The state of Wisconsin may be stuck with a $27 million tab to cover cost overruns on the St. Croix Crossing project — and that’s just part of a settlement that could be eventually twice that much or more, according to sources familiar with the project.
The Minnesota Department of Transportation is negotiating with the main contractor on the project, a joint venture formed by Lunda Construction and Ames Construction, on a final cost settlement for the estimated $647 million job, anchored by a new bridge over the St. Croix River between Oak Park Heights, Minnesota, and St. Joseph, Wisconsin. The bridge opened in August 2017 after a yearlong delay.
MnDOT is splitting the project costs with the Wisconsin Department of Transportation. The estimated cost share breaks down to $360.8 million to $368.8 million for Minnesota and $273 million to $278 million for Wisconsin.
MnDOT isn’t disclosing how much a total settlement might cost. But on Friday, Craig Thompson, secretary-designee of WisDOT Secretary-Designee, told The Daily Reporter that Wisconsin and Minnesota would each kick in about $27 million — or some $54 million total — to settle a dispute with Lunda and Ames over the project’s final cost. Minnesota oversaw the project’s development and is leading discussions with the contractors.
A line item in Wisconsin Gov. Tony Evers’ transportation budget request asks for $27 million to pay for Wisconsin’s “remaining costs” on the St. Croix Crossing project. Thompson said state officials expected project costs to run over the amount previously authorized for the bridge’s construction. Discussions are ongoing, and a third-party consultant is overseeing talks between the states and contractors.
“There’s no hard timeline, but Minnesota wants to get this resolved,” Thompson said.
Specifically, the $27 million proposed in the Wisconsin budget would be used to “pay a settlement related to additional costs incurred during project construction, which is currently under negotiation with the contractor,” according to an analysis released this week by the nonpartisan Legislative Fiscal Bureau. Negotiations are being held outside court in hopes of avoiding litigation, Thompson said.
Various sources familiar with the project tell Finance & Commerce, the Daily Reporter’s sister publication in the Twin Cities, that the total settlement, including Minnesota’s share, could be in the $60 million range. MnDOT wouldn’t confirm or deny that number. Lunda Construction couldn’t be reached for comment.
Some work remains to be done on the St. Croix project, although the new mile-long bridge has been open for more than a year and a half. Other St. Croix Crossing-related jobs include landscaping, the conversion of the historic Stillwater Lift Bridge to a span for bicycles and pedestrians and trail improvements.
“The project isn’t fully complete yet, but the bridge is open and we’re all proud of it. Final costs and the distribution of those costs between all involved parties are still being determined,” said Kevin Gutnecht, MnDOT spokesman, in a statement.
Finance & Commerce submitted a request to MnDOT about the project’s final cost. MnDOT responded with a dozen documents, most of which pertained to small project outside the scope of the main bridge structure.
The bridge was originally scheduled to open in fall 2016. MnDOT announced in early 2016 that the opening would be delayed by a year. That set off a round of negotiations between the Minnesota and Wisconsin transportation departments and the contractor.
Finance & Commerce reported in January 2016 that the states’ transportation departments and the builder were haggling over contract terms, including language that would charge the Lunda-Ames joint venture $20,000 for every day the project is delayed after Nov. 30, 2016.
MnDOT blamed the project’s delay on “project complexities,” worker and material shortages, equipment malfunctions and weather. One obstacle was the bridge’s unusual “extradosed design,” an amalgam of concrete-box-girder and cable-stayed design elements.
“They were kind of learning in the early part of the project,” said then-MnDOT Commissioner Charlie Zelle in 2017. “But once they kind of got over the initial process, things moved a lot more smoothly and they made up some time.”
In Wisconsin, Thompson likewise said the dispute between the states and contractors stemmed from the bridge’s “complicated” design. The states had also been “aggressive” in keeping down the costs of the project.
“The St. Croix Crossing is a game-changer for border communities,” said Wisconsin state Sen. Patty Schachtner, a Democrat from Somerset, in a statement to Finance & Commerce. “I support the governor’s proposal to pay remaining costs for this project, and I look forward to more opportunities to invest in our region’s infrastructure.”
Trouble seemed to follow the project from the start.
The Maple Grove-based contractor C.S. McCrossan sued MnDOT in 2013 after the department had rejected its low bid for work on approaches to the bridge. MnDOT tossed the bid out on the grounds that it didn’t meet requirements for working with so-called disadvantaged businesses.
In 2015, a woman-owned subcontracting firm, J&L Steel and Electrical Services, had to quit the job because of the high cost of cash-flowing the project. That ultimately forced the company, J&L Steel and Electrical Services of Hudson, Wisconsin, out of business.
LouAnne Loewen, who owned J&L Steel and Electrical Services, said in an interview on Wednesday that the St. Croix Crossing was only the second bridge of that design built in the U.S., which gave rise to some difficulties.
“Right from the beginning, there were issues,” said Loewen, who now owns Bridgeway Business Brokers. “For my company, the iron would not fit. … I had no choice but to walk off the job because I could not put any more money into it. There wasn’t anyone backing me.”
Three construction teams bid on the main contract for bridge construction. The Lunda-Ames joint venture had the lowest price ($332.5 million), followed by St. Croix Constructors ($345 million) and PCL Civil Constructors ($409.7 million).
PCL had experience building a similarly designed bridge: the $416 million Pearl Harbor Memorial Bridge in Connecticut. Before the St. Croix Crossing, the Pearl Harbor Memorial Bridge was the only extradosed bridge in the United States.
– Brian Johnson of Finance & Commerce contributed to this article.Follow @natebeck9