It'll be a few weeks before the city gets a look at some possible cost cutting options, but city officials and private stakeholders remained committed this to the idea of building an ice arena and conference center at Uptown Janesville as consultants work to shave millions off a new $60 million estimated price tag.
Designs for the Woodman’s Sports and Convention Center, a proposed two-sheet ice arena and flexible convention and sports space, are still only about 30% complete. But latest cost estimate shows that inflation has driven up the project’s prospective cost, adding another $25 million to a preliminary $35 million budget set earlier this year, according to estimates released last week to an ad hoc city committee.
During a special city council meeting Tuesday night that included city administration, a private booster group for the arena and representatives from consulting firm Kraus-Anderson, council President Paul Benson suggested city staff should review the city’s borrowing capacity in light of a recent boost in net new construction in Janesville.
That would be an early step to see if the city could absorb more borrowing than the potential $15 million that city finance officials estimated a few years ago would keep costs of such a project to about $25 a year for the average city taxpayer.
Right now, $15 million in city borrowing wouldn’t even cover the prospective overrun on costs. Kraus-Anderson, which the city has committed payment to as part of a bigger, $2 million consulting package, is now trying to trim the massive overrun via “value engineering”—a surgical rethinking of how costs for the facility could be scaled back in design and construction. To date, Kraus-Anderson has done about $10,000 in consulting work, including crunching numbers on a set of overall project designs that still are only about 30% complete.
Other city council members, including Dave Marshick, Michael Jackson and Heather Miller, said Tuesday that they've cooled in their support of the ice arena in light of the new cost estimates.
In a memo this week to an ad hoc city design committee for the facility, a city official wrote that Kraus-Anderson is being asked to return by Sept. 20 with a list of suggested cuts.
Kraus-Anderson consultant Mike Hinderman called the process “deflating the balloon,” saying that along with a forensic look at design and construction cuts, the goal would be to pare back parts of a three-tier contingency, possible additional "soft costs" for design and construction written into the project's bottom line. Those costs make up about $6.5 million, or 15 percent of the project's overall, estimated sticker price.
But city staffers are cautioning Kraus-Anderson not to diminish the final product so much that the Woodman's Center's business and operational models would be hobbled coming out of the gates.
“The city seeks value engineering items that do not conflict with recommendations of the business plan or the original intent of the project,” Public Works Director Mike Payne wrote in a memo to committee members. “The city also believes it is important, at this point, that value engineering items do not reduce the useful life of the building or critical systems to ensure the long term success of the facility.”
In a long, multi-pronged defense of the project, city officials, including Neighborhood Services Director Jennifer Petruzzello, on Tuesday showed economic impact estimates that the arena could bring in more than $10 million a year in new spending.
That would pair with as many as “170” new jobs that would result from a boost in foot traffic into hotels, restaurants and retail centers along the Milton Avenue corridor, Petruzzello said.
A private group of fundraisers called the Friends of the Indoor Sports Complex has raised about $4.2 million, still well short of the $9 million the group hoped to raise under the lower earlier cost estimate.
Private stakeholders also indicated Tuesday that commitments, such as $2 million from Woodman’s for naming rights, would hinge on whether the final proposal matches up with earlier plans, including those for two sheets of ice.
One potential cost-cutting measure includes keeping both ice sheets in the plan but leaving one as a “shell” to be completed later, consultants and city officials said in a committee meeting last week. It’s still not clear how much money such a move might save, nor is it clear whether such cuts would be embraced by the city of Janesville, private stakeholders, or donors who've committed with the understanding the arena would have two ice sheets.
The city has not released a short list of potential design changes that Kraus-Anderson might use to estimate potential savings.
Another moving target for the project is public funding. The earlier $35 million project budget also built in an assumption the city might garner $9 million in federal and state grants.
But one person with an interest in the project, Bill McCoshen, said Tuesday a major new source of potential public funding could come if the state releases an additional share of COVID-19 relief funding for the project and if Rock County would contribute $2.5 million in sales tax money.
McCoshen is president of the Janesville Jets junior hockey team, which would be a primary tenant of the facility, and he is commissioner of the North American Hockey League in which the Jets play.
McCoshen, also a longtime Madison political strategist, said Forward Janesville officials intend to meet with Gov. Tony Evers’ staff in Janesville later this week. The purpose of that meeting would be to discuss the release of what he called an "ask" for $10 million of additional federal American Rescue Plan Act funds to help build the ice arena.
McCoshen said the governor’s office continues to hold more than $1 billion in undesignated federal funding that is earmarked for COVID-19 relief. He said local boosters will try to convince Evers’ team that the inflation reflected in new cost estimates for the facility is directly tied to supply chain vagaries that arose during the pandemic.
He said that the city could know by mid-September if it is in a strong position for the additional ARPA funding, which Evers has sole discretion to release.
The city council still must approve the project, and it likely won’t see a more fully galvanized cost estimates until November or December. By that time, the city would be a few months from deciding whether to go ahead with the project and to bid it out for construction to start in 2023.
This report has been altered from a previous version to reflect a total amount the city has committed to consulting costs for the Woodman's Center plans. The city has paid one consultant, Kraus-Anderson, about $10,000 for its work so far.