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April 20th, 2010
Government center price tag drops $6 million

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Balfour Beatty Operations Director John Campbell, left, and Broaddus and Associates Vice President and Austin Area Manager Brenda Jenkins, right, discuss the government center project with Hays County commissioners. Photo by Sean Batura.

By SEAN BATURA
News Reporter

The largest single construction project ever ordered by Hays County now has an official price tag, which is lower than anticipated.

Last week, Hays County commissioners unanimously approved construction firm Balfour Beatty’s guaranteed maximum price proposal of $52,085,459 for a 232,000-square-foot county office building to be located near Wonder World Drive and Stagecoach Trail.

The proposal is about $6,214,541 less than the not-to-exceed amount of $58,288,337 specified in the contract that commissioners approved in November. Commissioners also approved design development documents created by HDR, the other member of the design-build team selected by the county in October.

As of the end of March, anticipated government center project costs beyond Balfour Beatty’s fees included a contingency budget of about $3.5 million, $350,000 for courtroom technology and $4 million for furnishings, fixtures, and equipment. Thus, the entire cost of the government center would come in just lower than $60 million.

County officials said construction of the government center will begin after an official groundbreaking ceremony on April 30 at 2 p.m. at the project site. County offices will begin moving into the building in December 2011.

Commissioners voted 5-1 to sell $72 million in certificates of obligation (COs) on March 23 to pay for the government center, which will house most county offices. The COs are due to mature on Feb. 15, 2035, at which time the county is estimated to have paid $120,055,562.

Dan Wegmiller of Specialized Public Finance, the county’s financial advisor, said the county will have the option of paying off the government center debt early after 10 years. By 2012, the county’s annual payments for government center debt are estimated to exceed the amount generated from the 4.5 cents currently embedded in the property tax rate for capital improvements.

The commissioners court began building funds in a capital improvements budget line item with a few cents of the property tax rate five years ago. The court increased the three-cent allocation to 4.5 cents this budget year. Approximately $4.5 million per year is generated from 4.5 cents per $100 of taxable valuation.

Before hiring Broaddus and Associates (B&A) to manage the government center project and right-size the building, county officials had estimated the structure would cost between $100 million and $115 million, excluding debt interest. B&A representatives told commissioners in June that a redesigned government center would likely cost between $70 million and $89.5 million.

After commissioners directed B&A to work up a short list of design-build proposals calling for less than $89.5 million, three top design-build teams emerged with conceptual design proposals entailing total project costs of $78,123,343, $74,990,740 or $74,415,590, and $73,955,339. The county chose Balfour Beatty/HDR’s $73,955,339 project proposal.

Financial services company Standard & Poor’s (S&P), in a report published on March 29, gave the county a long-term credit rating of AA. The county received an interest rate on the government center COs of 4.461 percent, compared to the anticipated rate of 4.658 percent.

“Hays County’s financial performance has been consistently sound,” states the S&P report. “In fiscal 2008, the total general fund balance totaled $25.4 million, or, in our opinion, a very strong 51.9 percent of expenditures.”

S&P’s March 29 report states that overall net debt in the county is “high” at $5,972 per capita and “moderately high” at 8.9 percent of market value, which the report attributes to debt issued by overlapping entities.

The government center is the largest public project within the county to be undertaken without voter approval of the debt issued to pay for it. In its fiscal year (FY) 2010 budget, which totals $167,025,731, the county allocated $10,449,685 for debt payments and $80,250,888 to construction projects. The 2010 budget set the ad valorem tax rate at 46.92 cents per $100 of taxable valuation, which is 1.42 cents higher than last year’s rate.

Proponents of the government center say current county offices and courts are overcrowded and insufficient for the needs of employees and residents. County officials have called the Hays County Justice Center, which used to be an H-E-B about 10 years ago, “a dump” and “a disgrace.”

Hays County District Attorney Sherri Tibbe (D-Buda) appeared before the commissioners in October 2009 to support the building of a government center. Tibbe said the county’s current justice system offices are inadequate to the needs of staff and residents.

Balfour Beatty Operations Director John Campbell told commissioners last week that an economic climate allowing for hungry contractors was a factor in reducing the guaranteed maximum price by more than $6 million.

Hays County Precinct 1 Commissioner Debbie Ingalsbe (D-San Marcos), who has spearheaded the effort to build a government center for about four years, said the approximately $6.2 million in savings can be attributed to the efforts of B&A employees such as Project Manager Terry Whitman, Senior Project Manager Bob Hinkle, Vice President and Austin Area Manager Brenda Jenkins, in addition to the design-build team, and the “literally hundreds of hours” spent by the government center steering committee.The committee includes Tibbe, County Auditor Bill Herzog, Civil Division Chief Mark Kennedy, Road Division Director Jerry Borcherding, and Purchasing Agent Cindy Maiorka.

Hinkle told commissioners that he will soon offer a list of extra features for their consideration, items that would entail more expenses but may, he said, provide long-term savings. Among them are formal Leadership in Energy and Environmental Design (LEED) certification, rainwater harvesting, stormwater recapture/re-irrigation features, and pre-wiring/pre-piping work on the building’s roof to prepare it for future installation of solar panels.

Hinkle recommended that commissioners wait until solar panel technology improves before installing panels. Hinkle said commissioners should figure out whether to add the aforementioned and other features in “the next week or so” to expedite the project and take advantage of lower construction costs.

(Editor’s note: The above has been revised to say the ground breaking for the government center will take place on April 30.)

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0 thoughts on “Government center price tag drops $6 million”

  1. This is really great; but…what about the jail and why are we not addressing this issue at the same time. I really do look forward to practicing law in a building that will be state of the art and not a place where auto parts and groceries once were sold. I am disappointed that we did not incorporate a jail into this project.

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