Could price increase kill downtown Batavia apartment plan?
Batavia aldermen are wondering whether the controversial One North Washington apartment development can overcome its latest challenge: an increase in the price to build it.
Rough bids have come in $6 million to $8 million higher than the $40 million developer Shodeen Inc. estimated when it unveiled the proposal in 2015, according to city officials.
So it is seeking a way to cut costs, and to put in more apartments so revenue will be higher, city administrator Laura Newman told aldermen Tuesday night.
“That is such a big increase in the cost of the project we really had to hit the 'pause' button and determine together how to get past the issue,” she said.
“This sounds less like hitting the 'pause' button and more like hitting the 'reset' button,” Alderman Dan Chanzit said.
The city is especially concerned because it is on the hook to pay up to $16 million toward the project, including the cost of a new parking garage. The city would be reimbursed from increases in taxes on the property after it is developed.
According to a contract approved a year ago, the city was supposed to turn the site over to the developer by the end of 2016. It took the city longer than anticipated to acquire all the parcels and demolish buildings. Now Shodeen has asked for a delay, because accepting the site means it has to secure financing and submit final plans within 180 days.
Sticker shock
Aldermen were shocked to learn about the price difference, and want to know how the estimate could have been so far off.
It appears the developer underestimated the cost of constructing a below ground-level garage, according to the city's economic development consultant, Chris Aiston. Aboveground garages cost about $22,500 per parking space, he said; those with below ground-levels cost about $35,000 per space.
The cost of concrete has risen since 2015, as have labor costs, Aiston said.
“They (Shodeen) screwed up in their estimates,” Aiston said.
The bids aren't final because they aren't based on final construction drawings. Drawings have not been submitted to the city for approval. Contractors typically add “10 to 15 percent fluff” in rough bids, Aiston said.
Possible changes
Shodeen has suggested removing the retail space on the first floor along Wilson Street, and 100 parking spaces in the garage, to make way for more apartments, Newman said. The building was approved for 186 apartments and 350 parking spaces.
It has also suggested removing brick from the facade of the parking garage, and perhaps having openings in the wall like many garages.
And the developer is applying to the state to make the site an enterprise zone, she said. If it were designated such, the developer could get incentives, such as not having to pay sales tax on construction materials, which would save about $700,000.
The city could also pay for more of the project, Newman said.
Aldermen balk
So far, Shodeen representatives have met only with city staff. The developer would like a sense of whether aldermen would go for any of the suggested design changes, Newman said, before doing any more work. If not, it may mean going “back to the drawing board” for developing the site.
Chanzit and several other aldermen said they don't want to remove the Wilson retail spaces.
Alderman Mark Uher and Michael O'Brien weren't thrilled with changing the River Street facade. “When they are going to recommend changing the building facade, they are not going to make it look nicer for less money,” Uher said.
And all agreed they want more details, including updated information on the developer's equity and financing, before they discuss it further. “We're not in Vegas, I don't chase bad hands,” Alderman Marty Callahan said.
They are inviting Shodeen representatives to discuss it an Oct. 11 committee meeting.
Shodeen President Dave Patzelt could not be reached for comment.