Village of Saukville officials put to rest fears that the Highway 33 reconstruction projectwas in jeopardy Tuesday, approving a modified memorandum of understanding with the state Department of Transportation.

The key component in the agreement is that the state will pay for 30% of all right-of-way acquisition costs from Northwoods Road to the northbound I-43 ramps.

Under the revised agreement, the village would be responsible for 70% of the land acquisition costs.

Part of the village’s share could also be covered by two developers who had previously signed on to the project, Ansay Group and MRED.

In the previous agreement with the DOT, dating to March 2008, the village was to cover all the acquisition costs.

Village officials met in closed session three times during the past month, including at Tuesday’s meeting of the Finance Committee, to discuss options to reduce the financial burden related to the road project.

That economic sensitivity was heightened after officials reviewed a five-year borrowing plan prepared by the village’s financial advisers that noted the local share of the highway work would push officials beyond their self-imposed comfort level for borrowing.

After a closed session on negotiations last week with the DOT, Village President Barb Dickmann said there was concern that the expenses related to the highway reconstruction were getting out of control.

Those fears were fanned by comments from the DOT last year that right-of-way would cost more than expected to accommodate the roundabouts planned for Market Street and Northwoods Road.

DOT officials said those expenses would include not only the cost of the land needed for the circular intersections, but also the costs of the adjacent property owners whose use is affected by that loss of land.

For example, DOT officials said, if eliminating a section of a parking lot makes it necessary to relocate a door on a building, those costs would be charged to right-of-way acquisition.

According the current state estimates, right-of-way acquisition for the project is expected to cost $1.15 million, with another $200,000 for utility relocation.

The new agreement says the DOT would pay $405,000 of the $1.35 million total.

Also added to the memorandum of understanding is a provision that the village has the right to review all land appraisals “before any negotiations are commenced or any offer is presented to any property owner.”

Village Administrator Dawn Wagner said that assurance is important because the City of Port Washington is the lead agency on the project and the village had no review authority under the previous agreement.

Similarly, the village has the right to respond to offers made to any property owner within the village’s area of responsibility, from roughly I-43 to Jackson Road.

The DOT has also agreed to provide the village with invoices detailing all costs related to the project for which the village is responsible.

The village, however, will be responsible for the full cost of burying overhead utility lines.

As previously agreed, the DOT will pay all of the construction costs from I-43 to Northwoods Road, and the village will pay 25% of the construction cost from
Northwoods Road to Jackson Road.

Other responsibilities of the village remain unchanged in the agreement: as much as $65,000 to extend the east and westbound ramps of I-43; as much as $206,550 of the Market Street roundabout expenses; and $150,000 to rebuild the road from Market Street to Northwoods Road.

With the revised memorandum in place,  utility work and the installation of temporary traffic lanes are expected to be completed late this year. Bids for the road reconstruction will be let on Jan. 11, 2011, and work would start that spring.

The full project will stretch from Tower Drive in Port Washington to just west of Foster Street in the village.

With a projected cost of $15.3 million, the work involves replacing the two-lane road with a four-lane, divided highway, complete with turn lanes, curb and gutter, sidewalks, bike lanes and new lighting.