Minneapolis officials are scrambling to reconfigure a planned overhaul of Nicollet Mall, the state’s signature pedestrian thoroughfare, after a lone construction bid for the project came in $24 million higher than expected.
The bidding dilemma comes just months before construction on the elaborate redesign is slated to begin following utility work that is already underway. The city’s public works director said the project will stay within its $50 million budget, but meeting that figure may require changing the pavement design and soliciting more specific bids in March.
“I think it surprised everybody,” Director Steve Kotke said of the one bid the city received in December, despite what appeared to be wide interest in the project. Golden Valley-based Morcon Construction’s price was $59 million, significantly higher than the $35 million budget for the construction work.
The hurdle marks yet another funding setback to city-led development projects getting underway this year. The City Council gave initial approval this week to delaying features of a park in front of the Vikings stadium until more private money can be raised to pay for them. And the planned renovation of Target Center required an extra $24.5 million from city coffers because of high construction costs.
The Nicollet Mall redo, designed by James Corner of the firm James Corner Field Operations, is being funded largely through property assessments charged to nearby building owners and state bonding money. The city is contributing $3.5 million. The project’s most prominent features are mini attractions that would pepper the mall, such as a mirrored canopy, woodsy seating areas and special lighting.
Thor Construction considered bidding on the project, but decided not to.
“It was a lot for the price they wanted,” said Hector Bruce, senior project manager for Thor Construction. “The more questions we asked, the more we realized there would be problems ahead.”
Kotke attributed much of the problem to the concrete pavers — brick-like tiles — that are designed to give the street and sidewalks of the mall a distinct look. There aren’t a lot of contractors who specialize in that, he said. “Even the people that do do the work, it was probably more than what they normally can handle,” Kotke said of the eight acres of pavers in the plan.
More than 20 general contractors had been examining the project documents online, but only Morcon placed a formal bid. The overhaul requires a diverse range of skills, meaning general contractors would need to seek out a team of subcontractors to do slices of the work. Two of the contractors reached by the Star Tribune said there was not enough time to develop a bid for such a large project. They also said it would be difficult to come in under the city’s $35 million budget unless the project were scaled back.
There were also cases in which the city’s estimates, conducted by outside firms CCS and Knutson Construction, understated the cost of the work, Kotke said.
The city may remove some of those pavers from the design and replace them with concrete or stained concrete, which they hope will lure more bidders. That increased competition is expected to help lower the overall cost. “Maybe the pavers in the places where people walk are still appropriate,” but perhaps the road could be concrete, Kotke said.
Kotke said the city may split the bid into more specialized packages in the next round, rather than seeking one bid on the entire project.
Although Thor Construction did not bid on the project in the first round, Bruce said the company might reconsider if it has more time to collect a full subcontractor lineup and if the city’s drawings and scope were more clearly defined.
“I’m glad it is going to bid again,” Bruce said. “Hopefully it will be done right this time.”
St. Paul-based LS Black Constructors showed initial interest but bowed out early because they lacked the subcontractors needed to accomplish the wide-ranging project. “It was too major of a project for us to go at it alone,” said Sterling Black, the firm’s chief executive. He said they might have considered bidding if the job were divided into smaller contracts.
Morcon General Manager Tony Peterson declined to comment.
The city expects to release new designs in mid-February, when they will be presented to the public and other groups before bids are solicited. Kotke said they do not intend to change primary elements of the design, like the mirrored walkway, reading areas, landscaping and public art. “That is what got people excited about the new mall,” Kotke said.
But they are taking a close look at the design of the bus shelters, and have been talking with Metro Transit about whether the agency could pick up more of their cost.
Metro Transit spokesman Howie Padilla said the agency agreed to pay $700,000 to $900,000 for shelter technology, including real-time arrival screens.
“As to any additional commitments, it would be safe to say that we’re exploring what that might be at this time,” Padilla said in an e-mail.
The $35 million construction budget is one component of the total project cost. Another $15 million covers other costs such as consulting fees, public art, city labor charges and traffic management.
The project’s timeline remains essentially the same, despite the hiccup. Utility work is already underway. And Kotke said construction is expected to begin in late June or early July, finishing in late fall 2017.
A number of real estate and development professionals serving on the project’s implementation committee — including leaders at Target and U.S. Bank — have been involved in the process behind the scenes, said Steve Cramer, CEO of the Downtown Council. “Those folks have pretty good perspective on construction,” he said.
“We’re certainly disappointed, as everybody was, with the [bid] result,” Cramer said. “But I think very quickly you go to pick yourself up, dust yourself off, and figure out how to restructure the opportunity and take it back to the construction market in a way that’s going to be more attractive.”