Það var verið að laga veginn niður að höfninni, svo við þurftum að ganga niður að höfninni.

This is a very common Icelandic way to talk about an ongoing action when the person doing it is not mentioned.

• það here is a dummy subject: it does not mean it in the normal sense.
• var verið að laga is an impersonal construction meaning something like there was work going on to repair / they were repairing / the road was being repaired.

So:

• Það var verið að laga veginn
  = The road was being repaired / They were repairing the road

English and Icelandic do this differently, so it is best not to translate it word for word.

It is close in meaning to an English passive like was being repaired, but grammatically it is not exactly the same as a regular passive.

A useful way to think of it is:

• vera að + infinitive = to be doing something
• það var verið að + infinitive = there was ongoing action of doing something, with no agent stated

So in practice:

• Það var verið að laga veginn
  means roughly The road was being repaired

But Icelandic is using an impersonal ongoing-action construction, not a simple direct equivalent of the English passive.

Verið is the non-finite form of vera (to be) used in compound verb forms.

In this sentence:

• var verið að laga

you can think of it as part of a layered verbal structure:

• vera að laga = to be repairing / to be fixing
• var verið að laga = was repairing / was being in the process of repairing

You do not need to analyze every layer every time you see it, but it helps to recognize verið að + infinitive as part of this common pattern.

Because að can do different jobs in Icelandic.

In this sentence, it appears in three different ways:

1. að laga
   Here að is the infinitive marker, like English to in to repair.

2. að höfninni
   Here að is a preposition meaning to / toward / up to.

3. að ganga
   Again, this is the infinitive marker after þurftum.

So even though the word looks the same, it is not always doing the same thing.

Veginn is the accusative singular definite form of vegur (road).

Why accusative? Because laga takes a direct object:

• laga veg = repair a road
• laga veginn = repair the road

Breakdown:

• vegur = nominative singular, road
• veg = accusative singular
• veginn = accusative singular definite, the road

So veginn is there because it is the thing being repaired.

Because the preposition að takes the dative.

So:

• að höfn is not correct here
• að höfninni is correct = to the harbor

Breakdown:

• höfn = harbor
• höfninni = the harbor in the dative singular

This is something you simply have to learn with the preposition:

• að + dative

It means down to the harbor.

It has two parts:

• niður = down
• að höfninni = to/toward the harbor

Together:

• niður að höfninni = down to the harbor

This can refer to literal downward movement, but it can also reflect how Icelandic often uses directional words in a natural, idiomatic way, especially with places like the sea, shore, or harbor.

Most naturally, it describes the road:

• veginn niður að höfninni
  = the road down to the harbor

So the sense is:

• They were repairing the road that goes down to the harbor

In the second clause:

• ganga niður að höfninni
  = walk down to the harbor

So the same phrase appears twice, but it connects to different things in each clause:

• first: the road
• second: the walking destination/path

Because þurfa is followed by að + infinitive.

So:

• þurfa að fara = need to go
• þurfa að ganga = need to walk
• þurftum að ganga = we had to walk

This is different from English must, which does not use to, but it is similar to English need to or have to.

Þurftum is the 1st person plural past tense of þurfa (to need / have to).

Because the subject is við (we), the verb must match it:

• ég þurfti = I had to
• við þurftum = we had to

So:

• við þurftum að ganga
  = we had to walk

Because ganga specifically means walk, while fara is more general: go / travel.

So:

• við þurftum að ganga = we had to walk
• við þurftum að fara = we had to go

Using ganga makes it clear that they had to continue on foot, probably because the road work prevented driving.

Here svo means so or therefore.

So the structure is:

• There was road work ..., so we had to walk ...

In other contexts, svo can also have other meanings, such as then, thus, or part of intensifying expressions, but here it simply links cause and result.

Because the phrase serves a purpose in both parts of the sentence, and repeating it is perfectly natural.

First clause:

• veginn niður að höfninni
  = the road down to the harbor

Second clause:

• ganga niður að höfninni
  = walk down to the harbor

English sometimes avoids repetition more aggressively, but Icelandic often repeats place phrases when they are relevant in each clause. Here the repetition sounds normal and clear.

Not very naturally.

A word-for-word approach would give something awkward like:

• It was being to repair the road ...

That is not how English expresses this idea.

A better learner strategy is to recognize the whole pattern:

• Það var verið að + infinitive + object

and understand it as:

• someone was doing X
• X was going on
• something was being done

So here:

• Það var verið að laga veginn
  is best understood as
  The road was being repaired / They were repairing the road