PORTSMOUTH, N.H. -- City Manager John Bohenko will ask the City Council for an additional $3 million in July to complete the city's downtown parking garage project, bringing the total bonding cost to $26.2 million.
Bohenko, in a memo sent to councilors Wednesday, said the additional $3 million will be used to "complete all aspects of the project." "On a 20-year bond this will add an average $193,000 per year," he said. "The total average cost of the $26.2 million bond will be $1.6 million per year, which will be paid by parking revenues."
Consigli Construction, the city's construction manager, "has been soliciting bids and negotiating pricing for the construction of the new parking garage, as well as the new road, Foundry Place," over the past several weeks, Bohenko said.
The City Council approved the original $23.2 million price of the garage project in May 2015. But since then "construction costs have escalated," Bohenko said "and the bidding is taking place during a hot construction market."
"Additionally, the scope of the project has expanded through the design process," Bohenko said. "The city has expanded the scope of utility work, most significantly water and electrical systems to provide improved water and electrical service into both the McDonough Street neighborhood and the North End."
City officials also pointed to site and environmental remediation costs for the project, which Bohenko said "will be addressed under the proposed budget."
His planned request in July for the additional $3 million is "based on the pricing that has come in thus far for the civil and site enabling work, as well as the preliminary numbers for the pre-cast structure (the garage itself)," he said.
Bohenko referred questions about how the costs broke down to David Allen, the city's former deputy city manager and project manager on the city's second downtown garage. Allen explained the cost of the garage itself now with all the site work is $20.7 million.
The cost of the land was about $5 million, there are design and construction management costs of about $1.6 million, along with $600,000 in environmental testing and environmental work, which Allen agreed Wednesday brings the total cost of the project to about $27.9 million or "a little more." But that number is offset by about $2.4 million in water and sewer funds, highway funds, parking revenue and a water and sewer bond premium, Allen said.
He said he is confident the project can be completed for $26.2 million and predicted demolition work for the project would begin in July but "the rubber won't hit the road hard until after Labor Day. Consligi remains confident the project will be finished by September 2018, Allen said.
Bohenko on Wednesday said he wasn't upset about the cost overrun "because everyone else is experiencing the same thing" in terms of construction costs. He said because the city has maintained its triple-A bond rating, it can borrow money for the project at a much lower rate than other municipalities.
"I'm not happy construction costs are higher but ... the cost of borrowing is a lot less," Bohenko said.
He also stressed the city's new garage project, which is being developed as part of a public-private partnership with Deer Street Associates, will be paid for with parking revenues. DSA is proposing to build four mixed-use developments around the garage. The city paid DSA about $5 million for the land where it's building the new garage.
Bohenko pledged the city would have enough money to pay for the new garage over its 20-year bond and continue to put $2.4 million into the general fund each year from parking revenues.
The city's Garage Committee had heard earlier in the year that the overrun could be $4 million to $6 million. Mayor Jack Blalock said he wasn't surprised to hear of the overrun having been advised of rising construction costs.
"I still hold firm we need a second garage so badly," Blalock said, adding the lack of parking downtown is the "number one complaint" city officials hear. "It's just the price we have to pay. It could have been worse."
City Councilor Brad Lown said Bohenko's request could "possibly stimulate a discussion about whether the scope of the project should be changed."
"I think everything should be on the table for discussion," Lown said Wednesday.
He pointed to the importance of being "sensitive to the concerns of the taxpayers that are paying the bill first and foremost."
"I don't mean to suggest this is directly funded by the taxpayers, it's funded by the users," he said. "But the more we bond, the more we spend, the more money we have to raise through use and potentially the less money we'll have available to transfer from the parking fund to the general fund."
He also continued to criticize a previous council's decision to take the city-owned Worth lot off the table as a site for the second garage. But he agreed with Blalock, saying the city has a "very bad parking shortage that is affecting everyone, downtown businesses, residents and tourists."
Councilor Nancy Pearson said "it's misleading to say the cost overrun is on the garage, because it's really the work around the garage that has the overrun."
The only way the city could have avoided the overrun is if the council built the garage at the Worth lot in 2012, she said. "It would have been much less expensive," she said.
But she doesn't think the scope of the project should be changed, noting infrastructure improvements included in the project will be good for the North End.
"It's actually good that that's getting done, as painful as it is now," Pearson said.
Bohenko noted the water system upgrades "will improve fire flows as well as provide looping of the water system improving both water quality and reliability."
"The electrical upgrades will not only underground the electrical service in the area but also provide improved reliability of the electrical system in the area," he said.
City Councilor Chris Dwyer called the request for the additional $3 million "reality" and said the initial estimate on big building projects is "just an estimate, it's not a fixed number."
"You deal with it on any projects, especially one with delays," Dwyer said.
Other city leaders she spoke to have said they're "having a hard time getting people to even bid on things."
"It would have been nice if we could have moved it quicker because anytime you can do something earlier, it's going to cost less," she said.
