Wellness Center bid acceptance delayed after funding issues come up at Aug. 16 special meeting
The question of who's actually going to build the Maslowski Wellness and Research Center in Wadena will have to wait a while.
The Wadena City Council was supposed to accept the first construction bids for the planned center at a special meeting Aug. 16 but chose to wait while they work to solve several financial problems facing the project.
First, there's the fact that the construction bids, or prices construction companies say they'll do the work for, came back more than $320,000 higher than estimated. Then there's also a $850,000 Federal Emergency Management Agency grant reallocation which FEMA may or may not award to the city. However, the city will certainly lose the grant if they begin construction before it's approved. Finally, rising costs associated with the project are outpacing the efforts of the Wellness Center Fundraising Committee.
In terms of dollars at stake, the biggest issue facing the council is the six-figure FEMA allocation. During the meeting, City Administrator Brad Swenson brought up the $850,000 in grant money that the city had asked FEMA to reallocate from rebuilding the grandstand at the Wadena County Fairgrounds to the Wellness Center project. The city applied for the reallocation in October of 2012, Swenson said, and about 9 months later in July FEMA finally responded to the city's application -- with some concerns. One of these concerns was that the city had yet to get the State Historical Preservation Office (SHPO) to confirm that the project wouldn't damage anything of historical value to the state. Swenson said FEMA had told him verbally that the reallocation would be approved as soon as SHPO signed off on the project, but they did not give him any promises in writing. However, FEMA was quite clear to Swenson and city officials that if they began construction before FEMA and SHPO approved, they would deny the reallocation outright.
"What FEMA is saying is, we cannot move any dirt until we have everything clear, or else we would not have this $850,000," Swenson said. "They will not give us the reallocation if we start the project beforehand."
As of the meeting on Aug. 16, the city had 60 days to accept or reject bids. SHPO had thirty days to respond after FEMA had given them the Wellness Center case information, which Swenson said was around Aug. 1.
The bids the city has received are more than $320,000 over the estimate that Chad Rettke, the project's construction manager, had prepared. Rettke said part of the high cost of actual proposals that came in was due to higher-than-expected bids in earthwork, concrete and paving services. Low bidder Lehr Construction withdrew their bid for earthwork services and other construction work after making an error in calculating bid price.
Also thrown into the mix is a new Minnesota law taking effect Jan. 1, 2014, under which certain materials the city would buy for the project could be exempt from state sales tax. Although there appeared to be no specific projection on how much money the city could save by waiting to buy materials, Swenson said it would likely be a high number. However, Rettke and Steven Miller, lead architect for the project, cautioned that the law only exempts materials from state sales tax -- not labor.
"It would be on things that you can order the materials separately from the labor," Miller said. "It'll be things like equipment -- the athletic equipment you're buying for the place."
A budget presented by Rettke at the meeting indicated project costs exceed available funds by about $407,000. Michael Craig, representing the Fundraising Committee, warned that to delay construction would mean a loss of donor money. He vowed to make up the shortfall in funding, even in the midst of rising costs.
"This fundraising has been a moving target. I think we've done a heck of a job raising funds," Craig said. "We're going to make up what we need to make up, that's my message. There's a group of us that are willing to underwrite whatever we have underwrite here, within reason."
Mayor Wayne Wolden said the the city planned to hold off on accepting or rejecting bids until they had secured the FEMA reallocation. As of late Thursday morning, the city had yet to receive any word from SHPO or FEMA regarding the site's historical status.