Thursday, May 26, 2022

Paying more, getting less: Live Nation amphitheater and park costs up $10 million, features reduced

The North Waterfront Park project will be delayed until 2021 now (Port City Daily/Michael Praats)
The North Waterfront Park project will be delayed until 2021. (Port City Daily/Michael Praats)

WILMINGTON — The North Waterfront Park project is once again the focus of conversation for city leaders. While voters approving a $20 million price tag for the park, the city is now planning on spending nearly 50% more, bringing the total to $29.17 million.

Related: Wilmington’s North Waterfront Park and Live Nation venue opening pushed back to 2021

“After months of revisions and a re-bid to reduce construction expenses, the city now has a revised scope of work and project budget of $29.17 million. The increases from the initial $20 million estimate approved by voters in the 2016 Parks Bond are largely related to infrastructure and site improvements in and around the site, as well as construction cost inflation that has become more pronounced since Hurricane Florence. The revised budget does not include all the previously discussed park amenities, but those can be built at a later date,” according to city spokeswoman Malissa Talbert.

It’s worth noting that ‘built at a later date’ would presumably require locating additional funding.

What drove up costs?

According to the city, at least four main factors have drive costs up:

  1. There are three Cape Fear Public Utility Authority easements on the park property. While planning staff were aware of the CFPUA easements, the cost to engineer the park around them was not calculated into the project until it was “well into design,” according to the city.
  2. Over $1 million dollars in allowances with the bids for work on the park. According to the city, the high number represents the risk subcontractors are protecting against in “the event they must remove and replace unsuitable materials or pump, store, and dispose of contaminated groundwater.”
  3. A factor the city called “much more impactful” then some others is the “continuation of a strong economic upturn which has thrived longer than analysts predicted, driving up construction costs.”
  4. Lastly, the city noted this impact has been compounded by “the ongoing impact of Hurricane Florence,” an effect the city said “cannot be understated.” According to the city, “[s]ome of the subcontractor trades involved in the project have seen percentage increases in prices over cost estimates of 1,000%. Simply put, securing subcontractors post-Florence has become a difficult, if not unworkable problem with some construction projects. “

Where will the city find an extra $10 million?

When it comes to this round of cost increases, the city cannot make $10 million appear out of nowhere; instead, city staff is recommending taking money planned for other projects to help fund the park.

“To fund the overage, staff recommends that money be used from the city’s debt service. This capacity is available due to a number of project delays in the city’s construction Capital Improvement Program (CIP),”

The adjusted costs for the latest park plan, with fewer features, is actually over $4 million higher than a 2018 estimate for the most expensive, feature-packed version of the park. Last year, Hargreaves Jones said building the park to its fullest potential, the so-called ‘Aspirational Park,’ would cost an estimated $25 million.

Last year design company Hargreaves Jones offered a look at design renderings for the park. The aspirational plan was projected to cost $25 million and included more than what the $29 million park will (Port City Daily/File)

Now, the city is prepared to enter into an agreement to spend nearly $30 million — while still not getting everything the aspirational park called for. Some features will still be upgraded, however, include the larger back-of-house structure for musicians requested by Live Nation.

According to the City Council agenda, included in the deal is, “A $344,990 amendment to the contract with design firm Hargreave Jones. If approved, additional design services will be for a larger back-of-house structure that will include a park office, public restrooms, a catering kitchen, box office and shade structure.”

Live Nation contribution, other costs and tradeoffs

Live Nation will be kicking in a significant chunk of money to fund the project, beyond the amount originally included in its agreement with the city.

According to city documents, “An amendment to the agreement with Live Nation. If approved, Live Nation will, upon completion of the park, contribute $2 million toward the construction costs. This is made feasible because of the design changes noted above, resulting in fewer temporary buildings, tents, storage units, and portable toilets sitting in the park during the concert season. These changes will reduce operational costs for Live Nation. Key components of the contract with Live Nation include:

  • 10-year term with an additional 10-year option
  • $2 million toward construction costs (noted above)
  • $2 million in-kind investment for furniture, fixtures and equipment
  • $200,000 in fixed rent paid to the city annually
  • $2.00 per ticket sold paid to the city
  • $700,000 worth of maintenance expenditures over the prescribed term of the contract.

Also contributed to the cost increase is a ‘construction management firm.’

“Given the substantial public and private investment in the North Waterfront Park project, staff believes it is in the best interests of the City to bring in additional assistance in the form of a Construction Management firm to serve as an Owner’s Representative during construction of this project. This will help to ensure the City’s interests are best represented during construction,” according to a City Council agenda item.

The cost of bringing this firm into the mix will cost taxpayers an additional $157,248.

Typically, it is the city’s policy to issue an RFP for any service contract over $90,000, but is not required by law. According to city documents, “Based upon how far along the North Waterfront Park project is, staff recommends awarding a contract to MBP based upon the City’s familiarity with MBP and the professionalism and quality of work demonstrated on the Riverplace Project.”

The firm, MBP Carolinas, Inc., is the same contracted for the public-private development known as Riverplace (which also faced significant budget issues requiring the transfer of funding from other locations to help pay for it. )

Related: Wilmington betting on ‘value engineering’ to reimburse $892,850 to be moved from parking fund to River Place

So which amenities are being removed from the latest $29-million version of the North Waterfront Park? Currently, city staff is recommending the removal of the public dock and public art installations.

“Staff recommends constructing the site work, stage, landscaping and amenities, the park support building, back of house building and performance venue restrooms and the following alternatives: wood trim on the stage, permanent follow spots, and water feature. Staff recommends eliminating the public dock and public art elements of the park which can be installed at a later phase. The cost to build the project as described is $29,174,260, leaving a budget variance of $9,854,339,” according to the agenda.

City Council will vote on several items related to the cost adjustment during its Tuesday council meeting.

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