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Dollar Daze

[whitespace] Frank Taylor In redevelopment, huge cost overruns were the rule

By Will Harper



FEW, IF ANY, big redevelopment projects came in on budget. In part, cost increases were due to politicians adding extras to the original plans or to unforeseen complications like toxic sludge under the ground. But just as often they were the result of poor project management, overly optimistic construction estimates and flawed designs. Here are a few examples of where the public's investment in projects soared.

The Arena
Original Estimate: Up to $100 million
Actual Cost to Public: Approximately $150 million
Ex-Mayor Tom McEnery promised voters in 1988 that the cost of the Arena, another Lego-block in the effort to make San Jose a "world-class city," would cost no more than $100 million. The price skyrocketed, in part because of unexpected toxic substances found during construction that needed to be cleaned up and miscalculation of building costs.

The Tech
Original Estimate: $30 million subsidy
Estimated Final Cost: $49 million subsidy
Several factors caused the price increase on the mango monument to modernity: mistakes in bid documents, redoing work previously done in the wrong order and upgrades in materials--like insisting on a high-quality African wood for the lobby floors. Also, construction crews worked overtime to ensure that the Tech would open before the holiday season. The Oct. 31 deadline also ensured that the project would be completed on retiring Mayor Susan Hammer's watch.

The Fallon House
Original Estimate: $1 million (state grant money)
Actual Cost: $5.1 million
The City Council first hoped they wouldn't have to use any redevelopment money at all for the project. But the costs started going up from the start with high land-acquisition and relocation expenses. Then construction bids came in $300,000 higher than expected. The clincher: $400,000 extra for furnishings and fixtures.

Convention Center
Original Estimate: $75 million
Actual Cost: More than $150 million
The city's decision to triple the meeting space greatly inflated the project costs. So did little extras like the six-figure tile mural--depicting God knows what--adorning the entrance.

Mexican Cultural Heritage Gardens
Original Estimate: $9 million subsidy
Estimated Final Cost: $32 million subsidy
The costs continue to climb. Just this week the City Council, acting as the Redevelopment Agency board, approved another $92,800 expenditure to pay construction management consultant Rudolph and Sletten Inc. In part, the addition of a full performing arts center raised project costs.

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From the February 25-March 3, 1999 issue of Metro.

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