• Waterbury office complex looks to be on budget, administration says
     | October 26,2013

    MONTPELIER — Administration officials say the $125 million rebuild of the state office complex in Waterbury looks to be on time and on budget. Lawmakers, however, are standing vigil for potential cost overruns that could exacerbate what already look to be significant shortfalls in future state budgets.

    Steve Klein, chief of the Legislature’s Joint Fiscal Office, told the House Corrections and Institutions Committee on Friday to expect a general fund shortfall of as much as $70 million in fiscal year 2015.

    The capital fund, too, could be headed for trouble as shifts in the bond market threaten to erode the state’s borrowing capacity. According to one projection, Vermont will have to shave $52 million from its next two-year capital bill. Doing so would leave lawmakers with just $108 million in borrowing capacity in fiscal years 2016 and 2017 — well short of the $138 million that legislative analysts say will be needed to pay for the projects forecast to need funding.

    Cost overruns in one of the largest capital projects in the history of the state would threaten to deteriorate the state’s fiscal position even further. And while officials in the Shumlin administration say they’re confident in the stability of the $125 million lawmakers have budgeted for the Waterbury rebuild, they won’t have inked a “guaranteed maximum price” with the contractor, PC Construction, until shortly before Christmas.

    “We believe we’ll be on target when we get there,” Michael Stevens, project manager at the Department of Buildings and General Services, told lawmakers.

    The state will learn more about the integrity of its estimates for Waterbury next month, when it puts out to bid the high-dollar contracts related to a renovation and rebuild that will one day house more than 1,000 state employees in a 200,000-square-foot complex.

    Rep. Alice Emmons, the Democratic chairwoman of the committee, expressed concern about changes in the “bidding climate” since March, when lawmakers OK’d the reconstruction proposal.

    Stevens and Jesse Beck, architect with the design firm Freeman French Freeman, said the use of estimators with strong knowledge of the New England market should guard against any unpleasant surprises when the bids are opened.

    While “there are unknowns,” Stevens said, the administration has built a 5 percent contingency into its budgeting numbers and will be able to absorb unexpected change orders into the existing estimates.

    Officials at BGS said, however, that certain unanticipated developments — the discovery of a Native American burial ground, say, during the excavation process — could balloon costs beyond what anybody expected. Costs can run as high as 10 percent over budget without any additional legislative review, meaning lawmakers could theoretically see unexpected expenditures in future capital bills of more than $12 million.

    Rep. Linda Myers, an Essex Republican, said that once the state breaks ground, Vermont is committed to completing the project, no matter the scope of the overruns.

    “Once the project starts rolling and the costs start rolling in, there is no way to stop the project,” Myers said. “While those of us on this committee understand the need for preserving … the integrity of the capital bill … we’re not going to build half the building, or three quarters of the building. … The fact is once it starts to roll, it has to roll.”

    peter.hirschfeld @timesargus.com

    Peter.hirschfeld@ rutlandherald.com

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