Construction inflation wallops Gilbert projects

By Tom Blodgett
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When Gilbert voters passed a $515 million streets, transportation and infrastructure bond in November 2021, town officials thought they had funding in hand to complete nearly 60 of the highest priority capital projects.  

Two years later, the list of what $515 million will cover has been considerably pared.  

Vicious construction inflation is eating up bond money, meaning the number of projects it will fund is dwindling.  

“We had a five-year plan for that money, and that would cover the (capital improvement projects) over a five-year window,” Public Works Director Jessica Marlow said. “And it’s pretty much anything in those outer years at this point, those are not going to get done because these other projects that were in year one, two, three have increased and are going to take more of those funds.”  

Costs were projected to increase over time. For example, the bond ask originally was going to be a $465 million bond for the 2020 ballot, but when the COVID-19 pandemic hit, the town elected to postpone going to voters that year.  

The delay had risks, including creating a lull in the town’s construction activity as previous bond money ran dry. But also it meant going to voters with the package having grown $50 million in a year’s time. Voters narrowly approved it.  

Recent work on the intersection of Elliot and Cooper roads is a sign projects are coming back now. (Independent Newsmedia/Tom Blodgett) 

Independent Newsmedia/Tom Blodgett

But cost escalation figured into the new total turned out to be woefully short of what happened in the marketplace.  

When council members at the Oct. 24 meeting asked about cost increases associated with the Ocotillo Road widening project, Assistant Town Engineer Susanna Struble said rising costs were everywhere.  

“That really is what we’re seeing throughout the industry right now on almost every one of our CIP projects,” Struble said. “We have sat on several panels along with other adjacent communities throughout the state, as well as just immediately here in the East Valley that have also basically indicated they’re seeing very, very similar in these cost increases.”  

Struble said those increases have been somewhere between 30% to 45% during the past one to two years, and Marlow said they have even run as high as 60%.  

At that meeting, Councilmember Scott Anderson said it is not just money, but time that has been a problem, and that delays only lead to additional costs.  

Indeed, Struble told council construction for the Ocotillo Road widening, which originally was thought to take about a year and a half, now figures to be on a three-year timeline. 

A presentation at the town’s strategic retreat for staff and council showed that Gilbert’s originally planned capital improvement projects for fiscal year 2024-25 would be more than $153 million, money that the town’s general fund does not have. Staff pared the list to fewer than $30 million, but it will be up to council on what direction to take with it.  

It is not just construction in which the town is seeing delays, either, as fleet procurement for items like waste trucks or fire trucks has been hampered, officials said.  

In the end, the town is going to have to look for more money to continue doing projects, and that could mean going back to voters on another bond package sooner than officials had anticipated.  

Priority projects  

Two of the biggest projects on the town’s plate are examples of the problems.  

The North Water Treatment Plant is currently the largest municipal capital project in the state. It is one Gilbert officials have repeatedly stressed as vital not only to handle future town growth but also to better handle the increasingly poor quality of water coming into town.  

The initial cost estimate to rebuild and expand the plant was $457 million, but it ballooned to $575 million in June 2022. “Value engineering” trimmed $30 million off the price tag, but now the latest estimate has it at $677 million, Assistant Public Works Director Eric Braun said. 

The value engineering involves Jeanne Jensen’s project team coming together to look for cost solutions while still maintaining the timeline and quality standards, Struble said.  

“She’s the first one who basically brings everybody back in the room and says, ‘Let’s get together and let’s basically figure out how we’re going to make this soup taste as well as it should and what it needs to do,’” Struble said. “’Get rid of the extra salt or the extra whatever that needs to happen there in order for that to stay really well. And it has paid us dividends.”  

The town’s twin projects to complete Ocotillo Road from Higley to Greenfield roads and widen Ocotillo from Greenfield to 148th Street have seen inflation drive up costs. (Independent Newsmedia/Tom Blodgett) 

Independent Newsmedia/Tom Blodgett

Similarly, the Ocotillo Road completion between Higley and Greenfield roads, which includes a bridge over the wash in Gilbert Regional Park, has grown from an estimated $62 million in 2020 to more than $111 million today, according to town documents.  

Again, the town has looked for ways to save money on it, including integrating the bridge’s aesthetics into the structural design, Marlow said  

“The aesthetic components of it were completely separate from the bridge itself,” she said. “And so they were able to say, ‘Well, hey, what if we actually make those structural as part of the design? It’s saving cost because it’s integrating it into the design of the structure of the bridge. So instead of having it be kind of like a bolt-on after the fact, they modify the design to make it, to incorporate this.”  

The savings were several million dollars, Marlow said.  

Fleet issues  

Some items such as electrical equipment now require long lead times that delay projects. Fiber always had a long lead time, and now the wait is three times longer than it used to be, Struble said.  

But inflation and supply chain-related delays are not limited to road construction. Long delays in acquiring vehicles for the town’s fleet and higher costs also are inhibiting operations.  

“We’re having to look at how we plan for those purchases,” Marlow said. “We usually just look a year ahead and so are we going to have to look further ahead so that we’re ordering earlier so that we know that we can get ‘em.”  

In fact, it now can take four years to get a fire truck on order. And the town had not even been able to place an order for a solid waste truck for two years, Marlow said.  

It was able to receive one new vehicle recently because another municipality canceled an order. But the truck is diesel while the rest of the fleet uses compressed natural gas.  

The difficulty in replacement is part of the reason why the town aggressively put the word out during the past year on what can be put in trash and recycling bins. A series of truck fires threatened the viability of trucks in the fleet at a time when the town is trying to extend the vehicles’ lives because of the delays.  

“We were doing a really good job for many, many years in keeping them replaced on their cycle,” Marlow said. “And with these challenges the last couple of years, they’ve all started to age out. So we started trying to do just rebuilds and refurbishments.”  

That involves taking the trucks to vendors to rebuild, for example, the hydraulics on the body or the packer that smashes the trash, but it has been with limited success.  

“It’s extending the useful life a little bit, but it’s a struggle,” Marlow said. “Twice this year we had to notify certain neighborhoods that we were going to be a day late and picking their trash up. We didn’t have enough trucks.”  

Additional funds  

From a resident standpoint, the delays and the increased costs are going to be a pocketbook issue for all.  

It may come in the form of higher town utility bills but also another bond package.  

“We’re just going to run out of money sooner and may have to ask for more money earlier than we had originally intended,” Marlow said.  

It comes at a time when Gilbert is working to balance its infrastructure needs with pressure coming from two ends.  

One is the town is still growing, with build-out expected in the early 2030s. The other comes from the town’s growth spurt starting in the mid-1980s going into the 1990s and beyond. A town of 29,805 people in 1990 has become one of more than 275,000 today.  

That  growth meant a lot of infrastructure was slammed into place 35-40 years ago and is now reaching the end of its useful life.  

“We are kind of in this tipping point of still growing and having to put new infrastructure in, but definitely having to look a lot harder at reinvesting and replacing the infrastructure that’s aging out so that we can continue to provide those reliable services to all the residents and businesses in the town as well,” she said. “And that is a national challenge.”  

Marlow said she knows it is difficult to ask people for money for those services during an inflationary period, but she hopes people understand what is at stake.  

“We’re trying to keep Gilbert a safe and wonderful community to live in, and it is up to them to decide what their priorities are and what they’re going to support,” she said. “But just know that everything we’re doing and asking for is in the best interest of the community to continue to support growth and provide the amenities and the quality of life that our residents expect and deserve.”  

We would like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions. Tom Blodgett can be reached by email at tblodgett@iniusa.org or follow him @sp_blodgett on X. 

Tom Blodgett
Senior News Editor | Gilbert

tblodgett@iniusa.org

Meet Tom
Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.

Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.

Education: Arizona State University with a BS in Journalism. 

Random Fact: He lived in Belgium during his freshman year of high school.  

Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).