Convention Center budget problem resolved

Following four months of marathon meetings, the Spokane Convention Center expansion project’s $8.7 million budget problem has been resolved.

The Spokane Public Facilities District, which owns and operates the Convention Center, will spend $3 million more for construction, bringing the cost of building the 100,000-square-foot exhibit hall to $58 million. The project has a total budget of $80 million, which won’t change.

The contractor will absorb $1.3 million in costs.

Since November, the project’s contractors and representatives of the PFD have been meeting to address the cost overrun on the work that’s been done so far. At a meeting Tuesday, both parties agreed to cover parts of the costs. Additional savings will come from selecting less expensive construction materials.

However, the contractor and board members of the PFD said no changes were made that will affect the size, appearance or use of the expanded center.

“We didn’t cheapen the building,” said board member Mick McDowell. “We found economies.”

The meetings resulted in $2.6 million in costs being removed from the project by finding different ways to build the building or selecting different materials. For example, using a different type of concrete saved $100,000. Additional savings were made by using less expensive materials in areas that will not be visible to the public. And $2 million will be covered by a contingency fund built into the budget.

The contractors attributed $6.5 million of the cost overruns to a dramatic escalation in the price of construction materials and a tight labor market, where subcontractors are highly in demand. In order to keep the project on schedule, the contractor had to buy construction materials at “hugely inflated prices,” said Dave Garske, operations manager for Hoffman-Bouten Joint Venture, the general contractor. The escalation in the cost of steel alone added more than $1 million to the project.

In addition, Garske said, the demand for construction workers in this region has risen by about 12 percent in the past two years, making it harder for some subcontractors to find the manpower to bid on projects. Fewer subcontractor bids make prices less competitive. The market conditions have brought some public works projects around the state to a halt, Garske said.

“Right now, we’re forecasting a loss,” Garske said of Hoffman-Bouten’s involvement in the project.

However, the PFD also is covering $3 million worth of the overruns, raising the construction budget from $55 million to $58 million. The PFD will make up for that additional $3 million by cutting other segments of the project, said Kevin Twohig, executive director.

Voters approved additional taxes in May 2002 to pay for the expansion and other civic projects. Revenue bonds totaling $77 million were sold to pay for the Convention Center project alone. Projected interest of more than $2 million brings the total project budget close to $80 million.

“We’ve got to get everything done with the bond proceeds,” Twohig said.

Twohig said the PFD hasn’t determined what parts of the budget will be cut to cover the additional $3 million in construction costs. However, two possible targets are the budget for land acquisition and the budget for furniture and fixtures for the expanded center. The PFD has a $3.8 million budget to acquire land south of the Convention Center for future expansion.

One budget that two PFD board members swore would not be touched is the $5 million budget for renovations to the existing Convention Center. After the new exhibit hall is complete, the existing Convention Center will be renovated to create smaller meeting rooms and ballrooms.

“That $5 million is sacred to us,” said Larry Soehren, a board member. “We will not do less than $5 million in renovations.”.