Friday, August 12, 2022

NCDOT’s local division $242 million short on projects through 2033

Construction off the I-140 Wilmington Bypass to connect the ongoing Military Cutoff Extension Project to the future Hampstead Bypass. (Port City Daily/Mark Darrough)
Construction off the I-140 Wilmington Bypass to connect the ongoing Military Cutoff Extension Project to the future Hampstead Bypass. (Port City Daily/Mark Darrough)

Update: This article has been updated to correct the counties located within division three. It has also been updated to include both committed and non-committed projects, rather than focus mainly on committed projects.

WILMINGTON –– The North Carolina Department of Transportation has an estimated $3 billion cost overrun for committed and noncommitted projects statewide between 2024 and 2033.

Encompassing New Hanover and Brunswick counties, NCDOT division three is short by $242.2 million, including Brunswick, Pender, New Hanover, Duplin, Sampson, and Onslow counties for identified roadway needs. Each of NCDOT’s fourteen divisions is allotted $506 million for the 10-year planning timeframe. 

RELATED: An ill-fated precedent: WMPO board rejects toll bridge proposal

Funding gaps in division three are on par with exceedances in other divisions, which average $241 million across the state.

Surprisingly, the department’s shoddy record of managing its finances isn’t (necessarily) to blame: rising construction costs are. Appreciation in construction materials, namely diesel fuel, steel, and asphalt, has resulted in actual costs exceeding outdated estimates. 

“I’ve seen projects that’s come in 100 or something percent over,” Chad Kimes, division three engineer told the Wilmington Metropolitan Planning Organization at its Wednesday meeting. “I’ve seen projects that’s come in 30% over.”

The discrepancy boils down to how the department structures its planned projects via its State Transportation Improvement Program (STIP), released every two years. “When you really start looking at it, it’s really based on when [the projects] were put in the prioritization. The older they were, the more expensive, on average, they were coming.”

“We’re not here to panic,” Kimes told the regional board. “We’ve got plenty of time.”

Cost hikes

Earlier this month, the state Board of Transportation voted to halt the latest STIP, which includes projects slated for funding between 2022 and 2033. The freeze was prompted by a department-wide need to reassess funded projects amid soaring construction costs. 

Downwind, NCDOT officials say the halt will not cause further delays of projects already included in the current STIP, shared last year covering 2020 through 2029. 

Local planning organizations, like WMPO, have heavy-handed input in what projects end up on each STIP, but ultimately, NCDOT has final say-so. Local transportation projects have three potential funding pots: statewide mobility dollars (an uber-competitive pool), regional impact, and division-allotted funds (which are in theory, guaranteed). 

But making the coveted list doesn’t mean the project will come to fruition. STIPs include both committed and non-committed projects –– a practice the state transportation board is looking at changing, considering the inclusion of only committed projects. 

Committed projects encompass items that NCDOT has committed to seeing through that won’t have to recompete with other projects during the STIP process. Non-committed projects may have funding set for certain aspects of the project (like planning) but remain in the competition phase of the STIP in future years.

To combat the cost overruns, Kimes told the WMPO board the department is undertaking a systematic “value engineering” effort for more than 450 planned projects statewide. The six-to-eight-month process involves engineers revisiting projects and coming up with cost-saving line items. 

For example, on the $152 million Hampstead Bypass currently under construction, downsizing 23-foot medians to 17-feet wide could reduce the department’s right-of-way acquisition expenses: “You still get what you want but you’re reducing the costs,” Kimes explained.

After that process wraps, the WMPO board can then revisit shifting projects around on the STIP, potentially moving up higher priority items. “This is DOT being proactive, doing this before we get to the point where we say we can’t let because we don’t have the money,” he said.

Of note, replacing the Cape Fear Memorial Bridge remains a non-committed project. “[J]ust pointing that out, there’s nothing on that list for decades in terms of a bridge,” WMPO board member Landon Zimmer said. “That’s just interesting seeing that after our previous discussions.”

The WMPO board voted 7-5 last month to reject a private proposal to toll and replace the bridge while department officials assert there’s no likelihood of getting it funded in the upcoming 10-year prioritization cycle. 

Plagued by a cash-flow crisis in recent years, Kimes insisted the department’s latest money problems weren’t triggered internally. NCDOT’s once-depleted fund balance is sitting at a healthy $2 billion, having recovered over the past year after dipping below its statutory cash floor. Lagging federal storm recovery reimbursements and a cascade of losses from Map Act cases accelerated NCDOT’s financial slump in 2019 and 2020. 

“That’s in the past,” Kimes said. 

Now, the department has an arguably even more challenging hurdle to overcome: the N.C. General Assembly. Revenues are derived from gas tax, highway use tax (3% of all vehicle purchases), and DMV fees. “The revenues are not catching up to our needs,” Kimes said. “That’s all this is about.” 

More revenues, no solution

Zimmer, who serves a dual role as both a state Board of Transportation and WMPO member, told the local board that while discussions to summon more revenues are taking place in Raleigh, an actionable solution is several years out. 

Wilmington city councilman Neil Anderson, who has previously aired criticisms of the legislature on the topic, implored whether the WMPO was wasting time workshopping the concept. He also wondered if it was “political suicide” for lawmakers to codify new revenues, which inevitably means raising taxes or fees somewhere. 

“I don’t see a change any time soon,” Zimmer said. “We’re going up every year in income, it’s just not keeping up with the increase in vehicular miles traveled or necessary roads we need.”

“Landon, are you saying just accept it? It is what it is?”


After a deep pause, Anderson said, “So then we don’t need to talk about it.”

New Hanover County Commissioner Jonathan Barfield Jr. chimed in with an optimistic perspective, having been inspired on a trip to Oregon alongside the state association of county commissioners and witnessing innovative transportation funding strategies. “It may be a long shot but it starts with having a conversation first as opposed to not thinking it’s going to happen and never having a conversation,” Barfield said. 

Zimmer explained he was just trying to be realistic. 

“I wish it could change in a year,” he said. “But you know how things move in politics, you know election years –– is a break-even tax going to be done by politicians? What do you think? 

There’s no urgency yet.”

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