Council ponders center's future.
The wrecking balls have been swung. The archeological sites have been excavated. Now the fate of the barren lot formerly known as the Sweeney Convention Center rests in the hands of city government.
The City Council is expected to decide at its July 26 meeting to accept or reject a $55.9 million bid from Hensel Phelps Construction that will either clear the way for the long-awaited new
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convention center or potentially delay construction by re-opening the bidding process. Councilors on the city's Public Works Committee indicated, at its July 24 meeting, an inclination to re-open the bidding process.
As reported last week by other media outlets, the Hensel Phelps bid is well over the $42 million originally budgeted for the project. To be exact, $13.997 million, according to the city's community facilities manager Frank Archuleta.
Approving the bid will require the city to downsize the convention center and potentially jeopardize other city projects. Denying the bid will further delay an already costly project and risk future bids soaring ever higher.
How did the city arrive at this impasse? For starters, Hensel Phelps is the only company that submitted a bid for the project during the three-month bidding window that ended last month. Originally there were four bidders, but the other three dropped out.
Add soaring construction costs to the equation.
"In today's market, the [bid] increase isn't shocking to me," Gary Ehlert, executive officer of the Santa Fe Area Home Builders Association, says. "When my contractors are on the phone getting quotes for materials from a supplier, that quote is good only as long as the phone call lasts. Things are escalating that fast."
Ehlert says construction costs have risen by as much as 300 percent in the last year. Ehlert and Kathryn Raveling, the city's finance director, say the soaring prices have as much to do with an increased market for American construction materials in China as it does Katrina or Iraq.
"I think we got that triple whammy in trying to put out a bid in this climate," Raveling says. "It's a situation that we're seeing all over the country…"
City Councilor Karen Heldmeyer says it's also possible that the city-along with Red Mountain Engineers and 3D/I International, the firms the city hired to help create the original budget-may have been too conservative with its original estimate.
"Our estimate may have been incorrect," Heldmeyer says. "At this point we don't really know."
Archuleta and Public Works Director Robert Romero have recommended removing a level of underground parking to shave $6.5 million off the project's cost, but "that's not something that we want to pursue because one of the whole ideas about this project was that we were going to increase the amount of available parking downtown," Heldmeyer says.
Even if the parking level is removed, the city would still be $7.4 million short. The original $42 million was funded entirely through revenue generated by the city's lodger's tax. An additional $10 million capital-improvement bond to cover the additional costs has been proposed using gross receipts tax revenue. But if gross receipts fall short of estimates, the city would have to siphon funds from other capital-improvement projects to cover the cost.
If the Council votes to reject the bid, it will take at least 30 days to re-open the bidding process and cost the city thousands of dollars in additional resources. Which is why Ehlert, among others, favors approving the bid and breaking ground without further delay.
"We just simply need to get this thing up and going," Ehlert says. "The longer you stall this off, the more it's going to cost."
