By Amira Van Leeuwen
KYLE — City council unanimously agreed to direct staff to bring back proposals as discussed for the 104 S. Burleson Project.
Initially, the budget for this project was $10.4 million, but now it’s $14.9 million due to increasing construction and building material costs.
“Basically, what we wanted to do was include all the costs that are going to be required for you to open and have a functional building. What we didn’t want to do was selectively choose what’s in and out of the budget for your purposes because then you’re left with a building that you may open, and it may not be functional,” said Ryan Rosborough, AG|CM vice president.
”Everybody knows what the market is right now. It’s crazy out there; it’s bananas. And so we want to make sure that we’re doing the right thing and accounting for that because right now nobody has all the answers,” Rosborough said.
The cost is only an estimate until the design is 100% complete and once the subtractor bids are bought out, a sizable financial gap of roughly $4.5 million in the project had city council concerned.
According to Finance Director Perwez Moheet, key items not included in the budget are Geotech study/analysis, survey, commissioning cost and alleyway improvement cost — all items the city will still have to spend money on.
“So $4.5 million gap with 50% of the structure unfinished with these major items unaccounted for yet … in my opinion, your gap is closer to $7 to $8 million. So now, I have to work with the city manager to come up with financial solutions to cover this gap,” Moheet said. “Mind you, I can’t do that in a vacuum because I have other projects, other higher priority projects that are near completion for which I have to also find supplemental funding, nondebt funding sources to fill those gaps.”
Examples Moheet used were the Public Safety Center, which has a $1 million gap, along with the Railroad Crossing project, which has a gap due to cost escalation.
“Bond financing is not an option unless council is willing to raise property taxes. So that option is off the floor,” Moheet said. “My short answer is no. My long answer is, it depends.”
The schematic design shows that the structure will be three stories tall, with the first floor being designed as a restaurant. The second floor will be a for-rent office space for private companies and the third floor will be a community space.
Council member Daniela Parsley thought that if financing was an option, the council should look into it.
“What we make out of this building is going to set a mark for whatever comes next. So, I don’t want to go cheap or reduce on the design of the building or what we are looking for because then we’re not setting that standard,” Parsley said.
Council member Yvonne Flores-Cale said she doesn’t want to see more bonds and more financing.
“With the way the economy is, there is no guarantee our housing prices or housing values are gonna sustain where they are now, so if we get into a year where the ad valorem tax is a lot less than we expected, I don’t want to have a half-finished project,” Flores-Cale said.
The city will spend time trying to match the design with funding sources and bring back that item at a later meeting.
