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    Friday, August 19, 2022

    Bond Commission approves another $20 million for State Pier redevelopment

    An aerial view of the wharf filling Monday, April 4, 2022, at State Pier in New London. (Sean D. Elliot/The Day)

    The state Bond Commission on Thursday voted 6-2 to provide an additional $20 million for the redevelopment of New London's State Pier for offshore wind, bringing the total estimated project cost to $255.5 million.

    Of that total, more than $180 million is coming from the state and the rest from private utility partners Ørsted and Eversource.

    The 2019 cost estimate for the project was $93 million, which then rose to $157 million, and then $235.5 million.

    Connecticut Port Authority Chairman David Kooris said Thursday the actual budget at the time of the $93 million announcement was more like $120 million or $125 million. He also said he doesn't anticipate any more funding requests from the Bond Commission. The port authority is overseeing the project.

    Rep. Holly Cheeseman, R-East Lyme, and Sen. Henri Martin, R-Bristol, questioned Kooris about the cost overruns. They were the only two to ask questions, and the only two to vote against the bond authorization.

    "Why didn't we just stop and take our losses?" Martin questioned. He asked what the rate of return is for the amount of money the state is putting into the project.

    Kooris replied that State Pier is a state asset "that has been in need of investment for generations." He said plans going back decades that have called for improvements — such as additional heavy-lift capacity and deeper berths — have said the state should proceed when a private partner is identified to defray some costs and utilize the facility once completed.

    "Those plans have been sitting on a shelf for 30 years, waiting for a moment in time like the one we have today," Kooris said, "where we have a private entity willing to invest $77.5 million in our facility, and then pay us at least $2 million a year to utilize the facility."

    The split between the state and the Ørsted-Eversource partnership was 50-50 at the outset, but the state now is taking on 70% of the costs. Martin asked why there weren't provisions made for Ørsted and Eversource to put in more money to keep the split at 50-50, and Kooris said the private partners capped how much they were willing to invest in a facility they wouldn't own.

    "With no cap at our end?" Martin questioned, to which Kooris replied, "The cap at our end is through this process" — effectively saying the cap is however much the Bond Commission is willing to approve.

    Noting that this was the third request for additional funding in her time on the commission, Cheeseman asked Kooris for some assurance this is the last time the commission will be asked to increase funds.

    Kooris replied, "The short answer is the project will be completed before the legislature even comes back in session next year, in early 2023, and we don't have any further authorizations, and so this is the final tranche of funding." He said all aspects of the project are contracted, and the port authority board will execute the final notice to proceed for dredging at its June 21 meeting.

    Why did the costs rise so much?

    Kooris was not yet on the port authority board when the harbor development agreement was announced in May 2019, but he acknowledged Thursday there "should've been more nuance conveyed at the time" that $93 million was a preliminary estimate. This figure did not include soft costs or contingencies.

    Cheeseman told The Day after the meeting she was struck by this admission and has been concerned throughout the process about what has been "either deliberate or nonchalant misrepresentation of the actual costs."

    "I believe we should figure out how it happened, who drove those decisions, and someone should be held accountable," she said, adding that she doesn't accept this as just part of the process.

    Martin asked how the port authority could come to the Bond Commission and not include soft costs, and Kooris said he couldn't answer that because he wasn't chairman of the board at the time.

    The increase to $157 million, Kooris said, was solely due to a change in design to move the heavy-lift pad from the south side of the facility to the east, a change to mitigate conflict with Cross Sound Ferry.

    "The evolution from 157 to 235 is frankly a little bit more difficult to explain," Kooris said. "It is the difference between engineered cost estimates that were vetted by third parties and actual bid prices we received from contractors. The truth of it is, the estimates were off."

    Kooris said the final $20 million is associated with delays in permitting, both from appeals during the state process and from the Army Corps of Engineers process taking longer than expected. The delays would have brought the completion date seven and a half months behind the original completion date of August 2022, but the state is accelerating the project to an additional six months, which is also adding to the cost increases.

    Kooris said the difference in the month and a half is the ability of Ørsted and Eversource to stage the first wind farm out of State Pier, which triggers both job creation and the lease payments to the state.

    Gov. Ned Lamont commented that while "maybe I'm mad as hell" that the cost has gone up so much, he does think about "what this could mean for this first round of wind power and the next five rounds that come after it, and the possibility that southeast Connecticut could be a major hub for what we think will be an important new industry going forward." He said time is money, and it costs the state every time there's a delay or a threatened lawsuit.

    Bob Stefanowski, the Republican candidate for governor, issued a statement Thursday evening saying Lamont is "mad as hell" at cost overruns "but hasn't done a damn thing about it."

    Stefanowski referenced February 2020 remarks from Lamont in which the governor said then-Office of Policy and Management Secretary Kostantinos Diamantis has "got to deliver the goods, and that means we get this thing done on time and under budget, so people can count on it, so our partners know what they can count on coming to expect, and that's something we're going to hold people's feet to the fire to get it done."

    Stefanowski added, "If you were building a house and the cost went from $93,000 to $255,000, would you fire your builder? Well, for New London's State Pier, the numbers are in the millions, and no one cares."

    Asked before the vote what would happen if the Bond Commission didn't approve the additional $20 million, Kooris said there wouldn't be funding to complete the dredging.

    "That would prevent us from deepening the berth, which is necessary for the first American-made offshore wind installation vessel, which is currently being constructed in Texas, to make New London its first port of call," Kooris said. The agreement to bring that vessel here already has been signed.


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