Converting Fred’s, WIC buildings for city use may cost $5.4 million

The apparent low bid to turn two downtown buildings into a municipal complex is $5,456,000. It’s $3,194,000 if only the minimum scope of work is done.

The question is how to come up with a cost that is about double what was anticipated more than a year ago without raising taxes.

The bids were opened this past Tuesday following several months of efforts to simplify the design. City officials wanted to reduce costs as much as they could without significantly sacrificing quality or usability.

The project involves converting the former Fred’s building into space for the light, gas and water and police departments. The nearby former WIC nutrition program building is to become the municipal court building including a courtroom that can be used for city board meetings.

Some background

The city has needed new quarters for some departments for several years, looking for possible sites and designs.

When the Fred’s building became available, it appeared that might be a good solution.

Following the Fred’s bankruptcy process, the light, gas and water department was able to buy the building from someone who purchased several of the Fred’s buildings at the same time.

The purchase price was $600,000, slightly less than the appraised value. A little later, city officials learned that the WIC nutrition center on Carter Avenue was closing and that the owner, Journal Inc. of Tupelo, was offering it to the city for sale. That building, which adjoins the Fred’s property, was purchased for $289,000.

Technically, the buildings were purchased by the light, gas and water department rather than the city. A $13.5 million bond issue by the utility would include $3 million to be used for purchase, renovation and other purposes, to be repaid through utility user fees.

Renovation planning begins

Light, Gas and Water General Manager Bill Mattox said New Albany native and architect Ross Barkley approached city officials offering help and even presented some concept drawings after the purchase was publicized. Aldermen accepted the informal help, Mayor Tim Kent said, and later chose Barkley’s firm, Eley Barkley Dale of Oxford, from among those who presented qualifications for the project contract.

Then the COVID-19 pandemic hit, causing material, transportation and manpower problems. That led to delays and a dramatic increase in construction costs.

What was planned as a $2.4 million project was now going to cost twice as much, or more.

Dealing with pandemic effects

City officials worked with architects to pare down the project specifications as much as they could.

Also, the project was broken down into smaller parts. Due to funding limits, breaking the project into one base bid plus four alternates would allow the city to do as much of the work, prioritized, as could be afforded in hopes of adding other bid alternates later.

The base bid includes the exterior work on the Fred’s building plus the interior front half of the building designated for the light, gas and water department (which, technically, is paying for everything so they get first choice).

Bid alternate one adds completing the police department in the back half of the building. Bid alternate two includes exterior work on the WIC building and alternate three completes work on the WIC building turning it into a municipal courtroom.

Alternate four, added later, would actually reduce the cost by using a less expensive treatment for the roof line on the Fred’s building.

The bids

Here are the base bids, along with the totals including all four alternates:

Company                                      Base bid          Base plus alternates

Construction Services of Meridian     $3,249,000      $5,728,100

Hooker Construction of Thaxton       $3,800,000      $5,456,000

Roberts Construction of Ripley         $3,194,000      $5,792,000

Flagstar of Brandon                         $3,323,390      $5,895,020

Benchmark of Jackson                     $3,470,000      $6,502,000

Add to that the architect’s fee, which includes seven percent of the completed project, according to city officials. So far, $130,000 of the eventual total has been paid.

Hooker Construction Company appears to have the low bid for all parts of the project, Roberts Construction Company of Ripley if only the base bid is chosen. Of course all the numbers have to be verified and the bids checked to make sure they meet specifications.

A contractor cannot build one of the alternates without winning the base bid and the alternates must be constructed in numerical sequence.

The reality

Mattox said the bids were more or less in line with what they were told to expect.

A rough architect’s guess was that the building work would cost $4 million and furniture and related items would add $200,000 to $300,000, meaning the total would probably end up closer to $5 million.

“The pandemic did leave a mark on this,” Mattox said of the bid totals. “I don’t know if it was $1 million or what.”

Nine major contractors had shown interest in the project and officials expected more of them to bid than did so.

As to why more did not bid, “I think people were scared of it,” one of the contractor’s representatives present at the bid opening speculated. He added that subcontractors were asking for advice because they “didn’t know how to bid it,” and were having trouble separating one alternate from another. “It’s a big gamble with all that much money,” he said.

Ultimately, the bids were fairly close to the same totals overall.

What’s next

Whichever bid is determined to be best, the city will still face some difficult options.

One is that they can accept the low base bid, plus any or all of the four bid alternates.

Two, the city may reject all bids and decide to re-advertise the project as is, hoping for better prices.

Three, the city can further reduce the scope of the work and rebid, hoping for reduced cost. Although downsizing has already been done, Mattox thought there were still areas where savings could be found.

Four, the city can even essentially throw out the design, all work that has been done, and start the project over from scratch.

At least there is a little leeway concerning the cost other than rejecting the bids.

“The architect can negotiate with the low bidder, up to a 10-percent reduction,” Mattox said. That could theoretically reduce the cost by more than one half million dollars.

Also, once the police department section is done, the light, gas and water department can recoup some of its cost by essentially charging the police department rent. That would help offset the price increase.

The decision will be up to aldermen in conjunction with Mattox and the mayor and should be made in the next week or so, Mattox said.

The challenge then is paying for the needed project without raising taxes and city officials say they are working on that now.

See related story:

https://newalbanyunionco.com/architect-ascent-for-bids/