York Co. seeks savings after Pennies for Progress road projects go millions over budget

By the end of next year, York County residents will be asked to approve a new round of road projects funded by a fourth Pennies for Progress sales tax.

In the meantime, county officials are trying to determine how much the county has spent on the three previous rounds of project as cost overruns are estimated at $100 million.

A study by a residents committee appointed by York County Council’s Pennies for Progress Committee found large overruns on projects from the first two rounds of Pennies dating to 1997.

The final amount spent on Pennies 1 was $84.9 million more than voters approved. The Pennies 2 package approved in 2003 – and has yet to be completed – is also set to exceed initial cost estimates, even after the number of projects was reduced.

Pennies program manager Patrick Hamilton says the final overruns on rounds of projects were reduced because the total amount collected in sales tax from each round exceeded the initial estimates, even though the construction costs here higher than estimated.

During a review of the data at a meeting of the county council’s Pennies committee, Councilwoman Christi Cox said she hoped the findings would help the county craft a more cost-effective proposal to put to the voters for a fourth round of Pennies.

“We want to communicate this in the most exact way possible,” she said. “So we need in a digestible format.”

Budget differences

In 1997, voters endorsed $99.2 million in projects in the first round of Pennies for Progress. The seven-year tax raised $103.4 million, and bonding raised another $11 million. But $184.1 million was spent for 15 projects, leaving the program $70 million over budget.

A mix of state and federal road grants and bond proceeds covered the the $70 million overrun. .

The S.C. State Infrastructure Bank provided $45 million for Pennies 1 projects, including work on S.C. Highway 5/Black Highway west of York and into Cherokee County by the S.C. Department of Transportation. Another half-million dollars in DOT funding completed the widening of Herlong Avenue/India Hook Road in Rock Hill.

About $16.5 million came from county bonds and $9 million came from federal grants.

Hamilton credits grant funding with significant savings on some projects. Work on a multi-lane bridge on U.S. 21 over the Catawba River was approved at $17 million at the 2003 referendum, but was reduced to $12.6 million with $2.6 million coming from Pennies funds, Hamilton said.

Three projects incurred a large majority of the Pennies 1 overruns: extending S.C. 5, at $46 million; expanding S.C. 274/Hands Mill Road between Old York Road and Lake Wylie Road at $30 million and the widening of S.C. 901/Mount Holly Road from Albright Road to Interstate 77, a $19.6 million project. The three projects came in $64 million over budget.

Over budget, after costs reduced

In 2003, voters approved a$173 million package of road projects, but the scope and cost of that package have fluctuated over the years. In 2009, York County took over management of the program from the engineering consultants CME, which had also managed the first round of Pennies, and revised the Pennies 2 budget to $165.4 million.

“We redid some of the cost estimates that didn’t seem accurate,” Hamilton said, crediting the savings to cost changes over the previous six years, the shifting scope of some projects, or simple over estimations of some costs in the initial budgets. “Some of the budgets turned out to be greater than what it was,” Hamilton said.

At the same time, $43.1 million worth of projects were moved to the next round of Pennies approved in 2011.

Two projects – expanding Ebenezer Road and Eden Terrace in Rock Hill – were dropped by the commission that put together Pennies 3. When voters had approved the projects eight years earlier the combined cost estimate was $8.5 million. Estimates for the Ebenezer project grew to $8.7 million, and Eden Terrace ballooned to $10.8 million.

If the combined $51 million in projects is removed from the original number approved by voters, the total drops to $121 million. Billy Hagner, who compiled the figures as a member of the residents committee, counts the revised budget as a $44 million overrun.

“If you keep those projects in, the original referendum is another $50 million over,” Hagner said. “And the nine projects that were $43 million in Pennies 2 now cost $95 million in Pennies 3.”

Work on the Tega Cay connector to Gold Hill Road exemplifies problem of growing costs. As first budgeted in late 2003, the cost was estimated by the consulting firm at $1.4 million. But the cost has risen steadily, and in August 2013, council voted to spend $4 million more on the project, bringing the total cost to $7.4 million. When council approved a bid for the project last September, the price tag had risen higher still, to $8.1 million.

Hamilton says the total raised by the one-cent sales tax for the second round again exceeded projections, to $174.8 million. Another $8.5 million was raised in interest, Hamilton said – interest the county continues to collect.

That drops the total amount over the revised budget to, at most, $33.7 million.

In 2011, voters approved $161 million in new projects, an amount that has since been revised to $157 million. To date, $59.7 million has been spent or contracted for new projects, leaving the current round of Pennies with a $97.3 million balance for the 14 projects going forward.

Audited

The county, concerned about previous cost overruns, has asked the Greenville accounting firm Greene, Finney & Horton to audit the projects. York County administration declined to identify which projects are being audited, but it includes two projects from Pennies 1, three from Pennies 2 and one from Pennies 3.

“Primarily, we want to see what procedures were in use in the past... so everybody can follow the proper procedures (in the future),” Hagner said.

The residents’ committee– which includes Paul Anderko, David Duncan and Alex Haefele – hope to make its recommendations to York County Council by May, so it can be incorporated into the planned 2017 Pennies program.

“We don’t want to say that anybody did anything wrong,” Hagner said. “We just want it so the perception of the Pennies program by the public is better.”

The committee members, chosen, by the county council, are a politically active group. Anderko is president of the GPS Conservatives for Action PAC. Duncan is a committee member of the York County Republican Party, and Haefele was a candidate for county council in 2010. Anderko has said one reason for serving on the committee is that, despite supporting the previous two Pennies rounds, he voted “no” in the 2011 referendum.

“The gentlemen who volunteered their time to study this program are dedicated, trustworthy and hard-working folks who understand the importance of the Pennies Program as well as the need for improving government accountability and transparency,” Cox wrote. “And they are volunteering their time to serve our county. Who better to collect this information?”

Examing past Pennies project performance comes before the new Pennies 4 Commission – a six-member body established to decide the list of projects to be presented to the votes in 2017 – hosts the first in a series of public meetings across the county. Commission members will hold a public meeting in the Tega Cay City Council chambers at 6 p.m. Wednesday. Other meeting times can be found online at bit.ly/1UnAvq0

This story was originally published March 19, 2016 at 8:03 PM with the headline "York Co. seeks savings after Pennies for Progress road projects go millions over budget."