City has paid $62,580 for cost consulting on DH&CC, split costs to favor Plamondon over taxpayers

Public Information Act (PIA) responses show the City of Frederick has paid the Maryland Stadium Authority (MSA) $62,580 for cost estimating work by its consultant Forella. The original contract between the City and MSA cost City taxpayers $53,764 and was paid by check Feb 5, 2016.

$34,392 or 64% was attributed to costing work on Parking Deck #6, and $19,372 or 36% to costing of the DH&CC.

This 64/36 is a sham split of the costs.

A parking garage has two or three standardized construction methods to choose from, some options with facade treatments, and elevators/stairs. It is much simpler to cost than the hotel/conference center complex which has in addition to the structural system, extensive internal detailing of finishes and fittings, walls and doors, it has windows, insulation, HVAC, plumbing, kitchens, restaurants, the pool etc. Plus there is the renovation of the trolley building, the proposed demolition of the Birely Tannery, and complex site and foundation work if there is to be underground parking onsite.

A hotel is way more complex and therefore far more work to cost than a parking garage.

A true garage/DH&CC split of the cost of costing could be closer to 20/80 than 64/36. The Forella report of Jan 7 2016 devotes a similar number of pages to costing of the DH&CC and the parking garage. That suggests splitting the costs 50/50.

So why load the estimating costs onto the garage?

Because it is being treated as a public work independent of the hotel, and its costs including consultant costs are being carried entirely by the City taxpayer. By contrast two-thirds of development costs of the hotel complex are supposed under the terms of the City-Plamondon MOU of Dec 3, 2015 to be paid for by Plamondon. As an aside, this itself was a concession to Plamondon since the RFP (request for proposals) which it and Wormald had bid on stated  on p16 of the RFP: “The successful offeror shall be responsible for all engineering, design, entitlement costs, permits, and operating and maintenance costs, and shall incur all risk of development, construction, operation and maintenance.” Plus it said (p26) that “all” costs associated with development of the property “will be the responsibility of the successful proposer.”

If they had stuck to the cost allocation advertised in the procurement of the developer the city wouldn’t have been up for any  of these costs.

Loading costs of a $67k consulting job onto the garage is a way of maximizing the City’s ‘take’ from taxpayers and minimizing the draw on hotel developer Plamondon.

A letter from Mayor Randy McClement to MSA executive director Michael Frenz of Oct 30, 2015  (Exhibit A of the contract) states that the city will be compensated by Plamondon for 67% of the costs the City incurred on consulting work for the hotel (DH&CC). Of the $19,382 paid by the City for DH&CC costing work, Plamondon would repay it $12,979, leaving the taxpayer paying a net $6,392. The garage costing (Parking Deck #6) of $34,392 is fully paid by City taxpayers.

Therefore by weighting the costs of the MSA consulting work contract 64% to the garage, 36% to the hotel (DH&CC) the Mayor sets up the taxpayers of the City for paying more and the hotel developer less.

A more real weighting would split the costs equally. That would have the developer paying $18,011 versus $12,968.

A bigger issue is that apparently the City screwed up in letting the initial costing go forward with what Richard Griffin has called “incorrect assumptions” which he says led to exaggerated costing in the Jan 7 report — the alarming $121 million figure for the project including nearly $28m for the 650 space Parking Deck 6, and for the hotel too.

So Griffin went back to MSA and Forella to challenge the cost numbers in the Jan 7 report. He dumped Deck 6 and brought three construction bids for the hotel work from Plamondon (the names of the contractors are blacked out.)

Biggest difference was the Forella Group’s assumption about “wage and MBE” (minority business enterprise) requirements, which adds close to 10% to Forella’s costs as compared to the three Plamondon contractors. There are also differences on foundation requirements with Forella’s numbers based on special piles. Plamondon’s contractors claim rammed aggregate (stone) will suffice.

Forella writes: “The current project is at the feasibility stage, with many unengineered issues.” Forella thought this warranted larger contingencies for cost escalation.

Forella’s extra work or Estimate Reconciliation was billed Feb 23 at $14,083 making the total cost of costing work $67,847. All the Estimate Reconciliation cost is being carried by the City.

The table shows Plamondon’s advantage from the weighting as $5,043 compared to splitting costs equally between the garage and the hotel and $15,850 if the realistic cost split is 20% garage, 80% hotel.

Add in the City carrying all the costs of the later $14,083 Estimate Reconciliation effort and the advantage to the developer is $19k or $30k.

It is unclear how firm these new estimates are since Forella emphasizes many aspects of the design remain to be engineered. They probably aren’t through with consulting on cost.

Most of this money is being spent for political purposes. Parking Deck 6 never made any sense as helping the hotel. It was too far away. It was only put in the hotel project because of its location next door to the County’s Board of Education complex at South and East Streets. In return for the County coming in as a ‘partner’ (providing $7m for the hotel project) it would get several floors of free parking for County employees.

But costed at nearly $28m that parking garage had to be dumped. That brought the cost down from $121m to $93m.

The $14,083 of extra costing work by Forella in February was needed to beat the total cost down another $9m from $93m to the current $84m.

City officials revealed not a hint of any of this struggle over cost estimates to state legislators in  Annapolis in March and April when going for state support to the tune of $16m. As far as legislators knew the project cost (without Deck 6) was still $70m.  P Sam 2016.07.07

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