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Off by $14 million

Bernero estimate inflates City Hall renovation price tag

Lansing Mayor Virg Bernero has told the public that renovating City Hall could cost as much as $60 million.

But the study on which his number is based shows that as much as $14 million of that amount is not for renovation at all but for furniture, technology and professional consulting fees — all expenses that presumably would be the same if City Hall operations were moved elsewhere, as is Bernero’s goal.

That comes from a June 6, 2016, report from DLZ, a local engineering, architectural and construction firm, obtained through a Freedom of Information Act request. The report included a space use study on the facility as well as an analysis of the conditions of the building.

The final cost estimates to consolidate all city services into the current City Hall range from $50,689,218 to $65,922,054.

Of those costs, $41,208,230 to $51,615,564 would be for construction. The remaining $9,480,988 to $14,306,490 would cover expenses like new furniture, technology and professional consulting fees.

The Mayor’s Office did not dispute that as much as $14 million of the cost Bernero has estimated is not to renovate the building.

But Bernero spokesman Randy Hannan said, “It is important to point out that the high cost of renovating City Hall is not the only driver of Mayor Bernero’s decision to move in a different direction.”

Hannan said the current location “is difficult to access” and that the “possibility of using the City Hall site for a transformatioal revelopement project … are equally important.”

Hannan also said the mayor’s numbers were “consistent with the costs cited in the previous study” during the Hollister administration.

The DLZ report, which the Mayor’s Office said cost $49,800 under a contract signed in 2013, found the city could consolidate almost all city operations in the current facility and have an additional 100,000 square feet. The important caveat on that estimate, however, is the assumption that both the Lansing Police Department and 54-A District Court would relocate. Those two entities account for nearly 70,000 square feet.

City Clerk Chris Swope on Tuesday was unable to locate a contract with DLZ on the space utilization study. All contracts are supposed to filed with his office. He said a FOIA request might reveal the contract through a more thorough search of city records, including the Mayor’s Office.

The building itself is “intact,” according to the report, which says the majority of electrical and mechanical systems “have either surpassed their useful life expectancy or need major repairs.” DLZ concluded its executive summary by stating the city should undergo a master planning process for the building.

“The next logical step in this process would be to perform a Master Plan/ Feasibility study, which would utilize the data collected through this project, to develop concepts, alternatives, and potential solutions to achieve the city’s operational goals,” the consultants wrote. “The Master Plan/Feasibility Study phase would explore a number of options for future development of facilities based on goals and priorities established by the City.”

But no master plan or feasibility study, as recommended in the DLZ report, was released by the city in response to the FOIA request.

Hannan said the master plan and feasibility study were only recommended “if we decided to remain in the existing City Hall” Local developer Harry Hepler, who has won awards for his renovations and reuse of the former Motor Wheel factory site in Lansing, said the lack of a master plan and feasibility study raises serious concerns.“ The Bernero administration is putting the cart before the horse,” Hepler said. “Their latest facility study appears to grossly over-inflate the cost to renovate their current building, and doesn’t give a comparable cost estimate for a new building. The lack of information sets up a dangerous path that could easily cost the city much more than necessary.”

Helper pointed out that a 1998 study placed the estimate to renovate City Hall at $28 million, while a new building would cost the city $32 million.

“I believe those numbers can still be achieved today,” he said.

Randy dismissed Hepler’s comments as sour grapes.

“We completely disagree with his assessment and can only surmise that his unrealistic numbers and critical comments are due to his inability to qualify ro compete in the City Hall RFQP process,” Hannan said.

Despite having a recommendation that the city conduct the feasibility study, Bernero, who has championed selling the building and moving city operations, is in the process of selecting one of four proposed sale and redevelopment projects submitted by developers last month. He has set Sept. 24 as a deadline for choosing a developer.

Last week, with only 24 hours’ notice to the public, those developers presented their plans at a four-hour event at the Lansing Center. Each development team had 45 minutes to present its vision, but no questions were allowed. An hour before the event was to begin, the city released all the plans on its website. City Pulse had sought those documents through FOIA, but the city delayed in releasing them until 30 minutes after they were published on the city’s website.

Here’s what the four developers had in mind for City Hall if they purchase the mid-century modern building.

— Chicago-based developer Beitler’s proposal would redevelop City Hall and the police building into a hotel. The proposal claims once they are vacated, the developer could have the new hotel up and running in eight months.

— Local developer Richard Karp, who renovated the old Arbaugh’s Department Store into apartments and has extensive experience in reuse project, proposed gutting the building down to its skeleton and reusing it as residential units. The plaza in front of City Hall would have a multi-story building built over a two-story high open area to maintain the plaza open space.

— Brett Forsberg and others have created a group called Urban Systems LLC.

Their proposal would also strip City Hall to its skeleton and reuse it as residential and hotel space. In addition, a multi-story tower would be built in the current plaza space.

— A group with ties to the Bernero administration, including the Boji Group, Christman Construction, C2AE and Gillespie Group, was the only developer to propose razing the building and building a brand new building on the site that would include residential, hotel and commercial space.

“In my professional opinion, the city should absorb all the ideas generated by this RFP, and then go back out to the market to get competitive bids responsive to the city’s exact needs,” Hepler said. “That is the only way to make sure the city realized its highest and best value, regardless of if they stay in the building or move elsewhere.”


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