This article was published on: 09/21/11 12:00 AM

Steel pipe purchase a $4 million gamble

Published: September 21. 2011 4:00AM PST

The city of Bend’s latest money-saving venture could maroon Bend with a $4 million pile of steel to sell. The city hopes it can save $400,000 on the price of steel pipe for its Bridge Creek water project by paying $4 million now.

But there’s so much uncertainty about the project that buying steel is a high-stakes gamble.
The city is planning to upgrade its surface water supply. The project includes replacing the pipeline under existing roadways — Forest Road 4603 and Skyliners Road.

The city’s plan to buy steel does have merit. The price of steel has generally gone up, even in a sputtering economy. The Associated General Contractors of America reported last week that steel was down by 1 percent for the month and up by 14.3 percent for the year.

That doesn’t mean that steel will keep going up in price. What if steel prices dip instead of rise?

But there’s much more uncertainty than price estimates. When city councilors first discussed buying the steel in 2009, the city didn’t even know how much steel it would need. The city considered buying it anyway. Is the city certain it knows how much it needs now?

Designing and planning work is still being done on the project. What if the requirements change?

The biggest uncertainty is perhaps the special use permit the city needs from the U.S. Forest Service.

The Forest Service is doing an environmental analysis. The public should get its first look at the analysis in December. There will be a 45-day comment period. The Forest Service will then issue its decision.

The Forest Service is reviewing the damage that may be done by construction, such as taking out trees. Because the pipe would mostly go under roads, that may not be much of an issue.

The Forest Service is also analyzing and modeling the cumulative effects on Tumalo Creek of the pipe running at maximum capacity. What will that do to things like water temperature and turbidity, and to fish? Are there any endangered species? Would they be negatively affected?

Rod Bonacker, special projects coordinator for the Deschutes and Ochoco national forests, said this week if he had to make a decision now, he has not found anything yet to suggest that the Forest Service would not issue a permit.

That’s now. Much work needs to be done, such as looking for endangered bull trout.

The Forest Service could still deny the permit. It could decide to approve the project but insist that Bend alter its plans, requiring more engineering and new pipe specifications.

Even if the Forest Service OKs the project, its decision can be appealed. An appeal would first go through a process within the Forest Service. An appeal could also end up in court.

City staff may be confident that steel prices will continue to rise, the project will go through and the project’s opponents will lose appeals. We’d argue it’s much more certain that the project’s outcome is uncertain.

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