Home Brentwood Update: Council Approves Additional Funding for Brentwood Library

Update: Council Approves Additional Funding for Brentwood Library

by ECT

On Tuesday, the Brentwood City Council approved an increase of $1.3 million to help build a new downtown library in a 4-1 vote.

In September of 2015, the council approved a $12.2 million budget for the project with $7.9 million of the funding coming from Community Facilities District Bond Proceeds and financing of $4.3 Million. Staff now says costs have increased to $13.5 million.

According to the staff report:

Construction documents are almost complete and as the budget continues to be refined and pricing information is sought, it is evident that costs have escalated and continue to escalate. The $12.2 million project budget is not enough to adequately construct the library that has been proposed and approved.

Labor costs continue to rise 2.5% to 3.5% annually, and in this current economic climate, contractors are seeking to combat the ongoing shortage of skilled labor by being more strategic and selective with their projects. The Fourth Quarter 2015 Turner Building Cost Index (TBCI) –which measures costs in the non-residential building construction market in the United States –has had a 4.58% yearly increase from the Fourth Quarter 2014.The volume of work remains high -new construction is booming, contractors are busy and material costs and delivery lead times continue to rise.

According to TBCI, the high volume of work underway “continues to put upward pressure on skilled labor. As a result, contractors are being more selective in their pursuits, which has driven selective trade cost increases. There are also continued increases in material delivery lead times in response to market demands and limited availability of production and fabrication facilities. As market demands continue to grow, the lead time for material will also continue to grow.”

In order to meet the existing design and construction specifications, as well as take advantage of the early demolition, staff recommends an increase to the budget of $1.3 million. Amending the budget increases the construction budget to $11.6 million, which includes increasing the construction contingency from 5% to 10% to cover unknowns that are likely in a project of this size and complexity. The total construction contingency is proposed to be raised from $515,000 to $1,160,000.

Gus Vina, Brentwood City Manager, explained that the cost increase was due to rising cost in labor and materials, however when they refinanced the $11.3 million originally, they saved money when they borrowed which resulted in a $2 million contingency which could be used across multiple projects.

He stated between the library and dispatch center, they had $2 million in contingency already planned.

“If you approve the resolution tonight, you are taking $1.3 out of the $2 million contingency and adding it to the library,” said Vina. “The contingency will allow us to get the library contingency from 5% to 10% which was low as we like to carry a 10-15% contingency on our projects.”

He highlighted back when the council approved this funding, they did not have as much information on the project as they did on Tuesday after the bids came in.

“There will be no increase in your budget and no additional increase in the borrowing,” said Vina.

Vice Mayor Joel Bryant asked that currently the budget will not allow the library to be completed and wanted to know if this additional $1.3 million will get the job done.

“That is our anticipation,” said Vina. “But as I mentioned we are waiting until we put the project out to bid in January where we will have an exact number. We have some good people working on estimates out there so we will be okay.”

Bryant asked about immediate needs where funding needs to be available. Is

Councilman Steve Barr asked about the process and how it was discovered there would be a gap in funding.

It was explained that they solicited contractor pricing and anticipated bidding cost—everything had been trending up. Staff also compared their estimated numbers with anticipated contractor numbers.

Barr then asked if bids came back on the project above the $13.5 million the council would then have to decide how to fund the project gap.

Vina explained that they still had another $700k available in the contingency they could use.

“If it comes in way above than what we are looking at today, we would then look at design changes to rein in costs to get within the budget,” said Vina.

Councilman Erick Stonebarger asked about why they would approve an increase today versus when the final documents and bids are in.

Vina replied it was to ensure they have a budget in place.

“It’s a matter of establishing an allocation of what we think the cost of the project is going to be,” said Vina.

Vina explained that this was a “check in” with council whether they do it tonight or in the future calling it a choice. He said in the end he believed the council would get to the same place and that they were trying to align the budget for what they expect.

“If it comes in higher, that we are clear that there is funding there,” said Vina.

Councilman Gene Clare highlighted that the statement of adding the $1.3 million to the library shows the public they are committed.

“The advantage is that it locks up that contingency funding and says this is what it is designated for. We are willing to support and fiancé a library that we can be proud of and want,” said Clare.

He explained how when they first started talking about a library, they started at the $14 million estimate and lowered the cost from there to the $12.5 million. He explained when school projects start kicking it; the cost is going to increase further.

“I think we need to move forward as fast as possible on this,” said Clare.

Barr stated his concerns and that when they put this out to bid, they have a clear budget and another above will be a difficult decision for the council.

“It should be clear to the contractors that that is their target number,” said Barr. “The message I want to send to contractors is that is our budge…. I’d have a difficult time having to try and expand the budget to meet the need. I am in favor of adding the budget to make it realistic to market conditions.”

Stonebarger said he believes they should scale back the project to hit the number.

In a 4-1 vote with Stonebarger dissenting, the council approved the $1.3 million increase to the Library Project.

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