A proposed nine-story Pierce County administration building likely would cost almost $127 million — about $60 million more than when county officials first described their plans two years ago, according to a final negotiated price released to the County Council on Monday.
It’s also about $40 million more than an updated estimate officials released last summer, when they said bringing the Tacoma Pierce County Health Department under the same roof would increase the cost of the building to about $87 million.
The new cost reflects a significantly expanded project from what County Executive Pat McCarthy proposed in 2013 as a way to consolidate services and cut leases the county holds for buildings all over Tacoma.
The two major changes to the plans would add about 100,000 square feet of office space — bringing the total to 330,000 square feet — as well as a three-level parking structure. Neither were in the county’s original plans for the 13-acre site in Tacoma’s Lincoln District.
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About half of the additional office space would be used by the Health Department, which would be a rent-paying tenant.
The cost also swelled as county officials became more specific in their plans, incorporating space for features such as a data center and street-level retail space.
“Now we’ve reached a point where the developer can guarantee a price. Anything before this was an estimate,” County Deputy Executive Kevin Phelps said.
County officials say the building on the site of the former Puget Sound Hospital still would save money by allowing the county to trim personnel, end leases and get out of outdated buildings that would be expensive to maintain.
“We are all about doing what is fiscally responsible,” McCarthy said last week at a meeting with The News Tribune’s editorial board.
County officials presented the final cost to County Council members at a study session Monday. So far, several elected council members have indicated they believe the project will save money while improving services.
“To me, it looks very promising,” said Councilwoman Connie Ladenburg, D-Tacoma.
The council has one more study session scheduled before its main vote on Feb. 17. It is expected to focus on the county’s plan to save about $4 million a year by eliminating 38.1 full-time positions and streamlining services.
Several council members said they still have questions about the projected savings. They want assurances that the county would follow through on staff cuts, and they want to know how much money the county is likely to spend on properties it plans to vacate.
“The cost is inconsequential whether it’s $70 million, $150 million or $200 million. It’s a question of if it pencils out,” said Council Chairman Dan Roach, R-Bonney Lake.
County officials last week finished negotiations with Seattle developer Wright Runstad, which has offered a guaranteed maximum price of $127 million to build the steel, glass and brick headquarters building. Wright Runstad would be responsible for cost overruns, and the agreement contains incentives for the developer to rein in spending.
The county also would spend about $15.5 million on bond financing costs.
The council would have a choice between financing plans.
One option would pay off the building at annual cost of $8.1 million for 30 years, covering all of the construction, information technology and furniture expenses.
The other option would cost $8.6 million a year for the first seven years and $7.6 million for the final 23. That plan would pay for furniture and other short-term costs first, while paying for the building’s construction over the full life of the financing.
Today, officials say they pay $7.4 million a year in charges they say they could avoid by consolidating 19 departments and divisions that are now spread across 14 locations. They also expect to charge the Health Department about $1 million a year in rent.
“It’s a deal, quite frankly, where I can’t say why you’d say no,” Phelps said at last week’s meeting with The News Tribune. On Monday, he told council members that his team did not use “creative accounting.”
Phelps and McCarthy say the administration headquarters, despite its rising price tag, is justified by projecting how much the county would have to spend elsewhere if it doesn’t build it. That number comes in at $303 million over 25 years through a mix of leases, maintenance and salaries that the county would continue paying if operations are not consolidated.
Recently, the plan has come under scrutiny from downtown advocates who would prefer to see the county invest in Tacoma’s traditional city center.
The administration building would be constructed on the former hospital site at 3580 Pacific Ave. It’s a county-owned property that supporters say offers opportunities for growth, would be less expensive to develop than a downtown site and would connect an underserved part of Tacoma to the downtown core.
The county would keep its law-and-justice operations downtown, along with about 1,000 jobs. About 1,300 county employees would work in the administration building.
County plans call for the building to open by the fall of 2016.