About six months ago, the Berkeley Pools Campaign obtained from an independent source a document whose existence had been unknown to us or to the public -- the detailed budget for Measure C, last year's pools ballot measure. We examined it eagerly because we were hoping the City would be able to design a new pools ballot measure for 2012 that could offer voters improved value for money and thus have a better chance of election victory.
We spent many hours poring over the budget, and to interpret the details we consulted with experienced construction management professionals. We were pleasantly surprised when the experts concluded from the data that Measure C could be replicated for millions of dollars less. But our surprise turned to shock when they explained the reason: Measure C's $22.6 million cost was artificially inflated by at least $5 million and perhaps more than $7 million in abnormally high soft costs and construction contingencies.
(Soft costs are added to all projects as a multiplier of hard construction costs, and they typically include architects' fees, consultants' fees, hazardous materials studies and the like. A construction contingency is added to all projects to cover unforeseen increases in bricks-and-mortar construction costs due to hidden or changed conditions.)
For Measure C, the City set its rate for soft costs at 45 percent, far higher than the regional average of 25 percent for similar projects, and it set a construction contingency of 17.5 percent, also far higher than the regional average of 5 percent for new projects and 10 percent for remodels.
The Berkeley Unified School District, Berkeley Public Library and Albany Unified School District told us that the formulas they use are far lower than those in Measure C:
- BUSD. From 1992-2011, all bond projects over $1 million, average: soft costs 21.7 percent, construction contingency 5 percent for new and 10 percent for remodels.
- Berkeley Public Library. For Measure FF: soft costs 36 percent, construction contingency 8.6 percent.
- Albany School District. For the pools project now underway: soft costs 18.7 percent, construction contingency 7.5 percent.
The net result is this:
If the City had used those established formulas, Measure C would have shrunk from its $22.6 million price tag to the following: $17.4 million (libraries formula); $15.5 million (BUSD formula); and $15.0 million (Albany formula).
If Measure C had cost that much less, it could have easily closed its 4.5 percent gap to reach 66.7 percent. In other words, our election result could have changed from defeat to victory.
A detailed summary of these costs is viewable here. To see the raw background data, the Measure C cost estimate report is here (see King Option 3, Willard Option 1 and West Campus Option 4); an Excel file of BUSD projects 1992-2011 is here; the Measure FF budget is here; and the Albany pools budget is here.
Our purpose in raising these concerns is not to look backward, point fingers or cast blame. This is about looking forward to create a new ballot measure for the pools that is capable of winning an election in November 2012. Especially given the indications that the City Council may be considering more than one ballot measure, perhaps also including street paving and storm drains, it's crucial to reduce overhead costs so voters have confidence that their money will be spent wisely. Two-thirds of the vote is a very difficult bar to clear.
Our attempts to obtain explanations from the City have been frustrating, as shown by a recent exchange of letters between the Berkeley Pools Campaign and the City. Our Sept. 11 letter to City Manager Phil Kamlarz is here; Kamlarz's Sept. 23 response is here; and our Sept. 26 letter to the City Council is here.
At the Sept. 27 City Council work session, Kamlarz and William Rogers, director of the Parks & Rec Department, did not directly explain why they had set soft costs and contingencies at rates that were so much higher than those of BUSD, the Berkeley Public Library or the Albany School District. They appeared to acknowledge that millions of dollars in soft costs were intended to pay for City staff overhead -- a practice that they admitted was at variance with the norm at other local cities and school districts. But they gave no details, and the Council members did not press them for any. For media coverage of the meeting, check out the Daily Cal's article here, Berkeley Patch's article here, and Berkeleyside's article here.
This is crucially important for 2012 and beyond. As the City Council and the general public discuss how to put together one or more bond measures for the November ballot, Council members will need to ensure that costs are calculated without unnecessary bureaucratic overhead. This kind of due diligence is one of the most important -- although admittedly not simple -- functions of an elected body. If Berkeley residents are to enjoy their pools, parks, waterfront and other facilities for many years and generations to come, the City Council needs to put on its green eyeshades and make sure that any proposals put to the voters are trim and efficient.