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DT Raleigh - a guide to public money waste.

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In an effort to keep my cool, and not think about the lost opportunities for DT Raleigh to strengthen its image, I will limit myself to saying that some people in Raleigh like to waste public money and then increase taxes in order to do some more unnecessary spending. After the City Council's recent decision to get a loan in order to pay for the re-opening of Fayetteville Street, the convention center [bad] deal comes back to haunt us. Read the following article and draw your own conclusions. All I am going to say is that some people need to be removed from key positions in order for this city to maintain a stable budget and spend its money wisely.

Design fees shock Raleigh council

Members ask why center's costs rose

By J. ANDREW CURLISS, Staff Writer

RALEIGH -- The cost for architects to design the new Raleigh convention center appears to have increased by almost 30 percent in the past two months -- a $3.7 million jump that is raising questions for some elected leaders.

City Manager Russell Allen says the latest figure is the result of refining the center's final design costs.

The bottom line, Allen says, is that any increase in design fees over the past two months is offset by decreases in other categories. The overall budget for the center, estimated to cost more than $180 million, remains unchanged, he said.

Council members on Tuesday delayed approval of the architects' fees, saying they want to study them in a committee.

The questions revolve around an estimate for the design fees given to council members May 20, compared with a request Tuesday by Allen for the council to OK the final bill.

When council members met on May 20 and chose a design that includes a below-ground exhibit hall, the budget pegged the architectural fees for the work at $12.95 million.

But on Tuesday, when Allen sought approval to pay the design bills, he asked for much more. Allen requested $15.9 million, in addition to $715,000 the city has already spent on the architects.

When questioned about it, Allen told council members the latest, $16.6 million fee was "in range" of the earlier estimates.

"But it's not," council member Jessie Taliaferro said. "It was going to be $13 million. Now, it's closer to $17 million."

Added council member Neal Hunt: "This is a rather large increase over and above what we were thinking."

Asked why the figure is now higher, Allen told council members the main reason is that they chose a scheme that sinks the main convention hall below ground.

"It's more technically difficult to design ... and we did indicate it was more difficult and would involve designing more costly systems," Allen said.

Council members disagreed.

Hunt and Taliaferro both said Tuesday, and again in separate interviews Wednesday, that they do not recall being told the below-ground option would cost more in architecture fees.

Architects' fees shift

A review of the official record of the May 20 meeting does not indicate council members were told that. But it was general knowledge at the time that going into the ground would cost the city more overall.

On Wednesday, Allen offered a different explanation.

Architects generally charge their clients a percentage of the construction cost of a project. The May 20 design fee estimate, Allen said, did not include a host of items the architects will handle, including work on graphics and signage, "art master-planning," security systems, furnishings and equipment, and other items for the center.

Those so-called "soft costs" have been known all along to be a part of the center's overall budget. But they were not included in the construction costs that formed the basis for calculating the design fees in the May 20 estimate, records show.

Instead, the $12.95 million estimate was based only on the "direct construction cost" of the center.

That approach was established by LMN Architects of Seattle, a designer of convention halls nationwide and the firm that first outlined the Raleigh budget last year.

In it, LMN based the architects' fees on paying 10 percent of the building's "direct cost."

LMN also listed expenses for the soft costs as part of the budget. But LMN listed them separate from the "direct cost" and as a result did not include them in the basis for the architects' fee.

For instance, LMN did not include the cost of furniture, fixtures and equipment as part of the calculation for the architects' fees. But now, that $4.8 million expenditure is included as part of the design fee equation.

LMN's Chris Eseman, who led the earlier work, said Wednesday he would not do that.

"Obviously, what we did was a starting point," Eseman said. "The fee that we established included all of that."

Allen's explanation

Eseman said he wouldn't, for example, base the architects' fees on any percentage of a contingency fund, either.

But records show the city is including more than $12 million of contingencies in its design fee calculation.

Allen said the architects' final fee for the new Raleigh center should be based on the direct construction cost and should include the other items.

"We are refining the fee for the design to match the actual value of the work on the project," Allen said. "The cost of the work includes the other items."

He said the bottom-line cost of the entire project won't change because a percentage of the costs previously attributed to expenses, such as furnishings, will now be transferred to architects' fees.

A memo from Wayne Baker, the city's construction administrator, to Allen says the final design fee figure also includes a range of "additional efforts" by the architects, such as presentations for people interested in the center's design.

Three architectural firms are handling the design: O'Brien/Atkins of Research Triangle Park; Clearscapes of Raleigh; and TVS of Atlanta, a nationally known designer of convention halls.

Council members will take up the cost issue Tuesday.

"I really question the increase," Hunt said. "I wonder about this."

Mayor Charles Meeker said he would seek a full explanation of the change, but reserved more comments until next week. "We need to find out why it's up," he said.

Staff writer J. Andrew Curliss can be reached at 829-2405 or [email protected].

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Consider this a sequel to the previous posting. The city is finally beginning to realize that some city officials in Raleigh have a lot more power and flexibility than they deserve.

Raleigh manager's power may be curbed

A Raleigh council panel recommends limiting the city manager's authority on contracts



Allen says he would not object to a lower limit.

RALEIGH -- City Manager Russell Allen may have to ask the City Council for permission more often.

The council's budget and economic development committee unanimously recommended Tuesday that the council limit the city manager's authority to approve consultants' contracts on his own. The manager can now approve contracts up to $300,000 without council permission; the committee recommended that the council approve any contract of more than $150,000.

It also asked Allen to make sure he looks carefully at each contract to ensure it is needed.

The full council will consider the recommendation Tuesday.

"I don't think it would hurt us to lower the threshold," said Mayor Charles Meeker, who originally proposed reducing it to $200,000. Council member Philip Isley suggested lowering it to $150,000.

The recommendation comes after the council raised questions during its annual budget talks about the amount of money the city was spending on consultants. At council member Jessie Taliaferro's request, city staffers created a list in June that showed the city had $6.5 million in consultant contracts.

Allen pointed out that of the 93 contracts, four were more than $300,000 and had received council approval. They totaled $1.9 million -- about a third of all the money committed to contracts. Seven contracts were between $150,000 and $300,000 and totaled about $1.5 million, according to the city's list.

A previous council raised the threshold to $300,000 from $100,000 in September 2002. The decision came after the General Assembly adopted revised legislation to help streamline the process of approving the purchase of equipment, goods and service and construction contracts.

Allen said a majority of the consultants were hired because the city doesn't have their expertise in house. They include firms working on technology improvements and groundwater sampling and several instructors in the parks and recreation department.

Allen said reducing the threshold to $200,000 was probably not unreasonable. He said after the meeting that he's OK with the even lower amount.

"If that makes the council feel comfortable, we need to be flexible," Allen said in an interview.

Allen faced more tough questions from council members Tuesday as they tried to sort out exactly how much architects would get paid for work on the planned convention center downtown. Last week, some council members said they were surprised when it appeared that the architects' fees had jumped almost 30 percent, from $12.95 million to $16.6 million.

Allen said that the $12.95 million figure was calculated only on the "direct construction cost" of the center and did not include other costs such as signage, security systems, furnishings and equipment. Officials also gave a presentation complete with charts and graphs to try to explain the difference.

But those answers didn't seem to quell the council's concerns.

"I thought the fees were going to be $13 million," and now they are almost $17 million, Isley said. "It does tend to lessen your ability to believe all these numbers when there is such a shift."

"Somehow there's a wall between y'all and the council," Isley added later. "There shouldn't be this much confusion."

Council member Neal Hunt said, "I don't think anybody at this table really has a clue what's going on. What I would request we have is a broad budget outline with broad categories."

Allen will try to give Hunt what he wants. Council members asked Allen to develop a more understandable budget and present it at Tuesday's council meeting.

Bottom line, committee member Janet Cowell told officials at the end of the meeting, "there is no major variance from the budget."

City officials and architects all nodded their heads to say yes.

Staff writer Sarah Lindenfeld Hall can be reached at 829-8983 or [email protected]

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