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<br />~~-_.~ <br /> <br />The Michigan River Water Conservancy District submitted <br />its request in late November and this request could have been <br />on the December agenda. The staff chose, however, not to <br />include it on either the December or January agendas only <br />because we were still in the process of evaluating final change <br />orders associated with the construction of the project. Since <br />this is a previously authorized project, and in light of the <br />fact that the District's request was in hand before December, <br />the staff believes that it is appropriate to consider this <br />matter notwithstanding the Board's decision at the January <br />meeting to temporarily suspend the processing of ~ projects. <br /> <br />The staff does not believe that the full $419,000 should <br />be funded. The unanticipated cost overrun has been only <br />$92,000 (the difference between the actual construction cost of <br />$1,4l9,085 and the originally estimated cost of $1,327,200). <br />This has largely occurred because of the construction of a cause- <br />way that was not originally anticipated but proved necessary <br />due to the Board's requirement for a conservation easement on all <br />lands bordering the reservoir. <br /> <br />The staff recommends that only the $92,000 be approved. <br />This would be consistent with the Board's treatment of the <br />Yamcolo project in which the Board's $l million limit was <br />waived in light of the unanticipated cost overruns on that project. <br />This $92,000 should carry a service charge of 5 percent and be <br />repayable over a period of 40 years, as present Board policies <br />call for. <br /> <br />In fairness to the District, it should be noted that it <br />is their perception that they have suffered a $419,000 cost <br />overrun. This is because their engineer has consistently main- <br />tained, despite our Objections and despite the fact that we <br />insisted that the engineer's feasibility report to the District <br />reflect an estimated construction cost of $1.33 million, that <br />the project could be constructed for a total cost of about <br />$1.0 million (actual construction, including the previously <br />completed cutoff trench, plus all fees and contingencies). <br />While we understand the District's point of view, the fact <br />remains that the project was initiated with the full knowledge <br />that the staff estimated, and the engineer's report reflected, <br />an anticipated construction of $1.33 million. This then, not <br />$l.O million, is the figure upon which cost overruns must be <br />calculated. <br /> <br />BM/sd <br /> <br />-2- <br />