Re-1 may pay $11 million more for soaring construction costs |

Re-1 may pay $11 million more for soaring construction costs

Soaring construction costs could drive up the price tag for Roaring Fork Re-1 School District building projects by $11 million.

Fortunately, Re-1 has enough financial reserves to absorb the expected increases. They should have little impact on its plans, and no effect on upcoming wage negotiations with teachers, district officials say.

Shannon Pelland, Re-1’s assistant superintendent of business services, said contractors are reporting “astronomical increases” in construction costs.

“The Western Slope … has just gone completely crazy,” she said.

Part of the reason is that a number of major undertakings are going on in the region, including work on school buildings in Mesa County, the Snowmass base village project, and construction in Vail. A construction labor surplus just a year ago has turned into a shortage, driving up work force costs, Pelland said.

In addition, costs of materials such as concrete and steel are jumping, along with the price of asphalt and other oil-based products. Global demand has helped drive up the prices of steel and oil.

Re-1 is using a voter-approved, $86 million bond issue to do building projects districtwide. Some of that money goes to architects and other costs not specifically related to construction. The original districtwide construction budget was about $65.5 million. Re-1’s school board on Wednesday voted to increase that budget to $76.5 million. Out of fairness, the district decided to boost the budget an equal 17.6 percent in each of its attendance areas: Glenwood Springs, Carbondale and Basalt.

However, individual building increases vary widely. Pelland said smaller projects are facing the biggest jumps in cost because they don’t benefit from the economies of scale that larger projects do.

For example, the remodel of Glenwood Springs Elementary School is projected to go up by 41 percent, or $300,000, to more than $1 million in total. In contrast, the Glenwood Springs High School expansion is estimated to increase 15 percent, or about $3.7 million, to $27.5 million.

Re-1 board member Brad Zeigel said forecasting construction costs was the hardest part of planning for the bond issue. However, Pelland noted that the district purposely built in contingency funds in case costs came in higher than expected.

The district also can tap its capital reserve fund, which has more money available because Re-1’s focus on major construction projects means it isn’t spending as much on more routine facilities work such as reroofing.

Pelland said the district also has cut 25 percent from the furniture and equipment budget provided for under the bond issue. That budget should still be adequate, she said.

“That is something that is easier to add later than walls on a building,” she added.

Re-1 also has available to it $3.3 million in projected investment income from the bond issue. In addition, if need be it can back out of its lease purchase agreement for the North Face property in Carbondale, and save $2.3 million.

But Pelland said the district may not need to resort to that. Actual construction costs could turn out to be lower than expected ” something that won’t be known until all the projects are bid and then completed.

“We have a long way to go and numbers still have to come in,” she said.

A few construction-related projects continue to be budgeted at the original amounts. Re-1 superintendent Fred Wall said those are the last ones scheduled to be done under the bond issue, and the district is hoping they can stay within budget. In addition, they involve things such as demolition work and transportation facilities. Wall said the district’s priority is completing all the building projects that are directly related to education.

Even if the district spends an additional $11 million, it won’t have to dip into its general fund, Wall said. Staff salaries are paid out of that fund. The district will begin pay negotiations with its teacher association this fall.

Contact Dennis Webb: 945-8515, ext. 516

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