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Only 2 local developers make pitches to construct Harris building

Linn County had invited 7 companies in process that has drawn concerns

This rendering shows the new Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building planned for 1019 Seventh St. SE in Cedar Rapids. The Linn County Board of Supervisors in January OK’d its construction in a lease-purchase agreement. (OPN Architects)
This rendering shows the new Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building planned for 1019 Seventh St. SE in Cedar Rapids. The Linn County Board of Supervisors in January OK’d its construction in a lease-purchase agreement. (OPN Architects)

CEDAR RAPIDS — Just two of the seven local developers propositioned by Linn County to enter a lease-purchase agreement have submitted proposals to construct the county’s future public health and youth development services building.

Proposals for the Dr. Percy and Lileah Harris Public Health and Youth Development Services building — unsealed Wednesday by the county — from Cedar Rapids companies Miron Construction and Rinderknecht Associates include lump sum cost estimates of about $30.5 million and $31.1 million, respectively.

While the two figures nearly reach the $31.5 million project limit set earlier this year by the county, several supervisors said those lump sum estimates are not bids. Rather, they reflect the contractor’s interpretation of the “dream architectural proposal” provided by OPN Architects.

Supervisor Brent Oleson added that the two proposals will be vetted and, if one of the contractors is selected by the Board of Supervisors, discussions will begin to lower that price tag — a process called value engineering, which could take out building elements like LEED Platinum certification or specific materials.

“That’s the beginning price to work down from,” Oleson said. “Now we separate our needs from our wants.”

However, Mike Glavan, chief executive of Kleiman Construction, one of the seven companies to receive the county’s request for proposals, said his company also came close to a $30 million estimate for the project. Ultimately Glavan said the decision was made to back out of the process, due largely to the amount of value engineering necessary to reduce the total cost by several million dollars to reach a mid-$20 million project, as supervisors have estimated the building to cost.

“When you’re value engineering 10 percent, 15 percent, you’re changing the whole project,” Glavan said during a Wednesday work session. “What needs to happen is you need to go back to the architect and redesign the building and rebid it, because it’s going to be a completely different project.”

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Supervisor Ben Rogers said it was encouraging to hear that Kleiman’s estimate — if submitted — also would have reached the $30 million mark, which shows consistency in estimates.

“I wish bids would have been lower,” Rogers said. “I think we also share that concern that we also are going to have to value engineer this proposal.”

Supervisor John Harris, the only supervisor to vote against entering into a lease-purchase agreement earlier this year, reiterated his concerns on the potential added cost and timeline of such an agreement.

“Additionally, my concern lies with what I perceive is a lack of transparency in this process. I had a mentor one time tell me, beware when someone says, ‘Trust me, I know what I’m doing,’ and I believe that the board is saying that to the citizens of Linn County,” Harris said. “I reject, and I encourage my associates on this board to reject these proposals, reject the process and start over again with a low bid process.”

The board expects to make a decision on whether to enter into an agreement with one of the contractors by mid-February.

The Dr. Percy and Lileah Harris Public Health and Youth Development Services building at 1019 Seventh St. SE. will honor Cedar Rapids residents and public health, education and civil rights figures Percy and Lileah Harris.

The 55,000-square-foot building had been estimated to cost $21.5 million. Supervisors earlier this year agreed to enter into a lease-purchase agreement not to exceed $31.5 million — to be paid by the county with general obligation bonds for urban renewal — with a contractor for the project.

The selected contractor will build the project, with the county buying the building when completed at a predetermined price. The contractor assumes all the risk associated with the construction process.

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A request for proposals document lists more than a dozen criteria for evaluating candidates, including the lump sum price; team qualifications; previous experience in $15-$25 million projects; adequacy and capability of the contractor; and the extent to which the contractor and other project members have worked on local projects as well as how many will work on the public health building.

But before work begins, Oleson said the selected contractor, the Board of Supervisors, officials with OPN Architects and an independent third party engineering company will sit down to cull items included in the lump sum to reach a final project scope and cost.

“We’re going to take our time and go through these. Somebody will eventually make a proposal to the board to begin that process of going over the architectural plans and looking for ways to build the building that is most efficient and best for the taxpayer,” he said.

The county’s use of a process that limits proposals and guarantees the project goes to a local developer has raised concerns among some state lawmakers and builder organizations.

A study bill in the Iowa House — heading to the Local Government Committee — would require public entities to advertise bids for any lease-purchase project over $100,000. Iowa law already requires competitive bidding for most standard public projects over that threshold.

Proponents of the bill argue that the county’s lease-purchase agreement did not abide by state competitive bidding rules, and limiting the pool of possible contractors could negatively affect the project’s cost and taxpayers’ outlay.

l Comments: (319) 339-3175; mitchell.schmidt@thegazette.com

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