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City of Durango in quandary over expensive street construction bids

Asphalt and labor have driven up prices, forcing city to hit pause on some projects
Mike Somsen, streets supervisor for the city of Durango, describes the improvements needed on North College Drive near Florida Road. (Jerry McBride/Durango Herald)

The city of Durango has a slew of street projects slated for 2022, but contract bids priced considerably higher than in previous years have made scheduling many projects difficult. Uncertainty surrounds what streets will get attention this summer.

Many of the street projects the city hopes to tackle this year are funded through a 2019 half-cent sales tax voters approved in April 2019 and took effect in July of that year.

Mike Somsen, city streets supervisor, said the sales tax increase helped “immensely” in completing projects that had been on the city’s docket for years. But even with bolstered funds, the recent high costs of contractor bids make it hard for the city to determine what will be achievable this summer.

Somsen said that because the bidding process is ongoing, he can’t discuss specific price tags. But he said since last year, bids have gone up in price by “a lot.”

During a discussion about capital improvement projects earlier this month at a City Council meeting, Cynthia Sneed, Durango finance director, said construction project bids are over the city’s budget by 69%. Bids returned in April were 80% over the budget.

The city asked contractors why price increases are so drastic, and contractors blamed it on supply chain issues, a lack of available labor, timing concerns for project deliveries, and fuel and other cost increases were all factors.

“It’s not any one particular department, it’s not any one particular project, it’s a pattern that we’re seeing,” she said.

Thomas Avenue was a street that had many problems such as water drainage and was fixed with a half-cent sales tax passed in 2019. (Jerry McBride/Durango Herald)

The largest project Somsen had planned this year was a reconstruction project on North College Drive from Florida Road to the first switchback, or the bend in the road leading up the hillside.

It’s a large project involving water line replacement and sewer line rehabilitation, new curbs and gutters, and replacement of the road base, Somsen said. The city is reserving money for the project, and Somsen doesn’t expect it will begin until 2023.

Overlay projects the city has put out to bid for 2022 include:

  • Ninth Street from Narrow Gauge to West Second Avenue.
  • Needham Circle.
  • A small patch of road on Needham Drive.
  • Turner Drive near the county jail.

Two other overlay projects on Escalante Drive were planned for this year, but Somsen said they’ll be pushed back to 2023. One project site is Home Depot and the other is Escalante Drive at the Walmart entrance.

Former Durango City Manager Ron LeBlanc stands on Thomas Avenue where a sidewalk and asphalt needed work to keep water from entering the residence. That was on March 3, 2019. The work has since been done thanks to a half-cent sales tax voters passed in 2019. (Jerry McBride/Durango Herald file)
Thomas Avenue had many problems and was fixed using a half-cent sales tax that Durango voters approved in 2019. The homeowner redid the driveway at his own cost. Mike Somsen, streets supervisor, said the sales tax increase helped the city complete projects on a long list of streets that needed maintenance or repairs, but project bids in 2022 are significantly higher than they have been in the past. (Jerry McBride/Durango Herald)

City staff members asked councilors to consider an amended budget for capital improvement projects at the May 3 City Council meeting.

Staff members pointed out that $248,000 was budgeted for the west Ninth Street overlay project, but the returned project required 110% more in anticipated spending, or $521,303.

A sealcoating and surface preservation project had a budget of $200,000, but anticipated costs are 28% higher at $255,746.

Councilors didn’t vote on whether to approve the budget amendment, which would increase the projects’ budget by 14% from $4,345,474 to $5,030,214.

The city had 13 Americans with Disabilities Act-compliant curb ramps planned for areas around 23rd Street and West Third Avenue, 15th Street and West Park Avenue, El Paso Street and West Park Avenue and other locations, but the city received no bids on those projects, Somsen said. He said several alleyway projects also received no bids.

By contrast, in 2020 and 2021, the city installed 32 ADA ramps and laid about 700 feet of curb and gutter, he said.

Somsen said a lot of the increases for project costs and bid prices are related to the price of oil. Asphalt mostly consists of oil, he said, and oil prices are high right now. He speculated that labor shortages may have also contributed to high-priced bids and the absence of bids for some projects, but he couldn’t say for sure.

Mike Hall with Four Corners Materials said the rise in costs is simply because of inflation. Four Corners Materials has had to pass increased costs onto its clients and customers.

Fuel and energy costs, rubber tires for construction loaders, hydraulic units and liners for crushers have all seen price increases, he said.

“Whether it’s the liners for our crushers, the fuel that powers our generators to run the crushers – it’s just everything,” he said. “Our cement suppliers, suppliers for the ready mix, it’s just out of control right now.”

Regional project costs

Julie Constan, Region 5 transportation director for the Colorado Department of Transportation, agreed with Somsen that higher oil prices have caused an increase in asphalt. She said oil is one of the bigger contributors to increased project costs for overlays and similar roadwork.

“Our maintenance teams actually buy asphalt on their own to do pothole patching as well as some other smaller overlay projects that they do,” she said. “And they’ve seen a significant increase in the cost of asphalt this year compared to what we’ve paid in the previous years.”

According to CDOT data, the average price of hot mix asphalt was $118.27 a ton in May 2021. The average price rose by $4.21 as of May this year, she said.

Another cause of increased project costs is steel, although to a lesser extent – just 8 cents more compared with May prices last year, Constan said.

“We are seeing elevated bid costs like the city of Durango (is),” she said.

She said the transportation department is in the process of prioritizing its projects for next year. CDOT usually advertises projects for bid in late summer or fall to early winter.

“Statewide, CDOT has seen an increase in project bids by about 5.5%,” she said. “For one overlay project planned for West Pagosa Springs, the transportation department saw a bid come in around 30% higher than its engineer’s estimate.

“A 30% increase of an engineer’s estimate is pretty significant,” she said.

The Pagosa Springs project was put on hold for a year because it didn’t fit into the state’s budget with the increased bid cost, she said. It will likely go back up for bid again in the fall.


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