Parking deck construction bid almost $4 million more than estimated cost

Jul. 21—The only bid for construction of a downtown Decatur parking deck was almost $4 million more than original projections, but an architect says added features caused much of the increase and the city will proceed with the project even though it now requires a bigger share from a bond issue.

Fite Building Co. of Decatur submitted the only bid, for $9.88 million, to build the publicly financed four-story parking deck with 230 spaces. It will be across from The Brick restaurant on a city parking lot at First Avenue Southeast and East Moulton Street.

The deck is part of a deal for the construction a new hotel next door. The deal includes reserving 90 parking spots for hotel guests.

City officials originally estimated the project would cost $6 million, but Scott Schoel, of Schoel Architecture, said at the bid opening Tuesday at his office on Second Avenue Northeast that officials later added four retail spaces with grease interceptors for possible restaurants, an elevator and electric vehicle charging stations in four of the parking spaces.

"These additions probably added $3 million to the bid," Schoel said.

Councilman Kyle Pike, whose District 2 includes the parking deck and hotel, said officials added the elevator after residents suggested it. He said the retail spaces are a good addition because it makes the deck a better fit in Decatur's downtown.

"It was the right decision to do the retail spaces now," Pike said. "Huntsville recently built a parking deck without retail spaces and they had to go back and retrofit retail spaces later. That cost them $8 million."

City Chief Financial Officer Kyle Demeester said the original $6 million estimate was calculated last year when the parking deck and hotel were announced. He said a portion of the additional cost resulted from inflation driving up the costs of materials and manpower.

Schoel said he thinks it's a good bid even though only one contractor put in for the project.

"I was worried that it could have been $10 million, $11 million or $12 million," Schoel said.

"So much of the structure of the parking deck will be pre-cast steel and that price hasn't moved much," said Schoel, who has managed about 10 parking deck projects.

Schoel said labor costs have also "calmed down" recently and he thinks this helped in preventing an even higher bid. However, the street and sidewalk repair that will be required after the deck construction are not included in the bid, he said.

Receiving only one bid will allow the city to negotiate with Fite on possible "value engineering" reductions in the contract and project, he said.

Schoel told city officials that he would come up with three possible reductions to present to Fite and the City Council before the council votes to award the contract to Fite.

Mayor Tab Bowling said he wished more than one local contractor had submitted a bid on the project but it's understandable because they have a lot of projects now.

"We're happy with the bid based on inflation," Bowling said. "We'll see what they can do with the value engineering and then we'll be able to do what we want to do."

The state sets the architectural fees and the percentage adjusts based on the project's cost. If the final project finishes on budget, Schoel's fees would rise from $252,000 (4.2% of the original $6 million) to $395,221 (4% of $9.88 million).

The bid could force the City Council to adjust its plans for a $20 million bond it issued in December. The council also plans to pay for the Sixth Avenue streetscape from the bond, and that project's cost has risen from a $5 million to $6 million estimate in December 2020 to an updated amount last month of as much as $10 million. Paying for both the streetscape and parking deck from the bond may not leave room for the $1 million planned as the city's contribution to a new Morgan County-Decatur Farmers Market.

Pike said the council may have to go into its unassigned fund balance for the Farmers Market project.

"We're in a good enough financial situation that we can find the funds for the Farmers Market," Pike said. "I'm not too hung up on whether the money (for the Farmers Market) comes from the bond or somewhere else."

Schoel said they've already applied for a city building permit, so construction can begin as soon as the Building Department issues the permit and the contract is signed by Fite and the City Council.

If approved as the parking deck contractor, Fite would be building three major projects downtown. It is already working on the four-story, 80-room Fairfield Inn by Marriott hotel east of the parking deck site and a new Renasant Bank at Sixth Avenue and Lee Street Northeast.

Fite President Jack Fite is a partner with H.M. Nowlin and Chris Chavis on the Fairfield Inn project at Second Avenue and East Moulton.

Council President Jacob Ladner said the city has the money in its general fund budget to pay the debt service on the bond issue "so I say let's go" on the parking deck and Sixth Avenue streetscape.

Bowling proposed when the hotel and parking deck were announced a combination of ways to assist in paying for the deck's debt service. These include charging for use of the parking deck and for on-street parking in the Second Avenue area of downtown and using a portion of the city's lodging tax revenues.

Bowling's proposal is to use a portion of the lodging taxes and the $2 per room tax generated by the new hotel. At the time, Demeester estimated that based on existing hotels in the city, an 80-room hotel would generate $234,375 annually in those taxes. The city would normally keep about one-third of that revenue, or $77,605, with the other $156,770 allocated to Decatur Morgan Tourism and the Hospitality Board.

Ladner said they also have to decide how to handle renting the parking deck's retail space and this money would also offset its construction cost. Council hasn't decided who would handle leasing and management of the retail space or the cost of rent.

— bayne.hughes@decaturdaily.com or 256-340-2432. Twitter @DD_BayneHughes.