It was more of a trick than a treat for Mobile city officials on Tuesday after learning that a parking garage project near the Mobile Civic Center is coming in more than 30 percent, or $9.5 million above initial estimates.

Mobile city council members also learned a spooky reality during the council meeting: There are few options toward lowering the soaring costs of a 1,025-space parking garage within the 22-acre Civic Center property.

The garage, once built, will accommodate a U.S. Army Corps of Engineers (USACE) office building that is currently under construction, and a future Civic Center renovation.

Originally estimated at $30 million, the new price tag for the parking garage has shot up more than $39 million.

“We haven’t come up with something we can recommend that is significant enough to get us closer to the budget,” Mobile Mayor Sandy Stimpson said during the council’s preconference session on an agenda item asking for the council’s approval in moving an additional $9.5 million of General Fund reserves to support the increased price tag on the parking garage.

“The cost of concrete has almost doubled the last several years, and it’s really material and labor costs that is driven by the increase in inflation,” Stimpson later told the media. “Everything has gone up. This is not the first (city project) to increase. But this has caught everyone’s attention because of the $9 million number.”

Reduce costs

Some council members are urging Stimpson and his staff to meet with Volkert Inc. – project managers for the redevelopment of the Civic Center, a separate project from the parking garage – to find some cost savings. The council initially dedicated $29 million for the parking garage as part of an appropriation authorized in May.

The council could vote next week on whether to appropriate the reserves to pay for the escalating costs on the parking garage, or if alternative options should be explored.

“We will look forward to the results of the meeting with (the engineers) and looking at the designs to see where changes can be made to make it a little less expensive,” Councilwoman Gina Gregory said. “We understand what is happening with the construction costs. We just have to get ready for that.”

Stimpson said options such as eliminating parking space by removing an entire floor from the parking garage could wind up being more costly in the long run.

He also said the USACE would not be asked to contribute to the increased costs, even though the federal agency will benefit the most in the immediate future from the parking garage. The USACE will get 151 of the parking garage’s spaces – 16 that will be reserved 24/7 and 135 that are reserved during weekdays.

The parking garage is needed because the USACE’s office building is removing existing parking from the Civic Center property.

“The cost overrun will be borne by the city,” Stimpson said. “There is no other way to say it.”

He said using reserves was the best way to approach the cost overrun, saying that borrowing would require “taking longer to pay it back.” Stimpson added, “this is cash we have, and there is no interest expenses to exacerbate the cost overrun.”

Councilman William Carroll said he would like the city consider rebidding the entire project, arguing that the construction methods are driving up the costs.

Carroll argued in support of building a parking garage with precast concrete components, which saves on labor and material costs. Precast concrete is concrete poured and molded before its shipped to a construction site.

He said that method could save the city $5 million or more on the project.

“Our approach to this job could have been different,” he said. “We need to slow down a little bit and see what costs savings there are to make this work.”

Leon Barkan, president and chief operating officer with Volkert Inc. – project managers on the Civic Center project – said the life-cycle costs for a precast project might be “less expensive” on the front end but are “much more expensive” for ongoing maintenance.

The parking garage will be built through cast-in-place concrete, which is poured and molded on the construction site.

Barkan also said that rebidding the parking garage will “guarantee a higher price.”

Volkert was hired by the city to oversee the Civic Center project after the bids were released on the parking garage.

“We do bid work every day and this market is incredibly busy right now,” he said. “Putting it out for bid when we see costs for construction going up every day guarantees a higher bid.”

Cost concerns

Indeed, the costs for concrete and raw construction materials continues to steadily rise since the pandemic. About 83% of construction materials experienced a significant cost increase since 2020, with an average jump of 19%, according construction cost data tracking firm Gordian, as reported by Construction Drive.

Input costs – the price paid for all goods and services, excluding labor and capital investment, used by construction firms – for new nonresidential construction were up 42.5% from March 2020 to March 2022, according to CBRE, a global real estate company.

The rising construction costs is also including plenty of worry among city officials eying a complete renovation of the Civic Center Arena and Theater. The 59-year-old downtown sports and entertainment venue has long been eyed for improvements, with initial estimates ranging from $170 million to more than $200 million.

Councilman Ben Reynolds said he is concerned about something similar happening on the Civic Center project if the council decides to move forward with a plan once the facility’s design is completed.

“Thirty percent is a big miss,” Councilman Ben Reynolds said. “I want to be as close as we can be as we move forward.”

Barkan said that Volkert intends to keep the council informed on estimates as the design process moves forward on the Civic Center facility.

“So, we don’t have a surprise when going out for bid,” he said.