Advocates of downtown central office proposal use low construction costs, interest rate in argument
As the economy begins to rebound, advocates for the downtown central office proposal have tried to rally support for the project by pointing out now is the best time to build.
Salisbury City Manager Doug Paris talked about the possible cost of delay during the joint meeting between the City Council and Rowan-Salisbury Board of Education on Thursday. Members of the Rowan County Board of Commissioners were invited, but only two showed up and one sat in the audience.
Paris showed the attendees 12 years worth of data from the Turner Building Cost Index and the Engineering-News Record Construction Cost Index.
“It’s important when you look at data and trends that you don’t rely on one source,” Paris said.
As the recession hit in 2008 construction prices started to drop, Paris said.
“The trend that we’re starting to see now is that the cost will come back up. That trend is very consistent across both of those indices,” he said.
Using the average increase of 2.6 percent in 2012, Paris estimates it could cost an additional $647,000 to build the 62,000-square-foot facility in 2016.
“It could ramp up depending on how the economy goes. It could come back down. I’m just providing a ballpark figure if that trend continues over a three-year period and then we move forward on the full building,” he said. “Can we put an exact figure on it? No, we can’t. But we can just provide you with what those trends look like.”
Paris said interest rates are another factor to consider.
“We took a look at what a 1 percent difference in interest rates would mean for a project of this magnitude. It’s about $425,000,” he said. “I don’t think rates are going to get any lower and we don’t know if they are going to go higher or stay stable.”
Mandates from health care reform could also push the cost of construction higher as employers begin compliance, Paris said.
School board chairman Dr. Richard Miller, along with four other board members, made it clear they are ready to move on, voting 5-2 to pursue the concept of an inter-local financing agreement suggested by Paris on Thursday.
“We bid this project at 62,000 square feet five or six years ago and had an $11 million figure. Today it’s $8 million,” he said. “The time is now.”
School board members Josh Wagner and Chuck Hughes voted against the prospect of joint financing, which would mean asking the county for a $6 million loan and the city of Salisbury for the additional $2 million loan needed to construct a facility large enough for all of the district’s administrative departments.
Both have said they support a central office, but not the current proposal.
During Thursday’s meeting, Wagner said he believes the project could be done for less.
“I don’t care what the financing costs are, what the construction costs are, the point is $10 is less than $100 no matter how you finance it,” he said.
Contact reporter Sarah Campbell at 704-797-7683.