Burning Money

[October 5th, 2005] The longtime proposal to move Portland Fire & Rescue's headquarters three blocks north is in doubt, thanks to a 61 percent cost increase.

As recently as May, the Portland Development Commission and the city's Bureau of General Services seemed on track to construct a "signature building" for $14.4 million.

That was the city's budget when it held a design contest for the building (won by Thomas Hacker Architects in May) and subsequently selected a contractor (Hoffman Construction).

But on Aug. 24, when the city's project manager, Connie Johnson, sat down with representatives from Hacker and Hoffman, she got two pieces of sticker shock: Hacker's estimate was $32 million; Hoffman's, $35 million. "I was surprised," Johnson says.

Over the next month, Hacker and Hoffman whittled their building numbers down to $23.2 million, still way more than the city can afford. "This still exceeds the City's initial budget of $14.4 million by a significant amount," Johnson wrote to Hacker's Will Dann, the principal architect on the project.

City Commissioner Erik Sten, who oversees the Fire Bureau, is more direct. "At that price, I would kill the project," Sten says. "I was never a champion of this project, even at the original budget."

Dann acknowledges that his firm badly overshot the city's target but explains Hacker had not examined the underlying cost assumptions when it submitted its design. He adds that soaring energy and construction costs since the city developed its budget in August 2003 are part of the problem.

"We're trying to figure out how to make the building smaller and more efficient," Dann says.

Moving the Fire headquarters is an idea that first surfaced after voters approved a $54 million fire bond in 1998. That money was earmarked for seismic upgrades and new construction of station houses.

The headquarters, located on unstable waterfront soil at 55 SW Ash St., was initially slated for demolition. But seismic analysis showed the headquarters would be cheaper to renovate than rebuild elsewhere.

In 2003, however, PDC, the city's development agency, proposed moving the station across Burnside to Old Town and turning the current site into high-rise housing and possibly a year-round public market.

In August 2003, the Fire Bureau, PDC and city planners came up with a construction budget of $14.4 million for an 87,220-square-foot building in Old Town, which would include offices, a fire station and a fire museum. That number did not include $7.8 million in "soft costs," such as professional fees, permits and testing, that are above and beyond construction expenses.

To pay the projected total costs of $22.2 million, PDC agreed to kick in $10.6 million, which would come from tax-increment financing, essentially borrowing against future tax proceeds from properties in the Downtown Waterfront Urban Renewal District. The Fire Bureau would pay the balance of $11.6 million from its bond proceeds, which was the amount it had allocated to fix up the existing building.

Now, of course, the kitty looks nearly $9 million light because the current $23.2 million price from Hacker and Hoffman also doesn't include soft costs.

And the total bill that taxpayers face even includes another related expense-the $5.4 million PDC paid the Naito family earlier this year for the Old Town block that will be home to the new headquarters.

To Shelley Lorenzen of the League of Women Voters, the budget overrun is just more evidence that the city's priorities are off-base. "They're moving the station from one prime waterfront lot to another, putting it farther from the bridge [Station 1 also serves the inner east side] and diverting Urban Renewal Funds away from needier projects in Old Town," Lorenzen says.

Johnson, the city's project manager, and Dann say they will continue to find ways to shave the project's cost-groundbreaking is still more than a year off. But they'll have to go a long way to satisfy Sten, who says the Fire Bureau will not put an additional penny into the deal.

"I think the development commission needs to take another look," he says. "There comes a point at which you say the price is too high."