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The expected cost to cover and seismically secure city water stored at Washington Park has ballooned as a result of a tight construction market and shortages of labor and materials.

The Portland City Council on Wednesday agreed to a guaranteed maximum construction price of $152 million, and accepted a contract with Hoffman Construction.

The estimated price of construction has risen by $12 million and the overall price has increased by $20 million to $190 million since the project previously went before the council in September 2015, when designs were 90 percent complete. The water bureau’s lead engineer, Teresa Elliott, said the construction market has changed as the project team has hammered out final details.

鈥淲e’ve had to adjust our prices for labor and materials escalation,鈥� she told the council. 鈥淎nd we’ve added some contingencies so we don’t have to come back to you.鈥�

Elliott said the project team is on track to meet federal compliance dates, including a July 1 deadline to begin construction. Work burying and fortifying Reservoir 3 is to be completed by 2019. Work on the now-disused Reservoir 4 is to conclude by 2020, and the overall project is to wrap up by 2024.

Wednesday’s hearing also included discussion of the city’s lofty equity goals for the project. Hoffman, which performed preconstruction services for the project, helped convince a five-member selection committee that it was serious about meeting diversity targets by identifying DMWESB (disadvantaged, minority-owned, women-owned or emerging small business) subcontractors it intended to work with. Five of them 鈥� O’Neill Electric, F.M. Burch & Associates, PLI Systems, Star Construction Services and IQ Traffic Services 鈥� already make up 26 percent of the subcontracting goal.

The city will employ the Community Benefits Plan for the project to disburse subcontracts set aside for DMWESBs. Similar to 鈥淐ommunity Benefits Agreements,鈥� CBPs contain guarantees that project developers make to various interested parties. The water bureau tested the efficacy of CBPs as a way of boosting minority participation in a pilot program involving two recent projects 鈥� the new Kelly Butte Reservoir and the Interstate maintenance facility renovation.

Water Bureau Director Michael Stuhr acknowledged that with CBPs there is potential for conflicts of interests. But he said all players for the Washington Park Reservoir project will sign pledges to avoid them, and city staff will oversee the process.

鈥淭he actual choice to disburse city funds will be made by city employees,鈥� Stuhr said.

Approximately $1.1 million will be disbursed through the CBP, with up to 75 percent going to workforce training and support, and 25 percent going to DMWESB subcontractors. Approval of the CBP will require a second reading by the council.