Dublin City Council members were surprised last week to hear about a budget shortfall in the BriHi Square project.

Dublin City Council members were surprised last week to hear about a budget shortfall in the BriHi Square project.

During council's meeting, staff gave an update on the 22,000-square-foot, two-building project that started in May at the corner of Bridge and High streets.

The mixed-use development, which is jointly funded by the city and the Stonehenge Co., was originally projected to cost $2.4-million. But Fred Hahn, director of parks and open space, told council that utility burial and other costs have added another $770,000.

"There's a shortfall in the existing budget compared to budget needs," Hahn said.

According to information given to council, the original estimate to bury utilities was $450,000, but it has since increased by $365,800 to $815,800 because the original estimate did not give "enough allowance for bed rock, the extent of existing underground utilities and the need to work around them, and regulations that required two vaults to be installed because of the size of required cables to service this area and beyond."

The water wall feature was given a price tag of $500,000 under the original plans, but that part of the project has increased by $314,675 because the architectural review board deemed the plans "not reflective of the needs of the historic district."

Another increase of $88,554 will come from upgrading "the currently planned concrete portions of the public plaza areas to brick pavers," the staff report said.

Council members were surprised by the increase.

"A shortfall of $770,000, this isn't like $5," Mayor Marilee Chinnici-Zuercher said.

Hahn said staff has come up with ways to cover the added costs: using the special assessment debt service fund; funds from the hotel-motel tax aimed at beautification of public property and the historic district; the delay of a payment to AEP for utility burial cost; and a few reductions in the BriHi project plans.

Council approved staff recommendations to make up the shortfall for project, which is expected to be finished this year. The development will include commercial office, restaurant and retail space.

In other news, council members heard the first reading of an economic development agreement that would result in a 40,000-square-foot expansion of Battelle's facilities at 5160 Blazer Parkway and the addition of 38 employees by 2012. The agreement also will keep Battelle at the site for 10 more years.

"We've been in discussions with Battelle for several weeks," city development director and deputy city manager Dana McDaniel told council.

The economic development agreement would give Battelle incentives through 2016.

According to the staff report given to council, Dublin will collect income tax withholdings from the company, but will give Battelle 25 percent of the withholdings in 2009 and 15 percent from 2010 to 2015.

The agreement also includes connectivity to Dublin's fiber-optic network. It will go before council for a second reading on Feb. 2.