Bid for recreation center comes in about $10 million lower than expected; questions grow over other cost estimates

The city’s $25 million recreation center apparently will cost a lot less than $25 million.

Lawrence officials on Wednesday received a batch of surprisingly low bids to build the proposed 181,000-square-foot recreation center in northwest Lawrence, with Lawrence-based Gene Fritzel Construction Co. submitting the lowest bid.

The Fritzel firm was founded by Gene Fritzel, whose son Thomas–an executive of the firm–is a leading local developer who has been a major figure in the rec center project. A company owned by Thomas Fritzel is building the adjacent Kansas University athletic complex and will be doing multimillion-dollar site infrastructure work for both facilities.

Gene Fritzel Construction submitted a bid of $10.5 million to build the eight-gym facility, which also will include a fitness center, indoor turf area, walking track and other amenities.

Architects hired by city officials had estimated the building would cost somewhere between $18.4 million and $20.7 million to build. But all nine companies that submitted bids for the project bid the construction between $10.5 million and $13.5 million. The Fritzel firm was the low bidder by about $280,000.

“They are excellent bids,” said City Commissioner Bob Schumm, who attended the bid opening. “But I’m a little surprised that it came in at the range that it did.”

City officials now believe it is likely the city will pay less than the $25 million maximum it was prepared to pay for the recreation center and associated infrastructure, such as parking lots and water and sewer utilities.

“It would be difficult for me to see how the total project would come in at $25 million now,” Schumm said.

This is at least the fourth major project the city recently has bid that has come in significantly below its estimates. The latest bids raised questions whether the city’s $8.3 million estimate for the infrastructure portion of the project is accurate.

Bid totals

Here’s a list of the bidders for the city’s 181,000 square foot recreation center:

• Burns & McDonnell, Kansas City, Mo.: $12.351 million

• Mason & Hanger, Overland Park: $12.787 million

• McPherson Contractors, Topeka: $12.15 million

• Murray and Sons Construction: $13.577 million

• Excel Constructors, Overland Park: $13.38 million

• Titan Built, Olathe: $11.702 million

• Crossland Construction, Columbus: $10.779 million

• Gene Fritzel Construction, Lawrence: $10.5 million

• McTech Corp., Kansas City, Mo.: $12.611 million

Unlike the building project, the site infrastructure is not going through a bid process. The city in February agreed to deviate from its standard process and allow the work to be done without bidding.

A company led by Thomas Fritzel will build the infrastructure for both the city’s recreation center site and the adjacent Rock Chalk Park, which will have track, soccer and softball facilities that will be owned by Fritzel’s company and leased back to Kansas Athletics.

Some infrastructure work has begun at the site, and city officials last week asked Fritzel to provide a quote for what the total infrastructure on the project will cost. But Thomas Fritzel, city officials said, had no firm numbers to share.

City officials will get to review invoices for the infrastructure work as the project progresses, but City Commissioner Mike Amyx said he’s not sure that process will be adequate in resolving any disputes that arise over the cost of the infrastructure.

“That is the process the commission decided to follow,” said Amyx, who voted against the project. “But do I have concerns about it? Absolutely.”

The project

City commissioners are scheduled to approve the low bid from Gene Fritzel Construction at their Tuesday evening meeting. Construction work could begin in mid-June, City Manager David Corliss said. Construction is expected to take a little less than a year to complete. The center will be just northeast of the Sixth and South Lawrence Trafficway intersection.

The recreation center has been designed to provide additional gym and indoor recreation space for local residents, while also serving as a venue to attract regional and national youth tournaments, which city officials expect will increase visitor spending in the community.

The center — which also will include eight lighted outdoor tennis courts — will be adjacent to the larger Rock Chalk Park development, which is being developed by Bliss Sports, a company owned by Thomas Fritzel. Rock Chalk Park will include stadiums for track and field, soccer, and softball, plus walking trails and other amenities. Bliss Sports will own the facilities, but lease them back to Kansas Athletics. An agreement between Kansas Athletics, the Fritzel entity and an entity controlled by the Kansas University Endowment Association, gives Fritzel the ability to host private events at the facilities as well.

Changing cost equation

City officials said they were pleased with the bid results.

“We are getting a lot of value for the taxpayers,” Schumm said.

Under a development agreement approved by the City Commission in March, the city has a guarantee that it will not pay more than $25 million for the recreation center and the associated infrastructure.

At the time of approving that agreement, city officials said they were confident the city’s recreation center and associated infrastructure would have a value of about $32 million. The agreement was structured so the difference between the value of the project and the $25 million guaranteed price would be covered by other entities, mainly Fritzel’s Bliss Sports.

But with Wednesday’s bid, it now appears likely that the city actually will pay nearly all of the infrastructure costs for both the city’s recreation site and the adjacent Rock Chalk Park site. The city has not separated the infrastructure work into two projects because much of the infrastructure — such as parking lots — will be shared between the recreation center and the Rock Chalk Park facilities.

Here is how the math now works based on the $10.5 million building bid received by the city: In addition to the $10.5 million in construction costs for the center, the city also will pay about $1.7 million in engineering, architecture and land costs for the project, bringing the subtotal to about $12.2 million. Previously, the city had expected the costs at this point to be about $20 million to $22 million, meaning the city would pay about $3 million to $5 million of the estimated $8.3 million in infrastructure costs. Fritzel and KU entities would pay for the rest.

Now that the building’s cost stands at about $12.2 million, the city seems likely to pay for all of the $8.3 million in infrastructure costs. That’s because the development agreement calls for the city to pay either $25 million or the actual cost of the project, whichever is less.

Schumm said he recognizes that city now may be paying for a larger percentage of the infrastructure than originally envisioned, but he said he is fine with that — particularly since the city will be paying less than the $25 million it had budgeted.

“When we pay more (for the infrastructure), that helps support KU’s mission out there, and that is a community mission,” Schumm said. “They do get a better deal, but that is fine with me.”

Amyx said he wants more explanation about that aspect of the project, and also wants an explanation about why the city’s cost estimates for the building were so far off. But he said he is pleased that the city will be paying less than the originally estimated $25 million.

“I want everybody to know I’m very pleased to see the numbers on these bids,” Amyx said. “I think the question is out there, though, how much less would we have paid if we bid it all?”