Greenwood façade costs rising

The cost to improve facades on 30 downtown Greenwood buildings has increased again and the city is upping its contribution of tax dollars to fund it.

Bottom line: The cost of construction has nearly doubled from the initial estimates provided by engineers and architects in December and taxpayers are on the hook for up to $850,000 so far.

The initial cost estimate for renovations on the 30 buildings with owners willing to participate was about $695,000. Those figures were updated to reflect more current labor and material costs, upping the cost to about $942,000. Since then, architects have more thoroughly inspected each of the buildings with structural engineers, leading to another increase in the estimated cost.

Now the construction is expected to run almost $1.3 million.

The project also includes about $205,000 in additional costs for architecture fees, grant administration, environmental studies, labor standards and title fees, taking the total project budget to $1.5 million.

The city redevelopment commission had initially pledged $600,000 in tax-increment financing, or TIF, funds to support the project. TIF funds come from taxes that are paid by some businesses that are then set aside to be used for infrastructure and economic development projects. The city is applying for a $400,000 grant from the state and building owners are paying for 20 percent of the construction costs for their buildings, for a total contribution of about $260,000.

On Thursday, the redevelopment commission approved another $250,000 in TIF funds to cover the cost increase due to the higher estimates.

“The only other option would be to start cutting building owners from the project,” Greenwood senior planner Ed Ferguson said while making the request for more tax funds.

AXIS Architecture, which has prepared all of the estimates, declined to comment and wants city officials to answer questions about the project, Ferguson said.

Architects formed the initial estimates by taking a broad look at the downtown while drafting conceptual drawings for the facade projects. The cost increased in the first revision because the projects were updated with more recent costs for labor and materials based on similar projects that had recently been done in the area.

The costs increased again this time because architects and engineers had done a more thorough inspection of each building and identified some additional types of work that weren’t expected previously, Ferguson. This time structural engineers were included who were able to identify issues that architects might not have seen before, he said.

For example, Circle City Auto Parts at 172 W. Main St. had a revised cost of about $6,000, but when architects and engineers took a closer look they found that much more brick repairs are needed and the building also would require expensive limestone work. That project is now about eight times more expensive at $51,000.

Twenty of 30 projects now cost at least 40 percent more than the first revised estimate. Six of the projects have more than doubled in cost from the first revision.

Five projects did have slight decreases in cost, but none of those were more than 15 percent from the first revision.

Some city council did express concerns in January about the cost of the project, how the price had increased $250,000 from the initial estimates before the plan was even approved and how much money the city would be putting into just the front of the store while not guaranteeing any interior repairs would ever be made.

The first estimates were formed from a brief review of Greenwood and were expected to increase during more detailed reviews, Ferguson said.

“I think the estimates we have, the last round are credible and accurate. We started with low numbers on a preliminary basis that we knew were low and I think, if my memory is right, initially we got estimates that were based primarily on drive-by, walk-by type cursory inspections and even just looking at photographs and so forth,” Ferguson said.

Redevelopment commission member Mike Tapp wasn’t sure why the initial estimates were so far off from the new costs, but the commission is willing to put in more tax money to see the downtown revitalization finally get launched, he said. Tapp doesn’t want to go any higher than $850,000, though, and if costs happen to increase again, the board will need to have a serious discussion about how to proceed, he said.

“It’s all in the spirit of economic development downtown. I know the Restore Old Town Greenwood group, they have a lot of momentum and mean well. It’s the city’s intention to see that gets done. I think we’re all behind that effort,” Tapp said.

Redevelopment commission member Mike Campbell, who is also a city council member, said he was beginning to get concerned about how much money the city is committing to the project. Campbell missed the Thursday redevelopment commission meeting, but he’s concerned that the city and business owners are putting up more than $1 million compared to the state’s $400,000 while the state has control over all the rules and how the project needs to be done, he said. He’s not in favor of the city putting any more than the $850,000 it has promised.

“I do see it as a huge morale boost for our downtown. It’s visible and something people will see and we need more of that. The cost is getting to the point where I’m not sure the costs outweigh the benefits,” Campbell said.

The city council will have one more opportunity to discuss the facade grant this month, since the council needs to approve a document that is needed before submitting the final application, Ferguson said.

Greenwood shouldn’t have any issues getting the $400,000 grant as long as its final application is submitted on time, Ferguson said. The city was the only community in the state to apply for the grant this spring, so as long as the city meets the minimum criteria it should get funded.

Building owners also will be providing 20 percent of the cost of their renovation, Ferguson said. In order to participate, building owners have to have signed contracts and agreements in place and submit a check with their 20 percent match by May 20, Ferguson. Anyone who doesn’t meet those requirements will likely be cut from the project since the city needs to submit a final application with firm numbers to the state by June 5, he said.

Ferguson said the interest and participation from downtown building owners has been overwhelmingly in support so far and that he wouldn’t expect many, if any, property owners to drop out of the facade program.

Redevelopment commissions approved upping the total TIF money that could be used to $850,000 total, but wanted to make sure that if the total costs for the project come in lower than their contribution would be reduced accordingly. If building owners drop out, the amount of city tax dollars being used would go down.

But no one can be sure what the actual price for the facade work will be. The $1.3 million construction figure is just an estimate and the project will need to be bid out to contractors this fall. If the city gets multiple companies interested and competitive bids, the construction price could come in substantially lower. But if few construction groups are interested or if they expect the work will be more costly than estimated, the price could go up again, Ferguson said.

When Franklin did a similar grant program in 2013, the city had two bidders. The company that came in under the estimate was eventually fired by the city because it was not making adequate progress on project in order to meet the deadlines set by the state. The second company, which ended up coming in to finish the project after the first firm was terminated, had initially priced the project substantially over the estimate.

Construction on the facades needs to be substantially complete within 18 months of the grant being awarded, according to state rules. Cities can request an additional six-month extension if they need more time, Ferguson said.

Rebuilding 30 facades in 18 months will require an aggressive schedule, but Ferguson hopes the large project will entice more firms to want to build it because it’s a large contract that would be worth devoting resources toward, he said.

By the numbers

Construction cost estimates to renovate 30 buildings in downtown Greenwood has nearly doubled from the original estimates. The city is planning to put up to $850,000 in tax dollars into the project, after increasing its contribution on Thursday due to another cost increase. Here’s a look at how the project has changed since the beginning of the year.

Initial estimate

These figures were presented in the initial draft of the downtown revitalization plan released in December.

Estimated construction cost: $695,325.48

First revision

The initial estimate was updated in January to reflect more up-to-date costs for labor and materials before the city council approved the plan.

Estimated construction cost: $942,476.25

Percent increase from initial estimate: 35.5 percent

Second revision

Construction costs were updated again this month after architects and engineers did a more in-depth inspection of each property.

Estimated construction cost: $1,292,678.28

Percent increase from initial estimate: 85.9 percent

Percent increase from first revision: 37.2 percent

Total estimated project cost: $1.5 million

Increasing costs

The construction cost to renovate facades on 30 buildings in downtown Greenwood has increased 89 percent from initial estimates. Here’s a look at the five projects that have more than doubled in cost from estimates earlier this year:

Circle City Auto Parts, 172 W. Main St.

Initial estimate: $2,795

Revised estimate: $5,848

New estimate: $51,128

Percentage change from revised: 774 percent

211 W. Main St.

Initial estimate: $3,927

Revised estimate: $6,796

New estimate: $21,743

Percentage change from revised: 220 percent

Money building, 310 W. Main St.

Initial estimate: $1,021

Revised estimate: $4,223

New estimate: $10,164

Percentage change from revised: 141 percent

A-Trains/Railway Productions, 180 W. Main St. and Main Street Cutz, 176 W. Main St. (same costs for both locations)

Initial estimate: $7,274

Revised estimate: $11,467

New estimate: $25,490

Percentage change from revised: 122 percent

Bar Rev, 211 S. Madison Ave.

Initial estimate: $4,271

Revised estimate: $8,847

New estimate: $19,591

Percentage change from revised: 121 percent