Sen. Somers on State Pier’s Escalating Cost: “Here we are once again.”

State Pier costs rise by more than $53 million

May 30, 2023
By Greg Smith
Day Staff Writer
The Connecticut Port Authority will ask the state for an additional $30 million to cover a portion of the $53.7 million more needed to complete the transformation of State Pier in New London into an offshore wind hub.

The increase in construction costs, mostly due to unanticipated obstacles in construction, brings the total cost of the project from $255.5 million to more than $309 million. The project was once estimated to cost $93 million.

The partnership of Orsted and Eversource has agreed to pitch in $23.75 million to cover more than half of the $47.2 million increase in construction costs in exchange for the majority of the revenue from any future sublease of the property, Connecticut Port Authority Intern Executive Director Ulysses Hammond said on Tuesday.

Hammond said the state will be asked for $23.5 million along with an additional $6.5 million for contingency funds to cover some contracts that have not yet been finalized. The new price tag for the project was the result of months of negotiations with State Pier construction manager Kiewit to cover increased costs of changes in the scope of work, additional materials and obstructions in construction which led to delays and increased costs to keep subcontractors on site.

State Sen. Heather Somers, R-Groton, was among other legislators on a call Tuesday morning with port authority officials when the news of the request from the state was announced.

“I think the entire delegation made it very clear we’re tired of the port authority coming back and asking for more funding. They promised they would not be coming back and here we are once again,” Somers said.

Somers said she was frustrated not only by the entire request from the state, but what was pitched as a request for a “small contingency” of $6.5 million.

“That’s $6.5 million we have to go out and borrow and our taxpayers have to pay back,” she said.

Connecticut Port Authority Chairman David Kooris said Tuesday he hoped the $30 million request would go to the state Bond Commission by July. The port authority cannot enter into a contract with Kiewit on certain items without first obtaining approval for the additional funding.

While Orsted recently announced its bid to buy Eversource’s stake in the State Pier project, Kooris said the purchase has not yet been finalized and negotiations on the new agreement occured with the partnership.

Orsted and Eversource, as part of a Harbor Development Agreement, are leasing State Pier for 10 years with an option to extend that agreement, and are paying the port authority $2 million per year to lease the facility.
Separately, the City of New London is receiving a minimum of $750,000 per year from a host community agreement with Orsted and Eversource.

Kooris said during lulls in Orsted’s offshore wind projects, State Pier would be an attractive facility for other offshore wind companies. Under terms of the new agreement, Orsted would take 90% of the revenues from a sublease until it recoups its $23.75 million. The agreement is over once Orsted’s lease is up. Kooris said Orsted and Eversource have taken a risk in not knowing if they will recoup their additional investment. Orsted and Eversource have already contributed more than $77 million towards the project, Kooris said.

Of the cost increase, Kooris said unlike previous estimates, the numbers announced on Tuesday represent an agreement for a “guaranteed maximum price” on the vast majority of the work.

Kooris agreed there were “clearly missteps in public pronouncements” on the estimated costs in 2018. He said the $93 million cost estimate being widely used at the time was based on a preliminary design that has changed. A later cost estimate of $157 million came before the project elements were ever even placed out to bid.

At Tuesday’s meeting, Marlin Peterson, construction manager for AECOM, the engineering firm overseeing the State Pier project, explained the complexity of driving piles in the seabed that need to be seated at a certain depth and on dense rock material into order to maintain the structural capacity to accommodate a heavy lift capacity berth.

Governor Ned Lamont, through a spokesperson, continued to tout the benefits of an upgraded State Pier.

“The State Pier Project will transform the New London region and all of Connecticut, supporting quality jobs and clean energy goals. The administration is thankful that our partners Ørsted and Eversource are making a significant investment to help complete this project. We anticipate placing any needed state contribution on the Bond Commission agenda in the near future,” said Adam Joseph, director of communications for Lamont.

Eversource and Orsted, in a statement, said the partnership remained committed to the State Pier redevelopment project “and its successful, uninterrupted completion.”

“Today, as part of our commitment to the state, we have agreed to provide nearly $24 million in additional funding to realize this critical infrastructure project that will transform this state asset into a state-of-the-art, heavy-lift marine terminal able to serve Connecticut with a broad range of industries, cargo types, and vessels including offshore wind turbine staging and assembly,” the statement reads in part.

https://www.theday.com/news/20230530/state-pier-costs-rise-by-more-than-53-million/