The companies that make a living building roads, burying sewers and paving parking lots have been hungry for work in recent weeks, in some cases bidding infrastructure projects for less than half what city officials had expected.
But when it comes to Lawrence’s new $25 million recreation center, city officials won’t find out how hungry. The city is set to receive bids for the building portion — the actual walls, roof and other such pieces of a structure — for the center on Wednesday. But the millions of dollars worth of roads, sewers, waterlines and parking lots for the project aren’t being bid.
Instead, a firm led by Lawrence developer Thomas Fritzel is building those pieces of the project through a no-bid arrangement with Kansas University entities and the city.
But the Journal-World has confirmed that even though Fritzel’s firm has begun work on the site, he hasn’t yet provided the city with a firm quote on how much it will cost the city to build the infrastructure.
City officials, though, are still scheduled to go forward with Wednesday’s bid opening, which is expected to produce bids in the $18 million to $20 million range. But it won’t be without some trepidation.
“I think it is imperative that we have these infrastructure costs in hand before we move forward,” said City Commissioner Mike Amyx, who previously has voted against moving forward with the project. “My big concern in all of this has been the process in which it has been handled, and this adds to that concern.”
No numbers to share
City commissioners agreed to the no-bid process for the infrastructure in February. At the time, a majority of commissioners said they believed allowing Fritzel’s Bliss Sports to build the infrastructure would be the most efficient process.
That’s because Bliss already had been chosen by Kansas Athletics and the Kansas University Endowment Association to build the infrastructure for the adjacent Rock Chalk Park, which will include KU-related track, soccer and softball facilities that will be owned by Fritzel’s company and leased back to the university. One contractor building all the infrastructure would allow the project to benefit from economies of scale, city officials said.
But now questions have emerged about when the city will be able to determine just how much the infrastructure will cost. The Journal-World asked city officials last week whether Fritzel had provided the city with a quote on the expected infrastructure costs, now that work had begun on the site.
Mayor Mike Dever said Fritzel had not, but he assumed that was only because the city had not asked for it. On Thursday he said he would ask Fritzel for the necessary documents. Dever said he was confident such numbers had been prepared.
“I’m sure he already has pricing for that, I imagine,” Dever said. “I don’t think he would carry on with the project without having quotes. There is no way he would do that.”
But on Friday, Dever said Fritzel told him that there were no hard numbers to share with the city. According to Dever, Fritzel said that was in part because the city’s planning office had not yet approved all of the specifications for the site’s infrastructure. Without those approvals, Fritzel’s subcontractor cannot give him a firm quote on the construction costs.
Dever, on Friday, said that explanation seemed reasonable to him. Attempts to reach Fritzel for comment on this article were unsuccessful.
A matter of timing
The lack of those numbers puts the city in an interesting situation. The city has created a complex agreement with Fritzel and the KU entities that caps the total amount the city will pay for the recreation center and related infrastructure at $25 million. But the agreement also holds out the possibility that the city could pay less than $25 million, if construction work is completed for less than what architects and engineers have estimated.
So, here’s the situation: The city has indicated to Fritzel and the KU entities that it has $25 million to spend on the project. Week by week, the city has been learning what its costs for the project will be: $925,000 for architects' fees; $784,050 for the price of the 26-acre recreation center site.
Now, only two parts of the equation remain unknown: the price to construct the building and the price to construct the infrastructure. Only the price of the building is going through a bidding process, and that amount will be known on Wednesday.
Once the price of the building is known, simple math will show what the difference is between the city’s costs and the $25 million maximum price it is willing to pay.
City officials have stopped short of saying Fritzel will make sure the infrastructure price is large enough to ensure the city will spend all of its $25 million budget. In fact, some city officials privately have said it is inappropriate to suggest Fritzel would conduct business in that manner.
Amyx said he’s not saying Fritzel would do that either, but he said it is the city’s job to create processes that protect the public’s interests.
“I think we have to have that infrastructure number,” Amyx said. “It is an absolute.”
At various times, city officials have argued this whole issue is likely to be moot. City officials believe the value of the recreation center building and its related infrastructure will have a market value of about $31 million, and the city only will pay $25 million. The difference would be covered by an in-kind donation from Fritzel and his company.
That still may be the case, but without a full bidding process, there have been questions about the true value of the project. Those questions have grown in recent weeks as the city has bid a series of infrastructure projects across the city that have come in below estimates in recent weeks. They include:
• Road and waterline work to convert the former Farmland Industries property into a business park came in at $4.9 million, compared with the $8.1 million estimated by engineers.
• Sewer line work for the Farmland project came in at $601,089 compared with a $1.4 million engineer’s estimate.
• Work to reconstruct a portion of Wakarusa Drive came in at $1 million compared with a $1.2 million estimate.
• Waterline work along Bob Billings Parkway came in at $1.6 million compared with a $2.1 million estimate.
The city has estimated infrastructure work for the entire recreation center site and the Rock Chalk Park project will total about $9.3 million. The city estimates the recreation center building will cost $19.9 million.
With the land costs and architecture fees added on, that brings the total to about $31 million. In order for the city to pay less than $25 million on the project, construction estimates for the project will need to be off by 20 percent or more. That has been the case with several of the infrastructure projects the city has bid recently.
Dever said he recognizes that fact.
“In light of the low bids we have received recently, I would like the community to know whether there are some potential savings here,” Dever said.
But Dever said he doesn’t regret the decision to allow the infrastructure to be built without going through the city’s normal bidding process. He said he still believes the economies of scale of having one infrastructure contractor will benefit the city.
Amyx said he wishes the city would have used its normal bidding process.
“I’ve had concerns all along,” Amyx said. “I wish we would have just put all the city portions of this project together and put them out there to bid and seen what we came up with.”
The city does have a process that allows it to review invoices submitted by Fritzel’s subcontractor after the work has been completed. Dever said the city will compare the unit prices used in those invoices with the unit prices of other infrastructure work completed in the city. But Dever conceded resolving any pricing dispute will be more difficult to do after the work already has been completed.
“But we are entitled to see his math,” Dever said. “If there is any question, we’re not just going to write a check.”