces a cost overrun of about $9.5 million that local taxpayers will have to foot. That could crowd out resilience projects planned for other parts of the city. And they’ll spend the next 28 months fighting something as inevitable as the tides: The federal grant’s hard deadline.
Timing is everything
The man shepherding the Ohio Creek project now is Doug Beaver, a former naval aviator who was the commanding officer of Naval Station Norfolk. Beaver, who notes he became the city’s chief resilience officer in August, after the high construction bids came back, said the project was a victim of timing.
When the bids first went out a year ago, the country was hipdeep in a trade war that was increasing the cost of construction materials such as steel and aluminum. And other major construction projects around Hampton Roads have created competition for contractors, driving up costs.
But Beaver said the city has managed to keep the project on track by trimming costs, switching timelines and cobbling together money from around the city budget.
One change, which saved $3.7 million, was scaling back plans for pump stations. City engineer Selo Qejvani said the original plan was “very conservative” and called for 80-foot-deep steel pilings. Redesigned foundations omit the pilings, but will be perfectly safe and in no more danger of blowing over in a storm, Qejvani said.
The city cut some things wholesale, like a pedestrian bridge or an additional pump at each pump station meant to handle mild rain without running the big pumps.
Beaver and Qejvani said repeatedly that nothing that was “value engineered” or removed will reduce the effectiveness of the project — Grandy Village and Chesterfield Heights will still be the resilient neighborhoods of the future, Beaver said.
They also cut millions from so-called “contingency” funding, which is basically the money the city would set aside for inevitable delays or unexpected expenses. The fund went from $8.8 million to $1.8 million, but Beaver said the original number was very conservative.
Another way they cut the price: By pulling out specific items and rebidding them individually.
Beaver said that when the project was bid as one huge task, contractors faced more risk and thus put in higher bids to cover their own potential cost overruns. By putting out a few specific items for bidding, the city saved millions.
So why didn’t the city do that and save millions in the first place? It would have made the bid process take much longer, Beaver said, and the tight federal timeline meant Norfolk wanted to get the process moving quickly.
But that backfired. City officials said in January 2019 they expected to start construction by July.
Beaver said they’ve now switched up the timeline so the project will be “substantially complete” according to federal rules by the September 2022 grant deadline. Then will come the finishing touches, including community amenities, with final completion expected around April 2023.
Skip Stiles runs a local environmental advocacy group and was involved in the earliest phases of the Ohio Creek project. He said when he first heard that the project was over budget, he worried that a lot of the green infrastructure and amenities, like a park, would get pushed down the line and eventually crowded out of the budget altogether.
But after talking with officials on the project, Stiles said he’s confident the project will end up hitting the marks he and others have been hoping for. “I think they’re going to be able to do all the green stuff,” he said. “The big issue’s going to be the race to the finish.”
$9.5 million
After all the trimming, reengineering and rescheduling, the city is still facing a $9.5 million gap between the available grant funding and the ultimate construction cost.
Norfolk’s budget director, Greg Patrick, said they’ve found the money and the debt-burdened city won’t have to take on extra loans to complete the project. About $5 million is going to come from Community Development Block Grants, another HUD grant that the city gets annually.
According to a legal advertisement from the city that was run in The Virginian-Pilot in December, the reprogrammed funds had been earmarked for things including the city’s rental and homeowner rehabilitation grant programs (more than $800,000 combined), city utility improvements (about $500,000) and other neighborhood-oriented efforts.
Patrick said that $5 million grant also comes with deadlines, and the projects it was supposed to fund haven’t been making use of the money. The other half of the overrun will be covered with city tax dollars.
When Norfolk raised taxes in 2018, it set aside a roughly $1.85 million chunk of the annual increase for fighting sea level rise and flooding across the city. Norfolk will use unspent money in this year’s budget, plus the full amount for the next two years to cover the remaining $4.5 million in Ohio Creek construction costs.
Patrick said that money is available because the city had hoped to save it up over a few years and use it to jumpstart a major project. It wasn’t earmarked for anything specific, but Patrick acknowledged spending it on Ohio Creek could mean other projects won’t happen.
“The reality is if you spend funds on A, you can’t spend them on B,” Patrick said.
Both Patrick and Beaver said spending the money here to ensure they can make use of the whole $112 million from the federal grant is worth it.
“The alternative is letting that money go back to the federal government,” Beaver said.
Ultimately, the city says the project will be exactly as effective at keeping the water at bay as planned, and residents in the neighborhoods will have the same amenities available to them. The project is finally under way, eight months after it was originally planned to start.
The sprint to September 2022 has begun.