Like a few other folks, we'll admit to being initially flummoxed by last week's San Diego City Council vote to spend $500,000 of new-main-library money to find out what the project will cost. Cost estimates for the long-delayed Downtown building, after all, have been bandied about for more than a decade—from 1996's initial estimate of $63 million to 2005's $185 million—and coming up with those figures never seemed to require such an expense.
Prior to casting his “no” vote last week, City Councilmember Carl DeMaio—who'd like to see the remaining $63 million in redevelopment money that's been earmarked for the project spent on more practical things, like paying off debt—applied a timely metaphor to the expenditure:
“That's like a family that is deeply in debt, that cannot afford its mortgage, getting a construction estimate on a whole expansion and remodel of their house.”
Turns out that what the city's getting for $500,000 isn't a new cost estimate but, rather, what's known as a Guaranteed Maximum Price (also referred to as a “Gross” Maximum Price in some city documents). To arrive at the GMP, Turner Construction—under contract with the city to consult on all construction-related aspects of the proposed library—will break the project down into all its component parts (electrical, plumbing, landscaping, etc.) and put all those jobs out to bid. Once the winning bidders are selected, Turner will total everything up to arrive at the GMP. A project awarded based on a GMP is different than a project that goes to the lowest bidder, city documents explain: “Turner will guarantee to complete the building for not more than the GMP” (barring, of course, “changes due to unforeseen conditions or made by the city after the work is bid”).
It's a huge leap forward for a project that's limped along for three decades. But it's happening at a time when 1) the city's facing at budget shortfall of at least $179 million and 2) financing for the library's not yet in place. In June, Turner estimated that project costs have increased by $9.1 million since 2005's estimate of $185 million. But only $157.5 million's been identified for the project, counting millions of dollars in pledges from unidentified citizens and including a $20-million state grant that's at risk of being pulled if the project doesn't proceed.
“Not moving ahead with this bid process virtually ensures we'll lose the $20-million state grant, which is absolutely critical to the project,” said Rachel Laing, spokesperson for Mayor Jerry Sanders.
The state agreed to extend the grant to August 2010 if the city moved ahead with the bid process by Nov. 15.
While only two of six council members opposed the $500,000 expenditure, enough expressed concern with the financing to derail the project when Turner comes back with the GMP in the spring.
“Kevin wants to see the money, especially in this economic climate,” said Tony Manolatos, spokesperson for Councilmember Kevin Faulconer, whose district includes Downtown. “He's not willing to spend general-fund money on a new library when we're facing so many cuts.”
Laing, though, pointed out that the Library Foundation—the project's private fundraiser, which claims to have raised $37.5 million so far—is confident that donors will come forward once the project breaks ground.
The Mayor's office “has seen enough fundraising campaigns to recognize that the more likely projects or candidates are to succeed, the more donations tend to flow toward them,” Laing said.
The foundation's best hope is to convey that confidence to council members; the winning bids that make up the GMP will be good for, at most, six months, said Darren Greenhalgh, deputy director of the city's Engineering and Capital Projects Department.
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