Despite an $18 million shortfall, the Montana Department of Transportation says the Shiloh Road project is on schedule and construction should begin next year.

But local officials and landowners along Shiloh Road are worried as they see deadlines approach and gaping holes in funding sources. What started out as a $7.3 million project in 1999 has grown to almost $50 million in 2008. Besides funding, issues still to be resolved include whether to build tall sound barriers, landscaping costs and what materials will be used to build traffic roundabouts.

With the Shiloh corridor promising to become the state's next big commercial area, businesses aren't waiting for the road. Sparks fly from welding torches and heavy earth movers scrape land at the future home of Kohl's department store on Shiloh near King Avenue West. "For sale" signs are staked in fields along the road and new construction is revving up.

About a dozen landowners are still negotiating with the MDT on right-of-way acquisition, the most pressing phase of the project now. According to the MDT, finishing the right-of-way phase by August and getting access to the land will allow utility work to begin in the fall. Final project designs are expected by the end of the year; construction is expected to begin sometime next year. It's supposed to be completed in 2010.

But cost increases and frustration with the slow pace of the project have prompted some local officials to suggest that the project be built in phases or segments, perhaps one mile at a time. Others don't think the state can deliver the project on time.

"My personal feeling is, can they make the schedule? No," said Ward 4 Councilman Ed Ulledalen. "(The MDT) think they're on a great schedule. They think they're doing a great job and when the city asks them a question, they're aghast."

MDT Director Jim Lynch contends that the agency's process is working smoothly and the current focus of the project, right-of-way acquisitions, is almost complete.

"I think we've got a mechanism in place to deliver the whole project," Lynch said. "But that doesn't mean it can't be phased."

Yellowstone County Commissioner Bill Kennedy said building the road in segments could upset landowners and affect land prices as improvements are made.

"It needs to be done at once because you can't piece it out," Kennedy said. "The project is realistic as long as we can acquire easements by August. If we can't, then that pushes us back. We need to get it done by August this year or we're going to out price the project."

The funding gap has grown each year - including nearly $10 million in the past year alone - because the project has grown in size and land prices have increased in anticipation of new development. Add to that increased materials costs and inflation, and you have an $18 million gap, said MDT information officer Charity Watt Levis.

The money already set aside for the project is a mixture of federal and state dollars. Of the $29 million committed, $14 million comes from the state and $15 million comes from various federal appropriations and programs.

To address the funding shortfall, Sen. Max Baucus, D-Mont., is expected to move $7 million in federal money from a Zimmerman Trail proposal to Shiloh Road. The money for Zimmerman was secured in 2005 by then-U.S. Sen. Conrad Burns and would have been used to widen the road from Highway 3 to Rimrock Road. With that project essentially dead, Baucus said he'll move the money to Shiloh Road in a highway bill to be taken up in Congress this month. Finding the rest of the money will likely rely on future congressional appropriations.

The construction project will rebuild 4.5 miles of Shiloh from Zoo Drive to Poly Drive. The road will be four lanes wide with sidewalks and bike paths and will have roundabouts at eight major intersections: Zoo Drive, Hesper Road, King Avenue West, Monad Road, Central Avenue, Broadwater Avenue, Grand Avenue and at the JTL Group complex.

The state will seek bids for both asphalt and concrete roundabouts. Concrete costs about $250,000 more than asphalt for each roundabout, but concrete lasts longer and requires less maintenance.

The MDT has made deals with nearly 100 landowners on Shiloh Road, and only a dozen or so remain. But those remaining landowners may be the most difficult. At an April 28 stakeholder meeting, Lynch hinted at the gulf that exists between the state and the landowners, some of whom were in the room as Lynch spoke on camera from Helena.

"There are a few property owners not even in the same county as far as property values go," he said. The MDT declined to identify the landowners who have yet to settle with the state.

Charlie Yegen, whose family owns about 12 percent of the land that the state acquired, said his family may build a pedestrian underpass to accommodate walkers. The Yegen family owns land for a half-mile on both sides of the road between Grand Avenue and Broadwater Avenue, making the Yegens one of the largest landowners. The family recently reached a deal with the MDT.

"Sometimes people have a notion of value that may be different than what the state has in mind," Yegen said. "If there's a big difference in the consideration of value, it takes a number of meetings, and that takes time. The big concern is whether or not there's going to be adequate funding to do the entire roadway. I understand that there's a moving target out there, but it's just kind of curious that it's costing so much."

Other major landowners include St. Vincent Healthcare and Shiloh Crossing Partners LLC, the company that is developing the Kohl's store. Dave Irion, executive director of the St. Vincent Healthcare Foundation, said St. Vincent donated almost 50,000 square feet of right-of-way access to help spur the project.

"It's important for the community. The longer we wait, the more expensive the construction costs get," he said. "It's an important community asset that's essentially sitting there waiting for action."

Other landowners along Shiloh Road, like Shiloh Crossing Partners and the Reger family, declined to comment, saying that they were in discussions with the state to sell their property. Officials said most of the landowners who have yet to settle with the state are at the south end of the project. MDT officials have said that condemnation wouldn't be used to acquire land, but Lynch recently said that the Shiloh Road project would be no different from any other project in which condemnation can be used.

Kirk Spalding is the Shiloh Road project manager at Engineering Inc., the Billings firm that is handling the design of the new road. He said the state may build sound barriers at three or four locations along the road. Federal regulations require that noise problems be addressed on projects that involve federal funds. The cost of a sound wall depends on the number of houses affected and the level of roadway sound that is blocked from the homes.

The walls are 10 to 11 feet high and could extend 500 feet at the Fox Run townhomes, 2,000 feet near the Shiloh Village mobile home park, 1,000 feet along the northern part of the Olympic subdivision and 500 feet near the Ponderosa townhomes.

"We're currently doing some detailed analysis on whether sound walls will be implemented on this project," Spalding said. "We're going to have to go back to the landowners to see what they want. If they want noise walls, then we'll probably implement them."

Spalding said his staff is still waiting for landscaping direction from the various agencies involved in the project. While the MDT is responsible for the construction, the city of Billings will maintain the landscaping and sound walls. Project estimates put the landscaping bill at more than $1 million, but the city may try to encourage landowners to do some of their own landscaping.

"Noise walls and landscaping add a lot to the project cost," he said. "I hope and pray that they can build this project in one fell swoop."