Cost of new Health and Human Services building has ballooned to more than $14M

In December, the building’s price tag was estimated at $9.8 million, but cost of steel and other materials have skyrocketed since then.

An excavator clears debris left after the old Routt County Human Services Building was torn down at the corner of Sixth and Oak streets in Steamboat Springs. The building was removed to make room for a new Health and Human Services Building that will be built on the site as well as an adjacent lot.
John F. Russell/Steamboat PIlot & Today

Crews spent much of Wednesday morning cleaning up the remnants of Routt County’s old Human Services Building in downtown Steamboat Springs, making way for a new building that has become much more expensive to build than initially thought.

The estimated cost of Routt County’s new Health and Human Services Building has ballooned to more than $14 million, an increase of about 40% since December 2020 as the cost of steel and other materials has skyrocketed.

“Since January, the raw price of steel has tripled,” said Jim Kohler, vice president of Calcon Constructors, which has offices in Steamboat and Englewood and is doing preconstruction work on the project. “Our whole structure is steel. All of our metal studs are steel. Steel is in everything.”

Other costs have increased, as well. The cost of wood has come down recently but is still double the price it was in January. Kohler said fuel was $2.08 per gallon in November last year, where now it commonly flirts with $4 per gallon. Labor and the cost to ship materials are higher now, too, he said.

“It is a hard one to swallow, but if you do the basic math, you get there pretty quick,” Kohler said. “We assume 50% of the project is labor and another 50% of it is materials. If you take that 50% of material and take a large chunk of it and double or triple its value … it adds up quick.”

Kohler said there is no indication steel prices are going to drop any time soon either, and delaying the project wouldn’t end up with any significant savings and could result in an even higher final cost.

A groundbreaking ceremony for the project is scheduled for Oct. 13, and crews hope to pour the foundation and erect much of the steel structure this year. Then construction will pause until April or May when the snow is gone.

Starting work this fall and winter will require portions of the job site to be heated to ensure the concrete cures, but pushing foundation work to the spring likely would have led to heating the whole structure next winter as crews finished work.

“It is a little bit of a trade off, but the consensus with our general contractor and our owner’s representative is the smart thing to do is get it started this winter,” said Commissioner Tim Corrigan.

Nine months ago, the total project cost was estimated at about $9.8 million, with about $7.4 million or 75% of the total cost going toward actual construction and the rest paying for building design and engineering, the various permits required, fixtures and furnishings and money set aside as a contingency.

But those construction costs have increased by about $3.6 million since then, bringing the current estimate for the total project to $14.1 million. Construction alone will cost about $11 million now, which represents about 83% of the total cost.

“There is a lot of steel in the building,” Corrigan said. “It’s not just the steel I-beams, the steel trusses and the metal decking, but it affects everything from conduit, wire, pipe … steel doors.”

Corrigan said the cost of drywall and anything with a chemical in it, such as PVC piping or foam insulation, has also increased.

County Budget Director Dan Strnad said he thinks the county will be able to weather the cost spikes because of several revenue streams he is projecting to come in much higher this year than originally anticipated.

The county will collect about $2.3 million more in sales tax this year than originally anticipated, an increase of 33%. Building use taxes are bringing in about $1.2 million more than expected, a projected increase of more than 230%. Auto use taxes, paid when buying a car, have also increased by about 77% this year, adding nearly half a million dollars more to county coffers.

In all, Strnad projects the county will collect about $4.7 million more in 2021 than the budget anticipated, bringing total county revenue from $16.2 million to $20.9 million. Because of this, Corrigan said he was still confident the county would not use any of its $5 million in American Rescue Plan Act funding on this project.

“(Strnad) has been able to identify other sources of funds so that we don’t need to access those ARPA funds,” Corrigan said.

It isn’t entirely clear whether the building would even be an appropriate use for the funding anyway, Corrigan said, and using it on the building could further increase costs as there would be more federal regulations to adhere to.

Corrigan also said commissioners, from the start, had no interest in building a sub-par building, and the county is committed to designing a building that fit with the design and development standards of downtown Steamboat. The new building is being built at the corner of Sixth and Oak streets.

Still, more cost increases would likely result in some design choices meant to lower total cost.

“We’re going to build a building, especially in the location that we’re building, that would be something that the community could be proud of,” Corrigan said. “Could we have built that building for less money? The answer is yes. … But we felt it was important to build a high-quality building that fits into the neighborhood and will serve the needs of the community for years to come.”

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