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Voters to decide fate of Pennies for Progress

Voters soon will decide whether to continue York County's sales-tax funded, road-building program - one with a 14-year history of cost overruns, construction delays and management snags.

Pennies for Progress has, for the past 14 years, been the only significant source of road-improvement dollars in York County. More than $261 million raised through the 1-cent sales tax has gone toward road improvements.

The tax expires in September. On Aug. 2, voters will choose whether to continue it for another seven years, raising $161 million more for another round of projects.

York County was the first in the state to enact such a program, passing a 1-cent sales tax in 1997 by 222 votes.

Clay Killian, county manager at the time of the vote, said early resistance likely came from voters not wanting any new taxes. Now, he said, "people have seen how well the program works."

The second round of Pennies for Progress passed by nearly 7,000 votes in 2003.

From the program's onset to 2007, the county hired private management firms to oversee Pennies - a move that helped county leaders manage the enormous challenge, but later led to a disconnect between county staff and program managers.

Making matters worse, costs for both the 1997 and 2003 projects soared well above estimates. County staff originally estimated the 1997 program to cost $99.3 million.

The estimates were "way off" from the current $208 million it will take to finish them, said Phil Leazer, current Pennies project manager and an engineer with the county at the time.

In late 2008, the county concluded that an additional $169 million would be needed to finish the 2003 projects, originally estimated to cost $173 million.

Some 2003 projects would be carried over and expanded in the proposed third round of Pennies projects, if voters approve. To complement the sales tax revenue, the county has sought additional revenue to ensure the remainder of 2003's projects are completed.

County leaders and project managers blame unexpected increases in the cost of construction and right-of-way acquisition, delays due to obtaining permits and poor project planning for the unfinished projects.

Bringing the program in-house and building on experience, county leaders are confident that more effective management and better planning will help the 2011 projects run more smoothly.

Deadlines and rough estimates

An inexperienced county rushing to get voter approval is one reason the 1997 estimates were not accurate, said Carl Gullick, York County Council chairman at the time. Gullick was a strong advocate of the Pennies program.

"We had to rush," Gullick said. The county was seeking local funding "out of desperation," he said, after learning of a drop in state transportation dollars for York County.

"The needs we had were significant and the needs were getting worse," he said.

Others agree.

"Highway 5 was killing people," said Jerry Helms, vice president for operations at Carowinds theme park. Helms has served on the commission tasked with seeking public input and selecting projects since Pennies' beginning.

The goal was to get the program on the ballot for the November 1997 general election - or wait two years for the next election. After the Pennies commission completed a list of projects, the county only had a few weeks to determine cost estimates.

The whole process - from forming the commission, to choosing a list, to getting estimates - happened "lickety split," Helms said.

But being "pioneers" - a term used by many involved in Pennies' beginnings - means there was a learning curve, he said.

What cost so much and took so long?

A thriving economy and rising fuel prices, along with permitting delays, caused cost overruns and lingering construction times, say those familiar with Pennies.

When the cost of oil increases, Leazer said, "everything goes up exponentially" - from the liquid petroleum that goes into asphalt, to the fuel used in making the asphalt, to the cost of operating and maintaining construction equipment.

At the start of Pennies in 1997, a barrel of crude oil cost about $20, according to the U.S. Energy Information Administration. In 2008, it hit $100, pushing gas to more than $4 a gallon, Leazer said.

The unexpected cost increases were hard to see coming, said former project manager Myron George.

"Cost projections for the projects were based on historical trends," George said, "but what happened to the oil prices during the program had never happened in history."

Asphalt wasn't the only material "skyrocketing" in price, he said. Increased demands for steel and cement in China and Europe drove prices up, too.

The thriving economy, until the collapse in 2008, also meant that real estate costs were escalating, driving up the cost of land needed for the projects. Limited workforces also drove up the cost of labor, Leazer said.

Acquiring the necessary permits from federal and state agencies took longer than expected, Leazer said, in part due to more stringent regulations over the years.

It takes between one and two years - depending on the project's scope - to get permits, and about a year to purchase right of way, Leazer said. If the granting agency wants to change a project's design that can delay things even further.

Rare sunflowers in need of relocation, illegal landfills unearthed in construction and historic sites in need of protection are some of the unexpected things that added time to some Pennies projects.

Gaining expertise

"York County, like any county, had no experience overseeing a road program that massive," said Al Greene, assistant county manager at the program's onset. Greene was the county manager from 2000 until he resigned in 2007.

"We really didn't understand what we were quite getting into."

Prior to Pennies, the county's experience was mostly in paving two-lane roads, said Leazer, who was a county employee at the time.

Hiring a private firm was key, they said. But not having a grasp on the program's day-to-day operations made it difficult for staff to keep residents informed, Leazer said.

The county brought the program in-house in late 2007 when the County Council learned that cost overruns were far greater than they had been told. County Manager Jim Baker said at the time that the surprising incremental increases in project costs weren't immediately brought to county staff's attention.

"Bringing it in-house was a matter of restoring credibility with the public," Baker said last week.

The county's attitude at the time, Baker said, was "stop talking about the old estimates which we know aren't good, and refigure them and fess up and tell people." .

That move allowed the county, Helms said, to "get their arms around" the magnitude of the program.

'Under-promising, over-delivering'

One of the greater challenges, George said, is "getting the public to understand the uncertainties of estimating projects that are five to 10 years out into the future."

Maybe a better approach, he said, would be to let voters know up front that "no one can predict what the cost of the projects will be" if something unexpected happens - such as spiking oil prices.

Acknowledging the uncertainties, Baker said, the county has followed a new strategy of "under-promising and over-delivering."

The county now uses cost-estimating firms that help anticipate costs more effectively, Leazer said. Being involved in the program's day-to-day operations and providing quarterly reports also helps everyone stay informed.

Starting projects more quickly helps cut back on real-estate speculation, Baker said.

Helms is confident the county has done its homework.

"The cost estimates that got everybody so concerned a couple of years ago...since the county has taken over and has worked and has developed a working relationship with the state, those costs have come down," he said.

"But nobody has a crystal ball," Helms said. "An estimate is an estimate."

The missed marks in 1997 and 2003 inspired a tendency to turn former project managers into "scapegoats," Baker said.

Now that county staff are running the program, he said, they'll be held accountable.

"Our people are very good," Baker said. "It's not because we're better, it's because this is their community, their estimates, and if we don't make it, we've got nobody to blame but ourselves."

At a glance

Here's what York County residents will vote on in the Aug. 2 Pennies for Progress referendum:

Fort Mill: $52.4 million for five projects covering 6.75 miles in the Fort Mill area

Rock Hill: $51.4 million for nine projects covering 13.1 miles in the Rock Hill area

Lake Wylie: $30.1 million for two projects covering 4.5 miles in the Lake Wylie area

Clover: $10 million for three projects covering 9.9 miles in the Clover area

York: $7.5 million for five projects covering 11.7 miles in the York area

Countywide: $9.5 million for 39 gravel roads

For lists of previous Pennies projects with status updates, go to penniesforprogress.net

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