CHARLESTON — Nearly 10 months after it was passed, the constitutional amendment allowing the state to take out bonds for road construction is allowing the state to fund billions in road construction, but not as inexpensively as officials hoped.

With higher oil costs and tariffs affecting the price of steel, the state says it’s prepared for higher road construction costs, and is working on ways to keep costs down. These higher costs are also affecting summer paving projects.

Paving West Virginia

In October 2017, 11 percent of West Virginia’s registered voters at that time came out to vote for the Roads to Prosperity Amendment of 2017. The amendment provides for the improvement and construction of roads in the state by the issuance of bonds not to exceed $1.6 billion. The amendment passed with 73 percent for it and 27 percent against.

Flash forward several months and the Roads to Prosperity program is starting to gain steam. There are already 225 smaller projects completed, according to the state Department of Transportation.

Grant Anticipation Revenue Vehicle (GARVEE) bonds for 2017 will fund 18 bridge replacements and 12 interstate pavement rehabilitation projects with $259 million in proceeds from the bonds. GARVEE bonds for 2018 will fund 19 bridge and 17 roadway projects with $90 million in proceeds

More than $193 million in proceeds from general obligations bonds for 2018 will fund or partially fund 10 projects across the state, from I-81 widening in the Eastern Panhandle, to Widening of I-64 in Cabell County. Just this week, the West Virginia Parkways Authority will use $172 million from the sale of bonds for major projects in southern West Virginia.

Altogether, West Virginia has $1.3 billion in the bank for road construction and rehabilitation projects. The state was also able to get the bonds at low interest, ranging from 2.15 percent for the 2017 GARVEE bonds, to 3.73 percent for the Parkways Authority bonds.

Expect the Unexpected

One of the projects being funded by 2018 general obligation bonds is bridge rehabilitation on I-70 in Ohio County. The original proposal included rehabilitation of 18 bridges on I-70, but the scope was expanded to add six additional bridges and pavement reconstruction.

Under the original project scope, transportation officials said the project would cost $175.5 million. The additional bridge projects sent the price to $201 million. The low bid for the project came in higher than that at $275 million.

In a wide-ranging press conference Friday in Charleston, DOT Secretary Tom Smith said they are aware of issues that could raise the price of construction projects.

“We’re fully committed to that entire program,” Smith said. “Our job is to manage the pluses and minuses to get there. Asphalt is one of the areas that is rising. We can actually turn and get other kinds of work, like focus more on grating work. We have the ability to move the type of work we’re doing to different things. In doing that, you can help those pluses and minuses.”

According to DOT data, over the last decade the price of asphalt peaked at $613 per ton in July 2012, falling to $309 per ton in July 2016 for state highway projects. But asphalt prices are on their way back up and climbing fast. Last July, the price of asphalt was $362 per ton, and this summer the price is $494 per ton.

Asphalt prices are also closely tied to crude oil prices, used in the asphalt manufacturing process. The price of West Texas crude oil as of July 25 was $69.34 per barrel compared to $47.89 a year earlier.

Another wrinkle for future road construction costs — particularly bridge building and rehabilitation — is the cost of steel. President Donald Trump placed a 25 percent tariff on imported steel. With increased demand and a limited supply while U.S. steel manufacturers ramp up production could cause more headaches as state transportation officials open more bids for other projects.

“People don’t understand how dynamic the world is that we live in,” Smith said. “Things change every day. We have to figure out how to take care of and make the good things happen. If there is something coming at us that is negative we have to find some way to mitigate it.”

One way transportation officials are mitigating potentially higher costs is getting projects under contract as quickly as possible. That way the prices are locked in.

Cities Being Mindful

While at a vastly smaller scale than state road projects, cities are also being mindful of the increased costs for their summer paving projects.

One of the first cities to see what higher paving costs look like was Parkersburg. The Parkersburg News and Sentinel reported in June that the low bid for their summer paving project came in at more than $600,000 than expect. The city budgeted $1.5 million and the low bid from West Virginia Paving was $2.17 million. Parkersburg paid $66 per ton in 2017, but now is paying $101.50 per ton.

Parkersburg is one of several cities — including Charleston, Beckley and Bluefield — suing West Virginia Paving for violating state anti-trust laws. The lawsuit accuses West Virginia Paving of hiking the price of asphalt by 40 percent and eating up smaller paving companies and asphalt manufacturers. The West Virginia Attorney General’s Office says the case is moving forward and discovery is ongoing.

“The state’s lawsuit against 11 asphalt and paving companies remains active,” said Curtis Johnson, press secretary for the West Virginia Attorney General’s Office. “The case has been transferred to the state’s Business Court Division with the parties agreeing trial should be set for 2019.”

The City of Wheeling has road paving projects out to bid currently and will open those bids Aug. 23. Public Works Director Rusty Jebbia said they’re expecting asphalt to be the driver behind any cost increase they might see.

“We are expecting an increase in cost this year because there has been an increase in liquid asphalt which is used to make the final product,” Jebbia said. “Last year our paving contract price was $75 per ton installed. There are a lot of variables to consider when looking at the actual paving numbers.”

Jebbia said Wheeling works with contractors to keep prices low, plus helps with areas, such as traffic control. But if bids come into high, that could affect how much paving happens.

“If we are a little low for funding, then we will reduce the number of streets on our list or if it isn’t too far off we get the additional funding,” Jebbia said.

One city that hasn’t experienced higher paving costs yet is the City of Martinsburg. City Manager Mark Baldwin said they didn’t see any increase in cost for a smaller paving project in May they used community development block grants to complete. But Martinsburg has a larger paving project out for bid.

“We are going out to bid in the next 30 days for a much larger street repaving project,” Baldwin said. “We’ve not opened those bids yet.”

When they do, they could face a similar speed bump.