Agenda 6-b - Northern Campus Project Update

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2 At least three factors have contributed to this difference. First, these projects have been included in the Capital Investment Plan for several years without budget escalation to recognize inflationary cost pressures. The Detention Center has been in the CIP since 2012. The Environment and Agricultural Center was originally included in the CIP in 2014, and the Parks Operations Base was included in 2013. In recent years, construction costs have escalated by five to seven percent annually. Second, the current construction environment is highly competitive, so an inflationary adjustment of seven percent (7%) is added to the projected costs. Finally, the original budget did not assume site acquisition costs or the associated increase in site preparation for a larger site compared to the original detention center site owned by the State. Several strategies can be used to reduce the cost of the Northern Campus Project. Repurpose Previously Appropriated Funds: The County had previously borrowed funds for Detention Center Design. Of this amount, approximately $718,000 is remaining to apply to the current Northern Campus Project. Value Engineering: Value engineering strategies can be used to change architectural and aesthetic features without impacting how the facilities function. The project team has identified $875,000 in value engineering strategies as detailed in Attachment 2. Project Scope Reductions: Elements of the project may be reduced or eliminated to produce savings. The staff team has identified $438,000 in potential scope reductions as detailed in Attachment 3. As part of the scope reduction exercise, the number of Detention Center beds was examined. The Detention Center capacity could be reduced by forty (40) beds which would eliminate any capacity to house federal inmates and would immediately fill the available beds. The elimination of federal inmates would also reduce operating budget revenue by $1.6 million. Project Deferments: Projects that are currently programmed in the Capital Investment Plan could be eliminated or deferred to a later date when the County's debt capacity would accommodate them. The Southern Human Services expansion and a portion of the Cedar Grove Park Phase 2 expansion could be postponed for a savings of $2.6 million. Components of the Northern Campus project could also be postponed. Postponing the Environment and Agricultural Center and the Parks Operations Base would defer $7.75 million in construction costs. Given the County's current debt profile, debt capacity will begin to increase in FY2023- 24. See Attachment 4. Using a combination of these strategies, current project costs may be reduced. The following table outlines different strategy combinations in four (4) different options.