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Day after city's bid opening for recreation center, relief and a few questions

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Sometimes you don’t understand why good things happen.

That’s the approach Lawrence city commissioners generally were taking the day after bids to build the city’s recreation center came in about $10 million below what city officials had estimated.

“My first thought was ‘this is awesome,’” City Commissioner Jeremy Farmer said of a low bid of $10.5 million by Lawrence-based Gene Fritzel Construction Co. “My second thought was ‘why did we miss it by so much?’”

City officials had received pre-bid estimates from two different architects — one for $18.4 million and another for $20.7 million. All nine bidders came in millions of dollars below those estimates.

Farmer said he asked some contractors who weren’t involved in the bid process why they thought the bids came in so much lower. Nobody had a definitive answer, but contractors said the construction market is very competitive right now because of a lack of jobs.

City Commissioner Terry Riordan thinks that had a lot to do with it.

“I think there were companies out there making a bid because they wanted to keep their crews together,” Riordan said.

I’ve talked to almost all of the commissioners now — I haven’t yet been able to catch up with Mayor Mike Dever — and happiness and relief are emotions in pretty high supply currently with the group. But several commissioners also acknowledge the process has created some questions. I suspect the issue of why the architectural estimates were off by so much will be asked quite a bit by commissioners at their Tuesday evening meeting.

Other lingering questions include:

• Given this low bid, how confident should the city be in its $8.3 million estimate for the remaining infrastructure work at the site? As we’ve written many times, the infrastructure work isn’t going through a bid process. An entity led by Lawrence businessman Thomas Fritzel will do the infrastructure work through a no-bid arrangement. (Fritzel is an executive of Gene Fritzel Construction, the company founded by his father that was the winning bidder.)

Is it possible that the city’s estimate for the infrastructure — items like parking lots, roads, sewers, and other utilities — also is substantially off? It's tough to say.

“Well, you have to wonder,” Riordan said when asked the question. “It will be very interesting to see how that comes in.”

The city will review invoices from Fritzel’s subcontractor as work is completed, and the city says it will review the prices charged compared to the prices the city is seeing at other infrastructure projects around town. There are no indications that a majority of commissioners are interested in changing the deal and requiring bid work for the infrastructure. Some infrastructure work already has started at the site.

• How much will the recreation center end up costing the city? We don’t quite have that number yet, because we don’t yet know the infrastructure cost. But proponents of the rec center plan touted the notion that the city would be getting about $32 million worth of improvements — the recreation center and the infrastructure — for only $25 million in payments. The way the agreement is structured, however, the city will pay $25 million or the actual amount of the recreation center and the infrastructure, whichever is less. Based on the bid for the 180,000-square-foot rec center building and the projected infrastructure cost, the city may pay millions less than expected.

Right now the city’s costs are at about $12.2 million. That means the infrastructure cost would have to come in near $13 million for the total to reach $25 million.

“If those costs come in at $13 million, there won’t be anybody in the city that is O.K. with that,” Farmer said. If the infrastructure comes in at the city estimate of $8.3 million, the city’s total cost would be a little over $20 million. (The city still will have some cost for equipping the facility, but that always has been the case.) If somehow the infrastructure comes in at about half the cost estimate, the city would have the project for less than $17 million.

• Is the city paying too much of a share of the infrastructure costs for the Rock Chalk Park development? That’s obviously a matter of opinion, but there aren’t any indications that a majority of commissioners want to reopen that part of the agreement.

The $8.3 million infrastructure estimate isn’t just for facilities that will be on the city’s 26-acre recreation center site. It also covers parking and other infrastructure work on the adjacent Rock Chalk Park site, which will include stadiums for Kansas University's track and field, soccer and softball teams.

How you feel about the issue may go back to how you view the Rock Chalk Park project. Is it a KU project or a private development project? There is no question KU is going to be the major user of the Rock Chalk Park facilities. But it also is not accurate to say it is a KU project, at least not in the sense most people think of the phrase. The university won’t own any of the stadiums or facilities. An entity led by Fritzel will own the facilities and lease them back to KU. That lease gives Fritzel the ability to use the facilities for private events. How much he will choose to do that will become clearer in the future.

That makes it trickier to assess the fairness of the city's pricetag for the infrastructure. When the city signed the development agreement in March, officials thought the most likely scenario was that Lawrence would pay for around half the infrastructure costs for the two projects, with the Fritzel mainly picking up the tab for the rest. Now, because of the reduced cost of the rec center building, the city may wind up paying all of the infrastructure costs—although the amount would be about the same as previously expected, or maybe even less.

Riordan and Farmer weren’t on the commission when the city approved the agreement, but neither indicated any interest on Thursday in renegotiating the infrastructure part of the deal.

“If we can get these infrastructure costs to come in at $8.3 million or less, I think the talk of the town is going to be how much less this is costing us than what was expected,” Farmer said. “I don’t think there will be many people who care that we’re paying for a larger share.”

• The final question may be: What if? The city came pretty close to allowing the entire recreation center project to be built without going through any traditional bidding process.

It wasn’t until February that public opposition grew to the point that the city was able to negotiate a deal with Fritzel and officials with KU Endowment, which controls the land, to bid the recreation building. They weren’t able to negotiate a deal for the infrastructure to be bid, although City Manager David Corliss said that would have been his preference.

“We have been consistent in saying we preferred a bid process, but in partnerships with others, we don’t always get all that we want,” Corliss said.

Looking back on the situation, City Commissioner Bob Schumm — who was mayor during the negotiations — said he’s certainly pleased the city ultimately had a bid process for the recreation center. In round numbers, the city was prepared to pay about $20 million for the recreation center and another $5 million for infrastructure.

“I’m glad we bid it,” Schumm said. “I always wanted to bid it, and there was a time that it wasn’t going down that path until we pushed for it. That was for sure the right thing to do.”

It goes to show that an outcry from the public still has some impact. No matter how you calculate the savings, it seems safe to say the opposition to the project saved the city millions.

Comments

true_patriot 1 year, 7 months ago

Why wasn't that bidder barred from the process? He effectively stole millions of dollars from Geary county by welching on this tax obligations and that was on top of saddling them with colossal debt.

He also has a contract for this rec center in Lawrence that was covered up initially containing all sorts of fine print that reveals that in essence Lawrence taxpayers will be footing an investment in a private profit-making enterprise by this bidder that on many fronts trumps the city needs in favor of his pet enterprise. The city helps fund it but doesn't have a say in how it works or in the profits.

Jayhawker07 1 year, 7 months ago

This has been a scam from the get go. We the people know that. Money is the root of all evil. What Timmy wants is what Timmy gets. Plain and simple. I am tierd of commenting this BS. Maybe with the extra money, we can buy $10 million of art stuff to go in it. They did that with the library with no inkcling of change orders that will make up the difference and then some. I bid my jobs on the money the best that I can, no insider info, my clients know how much they are going to pay at the end. On the other end, I have lost many jobs from a low bidder who will upcharge the price in the middle of the job. They are now my clients because I bid it right, but I will never get that job back. Way done with this BS fritzalmania stuff.

Travis Oliver 1 year, 7 months ago

Both of these comments are nuts. Timmy who?

Eride 1 year, 7 months ago

“If we can get these infrastructure costs to come in at $8.3 million or less, I think the talk of the town is going to be how much less this is costing us than what was expected,” Farmer said. “I don’t think there will be many people who care that we’re paying for a larger share.”

Um, I think the people in this town who aren't idiots will wonder why the city commission didn't negotiate for a more fair percentage of the infrastructure costs, thereby resulting in an even LOWER amount of tax revenue spent on the project. With the building being bid at around $10 million, it looks extremely likely that the city will get saddled with the entire infrastructure cost. A cost that the city allowed to go through a no-bid process and the developer has absolutely ZERO reason to build at a competitive price since the city has already basically written a blank check for it.

Considering that the majority of the infrastructure is for the KU portion of the project which is privately owned by the developer and will be used for private events benefiting only the developer... not negotiating a fair percentage of the infrastructure cost (or even using a reasonable method of ensuring the developer is price-competitive) results in a multi-million dollar handout to the developer. I think any non-stupid citizen of this town would like to see our city commission exercise some basic judgment and responsibility when spending millions of dollars of taxpayer money. The line of reasoning of "it will be less than we thought, who cares if it could and perhaps SHOULD be even less!" is frightening coming from our elected officials.

I wonder, is it incompetence and stupidity... or is it illegal behind-the-scenes graft?

Richard Heckler 1 year, 7 months ago

Where are the bids for the infrastructure?

Where are the estimates?

Why has this not been accomplished as yet?

jack22 1 year, 7 months ago

"How much will the recreation center end up costing the city? We don’t quite have that number yet,"... but we should expect that we'll all be paying for this for many years to come. How much are we budgeting for maintenance, utility costs, insurance, etc. and how much will all of those expenses cost us over the next twenty years?

homergoodtimes 1 year, 7 months ago

Schumm and Corliss never once wanted this or any portion of this project opened up for bid. They are both personally responsible for allowing Thomas Fritzel to have such control over the components of this project. This is 100% what they created. The blame should all fall on Corliss's shoulders and Schumm's lap. The others at fault here are KUEA and KU Athletics Inc. with special thanks to Sheahon Zenger for allowing Thomas Fritzel to use KU as a bargaining chip when negotiating with the city.

joes_donuts 1 year, 7 months ago

Where is the "$32 Million worth of improvements" number coming from? Seems to me if the bids are coming in around $10.5 to $12 million, our Rec Center building is worth $10.5 to $12 million.

jack22 1 year, 7 months ago

It's like when a car salesman tells you that the car you'd like to buy is worth x amount, but they're going to give you a great deal and sell it to you for a special low price. I'm guessing that when it's all said and done the project will go way over budget and Fritzel will get paid whatever he's wanting from us.

Hudson Luce 1 year, 6 months ago

"Considering that the majority of the infrastructure is for the KU portion of the project which is privately owned by the developer and will be used for private events benefiting only the developer ..."

OK, why are tax dollars going to benefit a private developer? For the next 50 years?

"The primary concern would presumably be with local government officials using this mechanism in ways that do not really express the preferences of their citizens. This concern might be realized in two ways. First, local governments, given their small size, may be prone to manipulation by the concentrated and powerful interest of developers to aid in the construction of projects that undermine the overall competitive positions of the jurisdiction--this is known as "interest group capture."...

Shanske, Darien. 2007 Public tax dollars for private suburban development: a first report on a national phenomenon. The Free Library (January, 1), http://www.thefreelibrary.com/Public tax dollars for private suburban development: a first report...-a0164997861 (accessed May 28 2013)

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