With construction set to begin on the new Robert Crown Center next month, City Council received a report setting the overall cost of the project at $52.9 million. The revised price increased from about $45 million just weeks ago.
Most of the funding options will impact taxpayers.
Some Reasons for the Cost Increase
Multiple events caused the increase, according to Assistant City Manager Erika Storlie and the staff memo accompanying the “for discussion” item at a Special City Council meeting on May 21. Poor soil conditions “requiring the installation of deep foundations and a structural slab” added about $1.5 million. Though the City has known about poor soil in and around Robert Crown for years – the soil has been linked to the current building’s poor condition because of excessive settling and sinking – apparently the soil was found to be even worse than believed.
A public art component, apparently required by Evanston ordinance, added $400,000. The City also elected to increase the contingency “based on discussion with the construction manager,” adding $1.4 million to the project cost. A contingency allows for relatively minor shifts in other costs to be absorbed throughout the construction process without having to return to Council for another vote.
Steel prices rose about $500,000 since the last construction estimate, thanks in part to an increase in steel tariffs imposed by the federal government on steel imports.
Finally, the “more detailed development of the construction documents” added about $600,000 to the overall project cost.
Ms. Storlie told Council that a “value engineering” exercise reduced the cost by at least $1.5 million, but doing so removed features from the project such as exterior restrooms on the east side of the building and changing countertops from quartz to Corian. Fields will also have only one scoreboard each now.
Sources of Funding
According to the report, funding will come mostly from general obligation bonds – money borrowed by the City for large capital projects. So far the City has borrowed $1.9 million in 2016 and 2017, but plans to borrow $21.25 million this year, plus another $1.25 million to be borrowed by the public library. In 2019, plans call for another $18.75 million borrowed by the City, $1.25 million by the library.
Private donations could limit the amount borrowed in 2019, but not 2018, said City CFO Hitesh Desai. In 2018, construction will start requiring cash on hand. Private donations often come in the form of pledges to be paid back over time. Donations can be used to pay the debt burden – pay back the bonds issued by the City, he said.
The Friends of Robert Crown, the not-for-profit group formed to raise money for the new Crown project, have far exceeded their initial goal of about $10 million. To date, they have raised well over $11 million and are on target to exceed their revised goal, $15 million, before year end, said the group’s secretary, Pete Giangreco. A “groundbreaking event” set for June 22 has already raised $150,000 of its $250,000 goal, he said.
Mr. Desai suggested three bonding options. First, tax-exempt general obligation (GO) bonds are the type most commonly used for large capital projects (and in Evanston, at times for routine maintenance work such as road resurfacing and recently a five-year consulting contract to study Evanston’s roadways). Second, taxable bonds are used primarily in TIF districts. The Crown facility is not in a TIF district, and given the higher interest rates charged there appeared to be no reason to consider taxable bonds.
A third bond type, though, 501(c)(3) bonds, might be available, said Mr. Desai, because the City has entered into “exclusive use” agreements with some of the donors to the new Center. As an example, it is widely believed that Northwestern University’s donation of $1 million to the project came in exchange for reserved ice time for its students. The exclusive use aspect of the donation may permit the issuance of 501(c)(3) bonds, which have the same interest rate and benefits as GO bonds but require some additional paperwork and an additional public meeting.
According to a “Tax Exempt Financing Scenario Debt Service” chart provided in the staff memo, taxpayers are expected to be responsible for just under $3 million per year beginning in 2024 – a bit less before then – until the bonds are retired in 2044. Plans call for an ongoing maintenance fund to pay for the upkeep of the building, so additional borrowing should be avoided.
The City’s Bureau Chief of Capital Projects, Lara Biggs, told Council the City planned to enter into a “Guaranteed Maximum Price” (GMP) contract with construction manager Bulley & Andrews. She called GMP a “methodology used a lot in the private sector and also when a municipality bids a very large project.” Essentially, the City will turn the entire project over to Bully & Andrews knowing the total cost will not exceed $52.9 million. Any contingency remaining at the end of the project will be returned to the City.
Alderman Peter Braithwaite, 2nd Ward, complimented the contractor and the City for outreach efforts to date. The contractor wants to make this a community project and has scheduled a vendor fair, promises to abide by the Local Employment Program and hire Evanston residents for at least 15% of all onsite construction work, and will meet the Minority, Woman and Evanston-Based Enterprise (MWEBE) goal of 25% set by Evanston ordinance.
“This is a lot of money,” said Alderman Cicely Fleming, 9th Ward. She said she would like to “have a discussion” about “generating more revenue.”
“I agree 100%,” said Mayor Stephen Hagerty. “Property taxes are high. I don’t want to see property taxes increase. ”He called for a dedicated revenue source.
Revenue could come from the sale of City assets, said Ald. Fleming, citing the approved but not yet completed sale of the library parking lot as one such source.
Ms. Storlie said fundraising efforts by the Friends of Robert Crown would dollar for dollar reduce the amount to be borrowed in 2019, and in the future would be used to cover debt service – the $2.9 million per year reverenced earlier. She asked for some direction as to the request for additional revenue sources, as the City constantly searches for revenue streams. “It would be helpful if I had some direction as to the types of things the [Council] would like” to pursue for additional revenue, she said.
Ald. Braithwaite suggested serving alcohol in the Center, likely by renting a concession area to a vendor. He said a community center in Palatine did so.
“What about our parking lot?” said Ald. Fleming. “I don’t know that as a City we need to be in the parking deck business. … I know that in south Evanston we don’t even have facilities for our youth.” She called for “some bigger ticket items to take some of the money off right away.” She suggested selling one or more of the City’s parking decks and using the revenue to pay for Robert Crown.
Ald. Fleming also called for traffic light cameras. “I’ve gotten several tickets at Oakton and McCormick,” she said. She admitted the Chicago red light ticket system has been controversial, but added, “just because another city did it wrong” does not mean Evanston could not do it right.
Other alderman said they were not interested in selling parking assets. Chicago sold their parking meters, said Alderman Melissa Wynne, 3rd ward, and “it was a disaster.”
“We make money on our parking decks,” said Ald. Ann Rainey, 8th ward. It does not make sense to sell an asset that’s making money to finance debt. She instead called for more development, and chastised Council for denying projects like the 601 Davis building and Northlight theater proposal, both of which would have generated millions in building permit fees alone. “The way to get affordable housing, social services, mental health funding,” she said, “is we do development.”
She also criticized the public for challenging development projects. “We need Harley Clarke, but we can’t have any development downtown,” she paraphrased. “We have turned down some of the most spectacular projects” as a result, she concluded.
“Should we reallocate some of these assets?” asked Mayor Hagerty. “That doesn’t seem unreasonable to me to do the analysis.”
The matter was up for discussion only, and the City took no action Monday night other than to dictate the artificial turf infill [see sidebar]. Robert Crown will officially break ground June 22, with major construction commencing shortly thereafter. The new Center is expected to open in the fall of 2019, with fields to be completed the next year.
A possible correlation between a crumb rubber and sand infill and cancer cases emerged at the May 21 City Council meeting, as aldermen decided on the type of material to use on the new artificial turf surfaces to be built at the new Robert Crown Center. All alternative-surface materials will increase the cost of installing and maintaining the fields, some more than tripling the cost.
Council voted, at least for the moment, to budget for a material composed of recycled shoe soles instead of the crumb-rubber surface. According to the staff memo, using the “Nike blend” increases the cost of infill from $176,700 to $359,100, with an expected similar higher cost each time the material is replaced. The highest-priced option, virgin rubber, would have cost about $627,000.
The motion to go with the Nike blend came from Alderman Don Wilson, 4th Ward.
“There is a public perception that crumb rubber causes cancer,” said Assistant City Manager Erika Storlie.
Speaking during public comment, John Kennedy said his daughter, who played soccer on crumb-rubber surfaces in high school and college, developed Hodgkin’s lymphoma. She has now recovered, he said, but “no child should ever have to go through” such health issues. He said a soccer coach in Seattle had identified some 237 soccer and football players who developed cancer playing on crumb-rubber surfaces.
City Bureau Chief of Capital Planning Lara Biggs said, there have been no scientific studies linking the surface with increased cancer risk. At this point, evidence is “anecdotal,” she said.
Alderman Eleanor Revelle, 7th Ward, said both the federal government and the state of California are in the midst of comprehensive studies, and results should be released prior to the installation of the Robert Crown fields in 2020.
“We’d feel really foolish to have chosen one [surface infill] then have this report come out” linking the chosen infill to cancer, said Alderman Melissa Wynne, 3rd Ward.
“We’re not going to have our adults and kids playing on any material that causes cancer,” said Mayor Stephen Hagerty.
Ald. Wilson then made his motion, saying the City should budget for the Nike blend.
Ms. Biggs said the contractor could bring in actual cost quotes rather than the rough estimate staff provided, and bring in alternatives based on the various infill options.