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Cost of new Bernalillo County headquarters set to rise almost 50% to $49.4M

ALBUQUERQUE, N.M. — Turning a 39-year-old Downtown building into Bernalillo County’s new headquarters could cost a lot more than expected – about 50 percent more.

County staff is recommending that the County Commission approve a $45.8 million design-build contract with HB Construction to renovate Alvarado Square and build a new commission chambers next door. Adding gross receipts taxes, the total bill will run about $49.4 million.

That’s far higher than the estimate given when the county in 2017 bought the property at 415 Silver SW.

At the time of that $2.7 million purchase, county staff wrote that the project would require another $33 million for renovation and other related costs.

“The current estimated costs for design and construction for repairs and renovation, furnishings, fixtures and equipment, relocation and other related expenses are $33,000,000,” according to documents prepared for the commission’s March 28, 2017, vote on the building’s purchase.

The county planned to fund the project with $37 million in gross receipts tax bonds.

County Manager Julie Morgas Baca recommended approval of the building’s purchase at the time, saying in written comments that buying it would help consolidate business operations and make county government more efficient.

The county – which currently shares Downtown administrative space with the City of Albuquerque, but also has other facilities around the area – has said the Alvarado Square purchase would allow it to house most departments in one place.

The 280,000-square-foot building – to be called the Bernalillo County Government Center – will house approximately 900 employees.

Morgas Baca in her 2017 comments also vouched for the research done ahead of the building’s purchase.

“County staff involved in the due diligence and our real estate consultant have worked tirelessly to present a clear financial and functional picture of the building’s condition and the programmatic opportunities at Alvarado Square,” she wrote.

But Morgas Baca said in an interview this week that a few things changed in the past two years that contributed to the higher costs.

She said the county discovered that the eight-story building could not accommodate a new county commission chambers as planned, in part because the chosen space had immovable columns. The county also needed more of the planned chambers space for its customer service operations. Officials also did not want to keep the entire building open to the public during the commission’s night meetings.

Instead, the county will erect a new chambers next door, which bumped up costs by $3.5 million.

In addition, the building’s rehabilitation will involve more mechanical and HVAC upgrades than anticipated.

“In the earlier estimates, the plan was to do some more repair kind of things, but it seemed like it was more efficient and made more sense to replace some of these items and have a 30-year life expectancy on some of those key structural components,” she said.

There is also $3.5 million in new furniture inside the contract, about $2.5 million more than originally expected, as the county will transition from an office-based setup to a more open floor plan.

The design-build contract also includes about $1 million in security features – like scanners and cameras – recommended by a consultant.

“Honestly, I do feel real comfortable with this (plan),” Morgas Baca said. “It’s something that would’ve cost a lot more money if we would’ve gone for new construction. And I think also because we paid $2.7 million for it initially, I think it afforded us the opportunity to make it a state-of-the-art building and to give it the 30-year life it needed.”

Funding for the project now includes $37.5 million in GRT bonds, $5 million in general obligation bonds and $6.9 million from the general fund.

The general fund money comes from previous years’ surpluses and did not require cuts elsewhere in the budget, the county’s top finance official said.

The county announced in a 2017 news release that the total project would cost $36.2 million – including land, upgrades and remodeling – and that it would recoup some of the money by selling five properties it would vacate as part of the consolidation.

Staff estimated at the time that the project would save the county $2 million over 10 years because it had fewer buildings to operate.

However, the latest financial analysis shows the total costs – land purchases, renovations and security – are now running at $53.2 million.

The County Commission deferred action on the contract during a meeting Tuesday night so staff could answer questions raised by a carpenters union regarding compensation and benefits for those working on the project.

Commission Chairwoman Maggie Hart Stebbins said in an interview after the meeting that the new price tag surprised her and she understood why some might have sticker shock.

But she said the county staff had adequately justified the increase, part of it attributable to unforeseen needs and part to upgrades that would extend the building’s life.

And, she added, “One thing you can’t really put a cost on is what is the value of convenience to our customers. That’s one of the really important goals of this consolidation – is it easier for people to access county services?”

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