Frustrated by rising costs and engineering uncertainties, Palo Alto officials agreed early Tuesday morning to relaunch the design process for what they still hope will be a showpiece bike bridge over U.S. Highway 101.

The City Council agreed to halt negotiations with Moffatt & Nichol, the design team that it chose in May to design the new overpass at Adobe Creek. The firm was one of three finalists in last year's design competition for the new overpass and while its submission — a slender, understated suspension bridge — finished second in the jury-selection process, it ended up winning over the council.

Since then, however, the negotiations between Public Works staff and Moffatt & Nichol have taken a turn for the worse, with the project's budget climbing from about $9 million at the time of the submission to about $12 million today.

Staff also believes, based on conversations with other engineers, that the costs for a one-of-a-kind suspension bridge will likely escalate further. And it didn't help that Moffatt & Nichol had requested that the city remove from its contract a standard provision that requires contractors to "value engineer" (remove extra expenditures to lower the project's cost) the project at their own expense, should the costs rise.

Representatives from the design team protested that the higher price tag is driven by the hot construction market and maintained that it is best equipped to deliver the project. But for city staff, the gap between the city and the contractor was too large to bridge. The council approved staff's proposal to reopen the design process by launching a request for proposals that would allow other firms to submit proposals within the prescribed budget.

Assistant City Manager Ed Shikada said the Public Works Department has been working hard to reinforce the project-manager mantra of "scope, schedule and budget." While re-launching the design process will delay things by a few months, Shikada said it would "reinforce the discipline this department is trying to convey."

"The difficulties in negotiating this project is a poster child for how things can go sideways if this culture is not reinforced at every opportunity," he said.

The council took little satisfaction with hitting the reset button for the bike bridge, which is one of the most ambitious and expensive projects in Palo Alto's new bike and pedestrian master plan.

Councilwoman Liz Kniss called the process "extraordinarily frustrating."

"It's just stunning that we could be going up like this," Kniss said. "And at this point we're talking about being done in 2019. That's a far cry from where we began this."

Mayor Karen Holman concurred and called the process "more than frustrating." Though the council was hoping for an "iconic" bridge, on Tuesday morning council members found themselves debating the merits of bridges in other communities and considering more standard options.

"The whole purpose of this was to get a nicely designed bridge but not something out of the can and looking like something someone else has," Holman said. "It doesn't have to be an absolute showpiece, but at least something we can be proud of in this community."

Yet the council unanimously agreed to approve the staff recommendation. Councilman Marc Berman pointed at the growing costs and said his "gut isn't feeling good about the situation."

"The city has been through some pretty difficult experiences over the past couple of years in building big civic projects," he said. "I'm not interested in entering into long-term agreements if they're starting off with a lack of trust."

Steven Grovner, an architect on the Moffatt & Nichol team, countered that the new figures include more than $2 million in "contingency costs," a figure that was not requested and not provided during the design competition. It is very important, he said, to apply a 20 to 25 percent contingency to the construction cost estimate to get to a construction budget. The earlier figure also didn't include the cost of construction management, a figure that is included in the new estimate, he added.

Grovner also told the council that the Moffatt & Nichol team has already invested close to 2,000 hours over more than a year in the selection and design process for the bridge. Its members have collectively designed more than 700 bridges in California, he said, and are "in the very best position" to work with city officials on obtaining grants and reducing costs through value engineering.

"We have a lot of experience in delivering projects like this," Grovner said. "Working with us is, simply put, the fastest way to deliver this project. We're just asking: Give us a budget target and let us get to work."

But the argument failed to sway the city's Public Works staff, who have been negotiating with the design team since spring.

Brad Eggleston, assistant director of Public Works, said that the new process will probably extend the timeline by three to six months. Staff's biggest concern, he said, is the "unknowns with design and the problems we might run into."

The council went along with the recommendation to relaunch the design process.

"Staff has got to execute this, not council," Councilman Eric Filseth said. "If staff feels we ought to do a reset, we ought to support them."