By JESSICA HOCH

Staff Writer

The city has overcome another obstacle in its efforts to begin the controversial Winslow Way reconstruction project after getting word from the Washington State Department of Transportation (WSDOT) last week that the city cleared the environmental assessment needed to release the state and federal grant funds for the project.

Construction could begin as early as March 2011.

The project will replace and improve the deteriorating parts of sidewalks, gutters and the utility infrastructure on Winslow Way. The project’s need was identified decades ago and was initiated a few years ago before being delayed by funding and environmental issues.

In order to continue with the project, the city needed to secure the grant funding from both the Federal Highway Administration and Washington State Department of Transportation. Those funds couldn’t be released until the National Environmental Policy Act (NEPA), the agency that performs environmental assessments, cleared the city’s application.

As of last week, according to city Deputy Director of Planning Chris Wierzbicki, the city has NEPA approval and WSDOT sent a recommendation to the Federal Highway Administration for it to approve the city’s application. The city still needs to wait for the official rubber stamp of approval from the highway administration, Wierzbicki said, which he expects to receive in two weeks.

Wierzbicki said the city should be able to begin the bid process in November and award a contract for the project by the end of January. The project is expected to last about seven months.

Despite the go-ahead with the grant funding, there are still lingering doubts as to how the city will cover their costs.

According to the estimated costs presented in April 2010, the total cost of the project is $5.6 million, with about $4 million coming from state and federal grants and $1 million from LID (local improvement district) funds.

With NEPA approval the state and federal funds are secured, but the city will still need to use a bond to access the LID funds. Due to the city’s poor financial standing and pending utility ratepayers lawsuit, securing a bond hasn’t been possible for recent projects.

In addition, island resident Melanie Keenan presented her concerns at Wednesday’s council meeting regarding the city’s potential inability to pay for a contaminated soil clean-up. In a 13-page memo sent to WSDOT, Keenan and Malcolm Gander, both licensed geologists and hydrogeologists in the state claim the city has underestimated the cost of the clean-up, and don’t have an adequate amount of contingency funds set aside to deal with the magnitude of the project.

Gander and Keenan estimated the cost of clean-up for three downtown sites that have been identified by state and federal officials as being contaminated – primarily by hydrocarbons. They include: the northeast corner of Winslow Way West and Madison Avenue North; the west side of the State Route 305 and Winslow Way intersection, including the former UNOCAL gas station site on the south side and dry-cleaning and wrecking yard operations on the north side; and the Bjune Outfall site, which isn’t included in the city’s clean-up estimates.

The report said the Bjune site should be included because it has confirmed contaminated soil and is in the path where water flows from known contaminated soils.

The memo offered two totals for cost estimates, one for lead contamination and another without it. Keenan told council that the site is at risk for leaded gasoline contamination, which requires more extensive and expensive handling, when considering the years the filling stations were in operation.

The memo concludes that even using conservative figures the city won’t have adequate funding if there is are unforeseen problems involving contaminated soils. Keenan said the project would cost an estimated $331,420 if it’s unleaded contamination and $548,102 for leaded contamination clean-up. The city has estimated a clean-up of the Unocal and Lundgren Landing would cost about $206,000.

Wiersbicki said city has approximately $322,000 allocated in a contingency fund for the entire scope of the project, $200,000 of which will be set aside for hazardous waste clean up. The Keenan/Gander memo estimated the city could overrun the $200,000 as well as the remaining $122,000 that makes up the property owner portion of the contingency funds.

“We need to make sure this project is done properly and addresses the lack of detail and omissions and errors in the application,” said Keenan. “The city needs to do a more thorough job.”

Wierzbicki also presented his best- and worst-case scenario in terms of how the city will cover the clean-up costs. He said that beyond the initial $200,000, the city does have other resources it can use for funding, if needed. He said the city can look to the salary reimbursement funds for another $200,000 and move to the utility contingent fund to add an additional $117,000, if necessary.

If additional money was still needed as the Keenan/Gander memo suggested, he said, the city could pay for it by using another $200,000 from the sewer fund – because that utility could be impacted – to total $717,000 to cover the costs. He assured the council that even with the worst-case scenario the city would be able to cover the costs.

Councilor Bill Knobloch said he is still concerned about the finances moving forward with the project.

“This is an extremely complex project and I’m concerned about how narrow the contingency fund is because it doesn’t allow for many glitches along the way,” said Knobloch.

Wierzbicki and council members also addressed the need to calm and address Winslow Way business owners who fear the financial impact on their bottom line during construction.