Wednesday, March 15, 2017

City of Asheville: taking on the development game

City gets into the development game: RADTIP
 
Asheville Unreported attended the first of three city budget work session meetings held yesterday, March 15th and also attended the Asheville Area Riverfront Redevelopment Commission ("AARRC") monthly meeting held last Thursday, March 9th.
 
If you're not aware, the AARRC is in charge of all riverfront development within the City (Swannanoa River as well as French Broad River) including the massive $50 million project known as RADTIP (River Arts District Transportation Improvement Project).
 
A recurring theme in both meetings was concern over rising construction costs.  The RADTIP project,  approved in early 2013, was originally supposed to cost $50 million, of which $14.6 would be funded by a Federal “TIGER VI” grant. The plan was that City and its taxpayers would then be responsible for $22 to $25 million and the remaining would costs would be covered by various grants.
 
Now the RADTIP project includes four greenways, a roundabout and road realignment on Riverside Drive, and actual lowering on Riverside Drive at the Norfolk Southern Bridge (aka Festus Bridge).  It also called for substantial right of way takings from more than 30 private property owners, several of which are contesting these through lawsuits.  Counting the rights of way needed for the Greenways, this is the largest right of way taking in the history of Asheville and one of the largest construction projects the City has undertaken in years.
 
The 14.6  million TIGER VI funds, awarded 3 years ago, are a flat amount and are not adjusted for rising costs or inflation.  The City has yet to receive a final contract from the Feds, although City Manager Gary Jackson ($192,000 annual salary and benefits) said at yesterday's meeting, he was as "positive as he could be" that the contract would be received this May. 
 
Meanwhile the City has hired almost every construction, engineering, architect and environmental group in town to do preparation work for these projects which have only just begun.  The bids for the major portion of the construction projects are set to go out this month or next. The City is hoping that final bids will be awarded in May, with actual construction to start in June or July. 
 
That's three years after the 2014 awarding of the Federal grant money and the original estimation of this project.  Three years’ worth of inflation and rising construction costs.
 
Rising construction costs a concern by the City Finance Director and City Tiger VI Grant Manager
 
The City Finance Director, Barbara Whitehorn, ($152,000 annual salary and benefits) voiced this concern at yesterday's budget meeting during discussion of RADTIP and reported that her department is seeing annual increases of 10% and quarterly increases of 20% in construction costs.  At that rate, by the time the project actually begins, actual costs will have doubled and inflation will have inflated the price tag by half again the original estimate.
 
In short, the City's original estimation of this project at $50 million is beginning to look like a bargain.  It could eventually rise to more than $70 million and that's assuming no construction surprises or issues.
 
And, at last week's AARRC meeting, Dustin Clemens, the new TIGER VI Project Manager (recently hired by the city just to handle the Federal Tiger VI grant projects), warned that it was important to get these construction bids and do final awarding to lock in the prices precisely because of rising construction costs.
 
Forewarned
 
At the May 17, 2016 City Council meeting last year, Chris Peterson, one of the French Broad River property owners whose property was seized for RADTIP, warned the Council of these rising construction costs.  In fact he specifically stated that construction costs rise at least 10% annually  (Click here to watch the video and go specifically to 54:00 minutes). If you watch this video and listen to Ms. Whitehorn's budget discussion, they say almost the same thing, verbatim.
 
Why was Mr. Peterson so concerned? As he stated to City Council, because it will be the City taxpayers who will foot the bill for those increases.  Given the City's history of development, it is likely that this RADTIP project could be the breaking point for the City's fiscal balance sheet.

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