Deepening Savannah’s port in order to accommodate larger vessels coming through the Panama Canal will cost 38 percent more and take two years longer to complete than initially expected, according to a key federal agency.
The U.S. Army Corps of Engineers estimated that ongoing work to deepen the harbor’s shipping channel from 42 to 47 feet will cost $973 million, or $267 million more than expected. It also said the project is now scheduled to be completed in January 2022.
The news is a major setback for a project that’s been in the works for more than a decade and has united Georgia politicians from both parties.
Gov. Nathan Deal’s office declined to comment.
A corps spokesman said the spike in price can be attributed to “recent increases in the cost of dredging, development of complex designs on unique features and a 24-month timeline extension.”
The spokesman said the two-year delay was in part to accommodate “measures that ensure contracts are awarded fairly and in keeping with the best value to the taxpayer.”
“As stewards of federal resources we are committed to taking extra steps in the award process to ensure small businesses and other disadvantaged competitors are fairly considered throughout the bidding process,” the corps stated in a fact sheet posted on its website. “This can increase project duration, especially when there are protests involved.”
Griff Lynch, the executive director of the Georgia Ports Authority, acknowledged that “we’re not happy about” the project delay. But in an interview Wednesday he repeatedly emphasized another corps statistic: that even with the cost overrun, the project’s return on investment would actually increase from $5.50 in economic benefits for every dollar spent to $7.30, mainly due to bigger ships being able to come to Savannah without having to wait for the tide.
“The payoff is actually better than it was,” he said.
U.S. Sen. Johnny Iskason, R-Ga., also touted the new projections.
“This project has the highest cost-to-benefit ratio of any harbor deepening project in the country,” he said in a statement. “We are committed to seeing this project to completion and will work with our federal partners and the state to ensure that the necessary funding is provided for an on-time completion.”
The corps spokesman said the federal government is likely to cover three-quarters of the overrun cost and the state 25 percent.
The state has already forked over its initial $266 million share of the cost — providing enough seed money for a pair of dredgers to begin scooping up mud in the Savannah River — but it will now likely need to find an additional $67 million.
Lynch said he was not concerned about the project losing support in Georgia.
“The state has been 100 percent behind us the whole way,” he said. “Governor Deal couldn’t have shown more support, and I know he still supports the project. It’s critical to the nation. It’s also important to Georgia.”
The federal government would be on the hook for roughly $200 million more.
Washington’s share of the money has been slow to come by. The Obama administration proposed allocating far less to the project than boosters had wanted, but proponents had been optimistic about securing roughly $90 million a year for the port deepening through 2020 — what had been viewed as enough to keep the project on track before Wednesday’s news. Backers now say that $100 million annually from the feds would be adequate.
Georgia’s congressional delegation will now be forced to fight for even more federal money in a political climate in which President Donald Trump has called for a reduction in nondefense spending. There has been some optimism that Trump’s proposal to inject $1 trillion into infrastructure projects could benefit the project.
“It took 17 years to get the original project approved because of bureaucratic delays,” said. U.S. Sen. David Perdue, R-Ga. “There’s no doubt Washington caused this cost estimate to increase too.
“We now have an outsider business guy in the White House who understands we need to get Washington moving at a business pace.”
News of the cost overrun was first reported by The Associated Press.
Project proponents have long said that deepening Savannah’s waterways would keep the port competitive with rivals on the East Coast and provide the state an economic boost.