Dan Horn

dhorn@enquirer.com

A massive project that was supposed to inject new life into South Fairmount is at least $13 million over budget and may need to be scaled back before construction work even begins, an auditor warned Wednesday.

The project, part of Hamilton County's $3 billion sewer overhaul, was pitched to residents as a combination of road work, urban renewal and sewer upgrades that would transform a stretch of Queen City Avenue into a thriving business and residential area.

The plan already has changed, however, when the city killed the road projects and trimmed other amenities. The latest setback comes from Dave Meyer, the monitor appointed to keep watch over the Metropolitan Sewer District's budget, and a team of auditors who are reviewing the sewer district's spending.

Meyer told county commissioners Wednesday that the district has burned through its $16.6 million contingency for the $244 million project and is now on track to finish the project about $13.5 million over its budget. Most of the spending so far has involved design work, the purchase of property in the construction area and other pre-construction costs.

County Commissioner Chris Monzel said he wants to meet with sewer district officials in the next few weeks to talk about Meyer's findings. "We have to keep costs under control," he said. "It's just too big of a project not to keep tabs on."

How did costs get out of hand before the most serious work begins? Meyer said the problem is rooted in the sewer district's accounting methods. He said district officials failed to count program management costs -- the cost of oversight -- into its budget estimates.

Late changes add $3 million to sewer repair cost

Meyer said district officials have been aware of the costs for more than a year and have refused to change their accounting methods, even though auditors asked them to so and even though, according to Meyer, MSD rules require them to do so.

"By not including these costs, MSD is not accurately reporting (project) spending," Meyer wrote in his report to commissioners.

Meyer's report recommends the commissioners order the sewer district to produce a "corrective action plan" that will include suggestions to bring down costs, including the possibility of trimming some aspects of the project.

"Because of the magnitude of this project, the corrective action plan should be submitted to the board very quickly so that additional over-spending stops," Meyer wrote.

The report sets up another potential dispute between the county, which owns the sewer district, and the city, which runs it, over how best to proceed with the court-ordered $3 billion overhaul of the county-wide sewer system. The two sides have bickered for years and even went to federal court in 2014, which ended with a judge declaring the county should be considered the owner of the district and the city its contractor.

City officials and many at MSD have argued that the county and the monitor are to blame for increased costs because the monitor's work has unnecessarily delayed projects and driven up expenses.

The South Fairmount project is the largest project to date in the overhaul. The work was supposed to create new roads, a creek called Lick Run, a pond, park space, walking areas and other amenities as part of revitalization of struggling South Fairmount.

Since it was first pitched a few years ago, however, the road projects were canceled, the pond has shrunk and a study found the creek would be dry more than 300 days a year.