High steel prices scramble pier project plans
HOUGHTON — First, COVID-19 delayed state funding of Houghton’s pier project by a year. Now the project could be delayed again by the pandemic-caused spike in steel prices.
Bids for Houghton’s project at Mattila Square came in at more than double the expected cost, City Manager Eric Waara said at Wednesday’s City Council meeting.
Bids were opened Tuesday after several contractors requested an additional week. The pier, which would be capable of handling large cruise ships, is the centerpiece of the planned Mattila Square work. It also involves rerouting the waterfront trail around the north side of the Portage Lake District Library, and making parking improvements.
Cost of the steel pilings for the pier, the biggest expenditure in the project, was estimated at $1.4 million, Waara said. It came in at more than $3 million.
“If we would have bid this project last year … we probably would have been in the money,” Waara said.
The Michigan Economic Development Corp. (MEDC) first approved funding for the project in 2019. However, that funding was pulled last spring and redirected to COVID relief.
MEDC’s grant this year was for $2,780,400, with the city slated to contribute $951,600.
This year steel prices have hit their highest point since 2008, as steel mills that had slowed down operations last year are working to regain their capacity. Overseas steel shipments, in addition to similar production problems, face a 25% tariff.
Those costs hit contractors too, Waara said.
“Once they get the project, they have to hold their price for 90 days in order for us to do the paperwork,” he said. “…Most of these supply places will only hold their prices for maybe a week, and then they’re going to go up by 8% or 12%. That’s been happening since last fall, and everybody’s victims of it.”
Waara said he would work with the engineer and the low bidder to find more cost-effective ways of completing the project. The city will also look to see if MEDC has additional funding available.
Waara said the council might hold a special meeting within the next two weeks to approve a revised bid.