Miami-Dade County

Miami-Dade weeks away from running out of money for firm running $2 billion sewage fix

Miami-Dade wants to increase the fees for a consulting firm overseeing a massive redo of the county’s sewage system. The entire job is expected to cost nearly $2 billion.
Miami-Dade wants to increase the fees for a consulting firm overseeing a massive redo of the county’s sewage system. The entire job is expected to cost nearly $2 billion. Miami Herald file

When more than 700,000 gallons of human waste poured into Biscayne Bay from a county pump station in Sunny Isles Beach earlier this month, the facility was under a court order to be repaired as part of a nearly $2 billion upgrade of the Miami-Dade sewage system.

The private firm managing that contract has burned through nearly $91 million in fees that were supposed to last another 10 years, and now Miami-Dade is scrambling to add another $49 million to the 2014 agreement and let AECOM continue managing the project through 2028.

“I’m not happy,” Commissioner Rebeca Sosa said during an Infrastructure Committee hearing on the proposed change to a $140 million cap on the contract, a 53 percent boost. “The increase is incredible.”

Miami-Dade residents and businesses are paying higher water fees in part to cover costs on the $1.8 billion construction project tied to a 2013 settlement of a federal suit against the county by the Environmental Protection Agency. Known as the “consent decree” program, it covers more than 80 upgrades and replacements of pipe systems, treatment plants and the kind of pump stations that failed Feb. 2, prompting temporary no-swim warnings at Haulover Beach and a nearby state park.

The county has more than 1,000 pump stations, but some of the oldest were included in the projects mandated by the consent decree approved by a federal judge in 2013 for environmental violations dating back to the 1990s. Of the 34 stations in the consent-decree program, 18 have been upgraded or replaced. Fifteen are under construction or about to be. The remaining station not yet in the program’s pipeline was the one that failed in Sunny Isles Beach.

“There is an urgency to this,” said Commissioner Daniella Levine Cava. “We are in this because we have a failed system that we have to fix as quickly as possible.”

While the consent-decree program is one of the largest infrastructure projects in Miami-Dade, the county has only a few people directly involved with the work. Private firms are handling the construction, design and architecture, and in 2014 AECOM, a global engineering firm based in Los Angeles, won the coveted deal to oversee the project.

At the time, the administration of Mayor Carlos Gimenez estimated the county would need to pay AECOM $91 million at the most over 15 years, the deadline for completing the consent-decree work. “We believe that is adequate compensation over a 15-year period for the entire scope of work for this consent decree,” Bill Johnson, then the county’s sewer director, told the commission on May 20, 2014, when AECOM’s contract was approved.

But as AECOM’s staff began evaluating the work ahead, company executives quickly began pressing for more money for what they determined was a much more extensive project than forecast. Pete Hernandez, a former county administrator and Miami city manager who now serves as an AECOM vice president, said reviews in 2015 and 2016 showed the county’s early estimates were significantly low.

By 2017, the county’s forecast on construction costs for consent-decree work had soared from about $730 million to $1.1 billion. And AECOM was billing at a much faster rate than had been expected when the contract was approved in 2014.

While the $91 million was supposed to last into the next decade, Miami-Dade officials said Tuesday the county was weeks away from having no authorized funds for AECOM’s work.

“They run out of money in March, am I right?” asked Commissioner Barbara Jordan, chairwoman of the committee. “Yes, commissioner,” replied Water and Sewer director Kevin Lynskey. “In the beginning of April, we run out of money.”

While Lynskey said construction projects within the consent-decree program are costing more, the overall price hasn’t grown as quickly when adding in professional services, county overhead and other expenses. The total price tag has grown from $1.6 billion in 2013 to $1.8 billion in the county’s latest capital budget.

Lynskey has been shedding other projects in Water and Sewer’s broader construction plans, and is trying to reduce the size of the department’s other major undertaking: a state-mandated reduction in the amount of treated sewage pumped into the ocean.

Construction of all water and sewer projects is expected to cost about $12 billion. The money comes from debt borrowed against water bills paid by homes and businesses. Miami-Dade has been increasing rates in recent years and plans more increases in the years to come, Lynskey said.

New standards for sea-level rise contributed to a “modest” amount of the cost increases for the consent-decree program, Lynskey said, but the bulk came from individual projects being expanded to cover more extensive work — such as a pump station that was to be repaired instead being replaced.

Gimenez, who oversees the Water and Sewer department and appointed Lynskey last year and Johnson in 2014, made a rare committee appearance Tuesday to urge commissioners to support the change. It passed on a 3 to 2 vote, with commissioners Jean Monestime and Joe Martinez voting no. A final vote by the full commission is expected by the end of March.

“I hate to come back on this,” Gimenez told commissioners Tuesday. But with the construction tasks more extensive than forecast, he said, AECOM will be conducting far more work than expected. “The scope of the construction project is much larger than what they bid on. They should be compensated for it.”

Doug Hanks covers Miami-Dade government for the Herald. He’s worked at the paper for nearly 20 years, covering real estate, tourism and the economy before joining the Metro desk in 2014.
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