UPDATED: State Pier costs rise by more than $53 million
The Connecticut Port Authority will ask the state for an additional $30 million to cover a portion of the $53.7 million more needed to complete the transformation of State Pier in New London into an offshore wind hub.
Increases in construction costs and contingency are raising the total cost of the project from $255.5 million to more than $309 million. The project to modernize the port and add heavy lift capacity to accommodate offshore wind turbine components was once estimated to cost $93 million.
The partnership of Ørsted and Eversource has agreed to provide $23.75 million to cover more than half of the $47.2 million increase in construction costs, according to an amendment of the Harbor Development Agreement approved Tuesday by the port authority’s board of directors. The authority, in exchange, has agreed to provide Ørsted and Eversource with the the majority of the initial revenues from the sublease of the property.
Ulysses Hammond, the authority’s interim executive director, said the authority is asking the state for $23.5 million along with $6.5 million in contingency funds to cover any unknown future expenses. The new price tag for the project was the result of months of negotiations with State Pier construction manager Kiewit and costs of changes in the scope of work, additional materials and obstructions in construction which led to delays.
State Sen. Heather Somers, R-Groton, was among other legislators on a call Tuesday morning with port authority officials for the announcement.
“I think the entire delegation made it very clear we’re tired of the port authority coming back and asking for more funding. They promised they would not be coming back and here we are once again,” Somers said.
Somers said she was frustrated not only by the entire request from the state, but what she said was pitched as a request for a “small contingency” of $6.5 million.
“That’s $6.5 million we have to go out and borrow and our taxpayers have to pay back,” she said.
State Sen. Martha Marx, D-New London, said the request from the port authority comes at a time when legislators are negotiating a budget. The $30 million, she said, certainly could be used in other areas.
“It’s unfortunate we have this cost overrun. It’s extremely painful. That being said, at least (Ørsted and Eversource) are paying for half of it. In the end, I still think it’s a good project for New London. For 40 years we’ve talked about this asset being underutilized,” Marx said.
Marx said she was “never a fan” of quasi-public agencies, agrees with continued scrutiny of the port authority and supports a bill passed in the House that places further restriction on quasi-public agencies.
Connecticut Port Authority Chairman David Kooris said Tuesday he hoped the $30 million request would go to the state Bond Commission by July. The port authority cannot enter into a contract with Kiewit on certain items without first obtaining approval for the additional funding.
While Ørsted recently announced its plan to buy Eversource’s stake in the State Pier project, Kooris said the purchase has not yet been finalized.
Ørsted and Eversource, as part of a Harbor Development Agreement, are leasing State Pier for 10 years with an option to extend that agreement, and are paying the port authority $2 million per year to lease the facility.
Separately, the City of New London is receiving a minimum of $750,000 per year in accordance with a host community agreement with Ørsted and Eversource.
Kooris said during lulls in Ørsted’s offshore wind projects, State Pier would be an attractive facility for other offshore wind companies. Under terms of the new agreement, Ørsted would take 90% of the revenues from any sublease until it recoups its $23.75 million. The agreement is over once Ørsted’s lease is up. Kooris said Ørsted and Eversource have taken a risk in not knowing if they will recoup their additional investment. He said Ørsted and Eversource have already contributed more than $77 million toward the project.
Of the cost increase, Kooris said unlike previous estimates, the numbers announced on Tuesday represent an agreement for a “guaranteed maximum price” on the vast majority of the work to be completed.
Kooris agreed there were “clearly missteps in public pronouncements” on the estimated costs in 2018. He said the $93 million cost estimate being widely used at the time was based on a preliminary design that has changed. A later cost estimate of $157 million came before the project elements were put out to bid.
At Tuesday’s meeting, Marlin Peterson, construction manager for AECOM, the engineering firm overseeing the State Pier project, explained the complexity of driving piles in the seabed that need to be seated at a certain depth and on dense rock material into order to maintain the structural capacity to accommodate a heavy lift capacity berth.
Gov. Ned Lamont, through a spokesman, continued to tout the benefits of an upgraded State Pier.
“The State Pier Project will transform the New London region and all of Connecticut, supporting quality jobs and clean energy goals,” Adam Joseph, director of communications for Lamont, said. “The administration is thankful that our partners Ørsted and Eversource are making a significant investment to help complete this project. We anticipate placing any needed state contribution on the Bond Commission agenda in the near future.”
Eversource and Ørsted, in a statement, said the partnership remained committed to the State Pier redevelopment project “and its successful, uninterrupted completion.”
“Today, as part of our commitment to the state, we have agreed to provide nearly $24 million in additional funding to realize this critical infrastructure project that will transform this state asset into a state-of-the-art, heavy-lift marine terminal able to serve Connecticut with a broad range of industries, cargo types, and vessels including offshore wind turbine staging and assembly,” the statement reads in part.
State Pier is slated to be a staging and assembly hub for three of Ørsted and Eversource’s offshore wind projects ― South Fork Wind, Revolution Wind and Sunrise Wind. Construction work at State Pier is expected to continue through the summer even as it hosts vessels associated with South Fork Wind.
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