CEDAR RAPIDS — While construction association officials and lawmakers scrutinize Linn County’s recent lease-purchase agreement for a new public health and youth development services building, the process is moving forward.
Several local contractors eyed by the county for the job have expressed plans to file proposals for the project, which is not to exceed $31.5 million. The building itself has been estimated at $21.5 million.
The 55,000-square-foot 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 board earlier this month sent a request for proposals to Cedar Rapids contractors Miron Construction, Unzeitig Construction, Tricon Construction Group, Kleiman Construction, Ryan Companies and Rinderknecht Associates and Mortensen Construction, which has an office in Coralville.
The 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.
Supervisor John Harris said the board likely would grade proposals on a matrix using that criteria, potentially with input from county staff.
“The board is going to have to make some decision on their own on who sets themselves apart as far as compliance to the bid,” he said.
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Contractors have until the end of the month to submit proposals. The board expects to make a decision in February.
Of the seven contractors potentially in the running for the project, officials with Tricon, Kleiman and Rinderknecht said last week they plan to submit proposals for the project.
Calls to Mortensen, Ryan and Unzeitig were not returned. An official with Miron Construction declined to comment.
Mike Glavan, chief executive of Kleiman, said the process will be similar to a competitive bid for contractors, but the biggest difference will be the financing.
The lease-purchase agreement requires the contractor to 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.
“The construction piece of the pie really doesn’t change at all,” Glavan said. “Really what it’s going to do, in my mind as a general contractor, is I really have to mind my P’s and Q’s ... It really puts the general contractor on high alert to make sure they’re managing that cash flow properly.”
Contractors said that level of financing will require a loan.
“We have to go to a financial institution and obviously come up with the $25 to $30 million to finance this project while it’s being built,” Tricon owner Ron Richard said. “As a contractor, you have to put down a certain percentage of that yourself.”
That upfront investment will be a bigger barrier for smaller companies, Richard added.
“That takes money out of your own working capital that you would put toward other projects and so forth,” he said. “If you’re a large developer ... it’s not as big of a barrier.”
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In addition, the contractor faces penalty fees if it fails to meet the project’s substantial completion date of Sept. 1, 2019.
Contractors interviewed said they don’t think a lease-purchase agreement will make the process any less competitive — price will still be a major factor.
If the board — which already has pared the pool of candidates to seven contractors — doesn’t take the lowest bidder, Glavan said it should come with a reason.
“As far as what I’ve heard from the county is they really want to make sure it’s done by local folks,” Glavan said. “All we want is a level playing field.”
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