Akron buys $65 million insurance policy for new $184 million sewer tunnel

Akron will pay $100,000 a year to insure the most expensive asset the city has ever owned -- a recently completed 27-foot tall, 6,240-foot long, $184.1 million sewer tunnel under downtown.

With construction, which took longer than expected, finally complete on the Ohio Canal Interceptor Tunnel, City Council's Budget and Finance Committee approved a proposal Monday afternoon to purchase $65 million in coverage with a $1 million deductible -- unprecedented amounts for any single city-owned asset.

"The idea is to insure against a very large, catastrophic event that would take the tunnel out of service and require tens of millions of dollars to repair," Akron Finance Director Steve Fricker told Council during its regular public meeting Monday, which was broadcast on YouTube.

Council was poised Monday night to allow the mayor to purchase the hefty insurance policy.

Mayor Dan Horrigan, who tuned into the meeting, said he's not aware of anything the city owns that isn't already insured. Sweeping policies cover all assets and workers against damage and injury.

But the tunnel is too big to squeeze into any of those plans.

"The reason why we are getting a separate policy is because of the unique nature of this asset that the city has built. It doesn't really fall under any of our existing policies due to the high value of the asset and its unique operation," Fricker said.

Illinois-based Kenny Construction Co. and Tokyo-based Obayashi Corp. teamed up to install the tunnel, which required a $12 million boring machine. During construction, a builder's at-risk policy insured against damages and accidents. That policy will lapse soon.

In the first year, the city will pay an annual premium of nearly $96,000 for the new tunnel insurance, which Fricker said would cover against erosion, earthquake damage, explosions and even flooding -- which he added was somewhat ironic since the tunnel was designed to handle flooding that causes sewage to mix with storm water and overflow into the Little Cuyahoga River. The tunnel and other sewer projects are part of $1.1 billion in repairs a federal judge, the U.S. and Ohio EPAs and the city of Akron agreed to in a court-ordered consent decree.

Horrigan said he's still negotiating another change to that agreement that would eliminate the need for a second, slightly smaller tunnel that would run the length of North Hill.

"Hopefully this is the first and only tunnel as work for a modification to that consent decree," Horrigan said.

Citing the delay in completing the OCIT tunnel project, federal Judge John Adams, who approved and is overseeing the consent decree, ordered Akron to hire an outside expert, at $550 an hour, to oversee the remaining projects. Adams later ordered that the expert get two assistants with all three salaries paid for by sewer customers in Akron.

In the Sixth Circuit Court of Appeals, the city is fighting the judge's order for expert oversight, which neither state nor federal EPA officials said was needed.

Reach reporter Doug Livingston at [email protected] or 330-996-3792.

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