School improvements will take maximum bond

The bids for the New Rockford-Sheyenne (NR-S) School improvement project came in higher than expected, and as a result the district will need to use the maximum amount approved by taxpayers to complete the building renovations as proposed.

Voters approved up to $3.255 million dollars in general obligation bonds on October 17, 2017. After the bond was approved, district administrators and building committee members worked with consultant firm CTS Group (CTS) to develop detailed plans and specifications, then CTS privately solicited bids from contractors to develop a performance contract for the work to be completed this summer.

After several months of discussions, building committee members gathered last week to mull over a projected $600,000 overrun. According to Mark Bucholz of CTS, a few factors created the cost increase. First, the bids came in higher than expected. Second, the building committee had built in additional improvements to complete should the bids come in under budget. Third, they found some "unnecessary" items that could be eliminated, including hurricane-proof glass that is required in Minnesota but not North Dakota.

Bucholz attended building committee and board meetings last week via phone. At the Thursday morning meeting I attended, he addressed concerns from board members that the itemized bids were not made available to board members or the public. He said, "The bids are really difficult, and it took us several weeks because of the way that everything was packaged." The project was not subject to the competitive public bidding process because the district had entered into a performance contract, or guaranteed energy savings contract, with CTS to complete the work. There is a section in the North Dakota Century Code that allows such projects to be exempt from competitive public bidding, namely N.D.C.C. 48-05-11 and 48-05-12.

Bucholz responded to comments from building committee members Todd Duchscherer and Roger Duda, as both of them stated that CTS had set an expectation that the cost would be much lower than the maximum bond approved by voters.

"I still have heartburn about why we're paying the top dollar. We were led to believe that we would come in way under the $3.2 (million)," said Duchscherer, who is the chair of the building committee.

Bucholz replied, "We guaranteed a gross maximum price, and we got it within $64,000 with much better units." He is referring to the self-contained unit ventilators sought by building committee members. The initial design called for the ventilators' cooling condensers to be located on the roof. These self-contained units are now in the plan, and will not compromise the roof structure as the condensers would have. Each unit will cost $2,600 more, but will be more energy efficient.

Duda also asked that CTS break down its development costs. Bucholz replied, "The price includes $250,000 worth of expenses to date for the architect and mechanical engineering work. We have held our project development costs since day one." He also stated that the total development costs were in the range of 12 to 15 percent of the project, which includes architectural plans, mechanical engineering and construction management.

A motion from Duda to put the project on hold and rebid died for lack of a second.

Bucholz sought to assure board members that CTS was still committed. "We are 100 percent confident with this design. There will be no change orders. I think that's the biggest benefit to the taxpayers," Bucholz noted. He said the goal is to keep the project on time and on budget. He maintained that CTS Group did everything they could to control the costs and honor the contract, even as bids for construction came in high.

"If we were to do it again, we would have adjusted that bond and built in more contingencies," Bucholz said. Then he added that if the contract was approved by the board, he would further negotiate with subcontractors and pass any savings on directly to the district.

Duchscherer asked about the project's timeline and whether beginning and end dates had been built into the agreement with contractors. Bucholz replied that the contract is written such a way that contractors must be out of "occupied space" by the time school starts. However, there may be touch-up or mechanical work still remaining to be done when school is in session.

Eric Myhre made the motion to approve the performance contract for $3,209,000 and take an additional $64,121 out of the general fund for the self-contained unit ventilators. The $64,000 is available in the general fund because there was a $75,000 contingency built into the Phase I improvements that has not been used. The motion carried on a 6-1 vote, with Duda casting the sole dissenting vote.