Fiscal Analysis

DOC-Riverside Power Plant

Project Cost Increase

Bill/Sponsor

SCR 28, Senator S. Johnson

House Committee

Appropriations

Analysis

Summary

The FY 2003-04 Capital Outlay budget act contained cost and construction authorizations to replace the 40+ year old coal fired power plant at the Riverside Correctional Facility with a new automated gas fired plant.  The authorized cost was established at $3,000,000 to be financed almost entirely from State Building Authority bonds.  The project was authorized not only because of environmental concerns, but also due to projected operational savings of nearly $500,000 per year.

Construction bids from 3 contractors were opened in July and all came in substantially higher than the total cost authorization.  The Department of Corrections is requesting a revised total project cost of $4,500,000.  This is mostly the result of a lower, inaccurate original cost authorization and inflationary increases.

The Joint Capital Outlay Subcommittee (JCOS) approved this resolution, with recommendation.  The Department of Management and Budget also recommends approval.

State Fiscal Impact

The State Building Authority will finance the cost increase.  The increased annual General Fund payments to the SBA after the long-term bonds have been issued range from an estimated $135,000 to $165,000.

Local Fiscal Impact

None

Riverside Correctional Facility Power Plant Automation Project

Current Authorizations

Requested

Change

Revised

Authorizations

StateBuilding Authority

$2,999,900

$1,500,000

$4,499,900

State GF/GP

100

0

100

Totals

$3,000,000

$1,500,000

$4,500,000

Analyst(s)

Al Valenzio

Mitchell Bean, Director - House Fiscal Agency

124 N. Capitol Avenue, Lansing, MI 48909

 Phone: (517)373-8080, Fax: (517)373-5874

 http://www.house.mi.gov/hfa