:quality(70)/cloudfront-us-east-1.images.arcpublishing.com/adn/2XXVS4XM7NAPDJ2Y5NKXIV6VK4.jpg)
Mayor Dave Bronson’s administration pushed ahead with millions in work on a city project to construct a homeless shelter and navigation center in East Anchorage — without first getting Assembly approval on the necessary $4.9 million upgrade to the construction management firm’s contract, as required by city code.
During a work session with the Assembly last week, Director of Public Works Lance Wilber conceded the error.
“I think the error on our part was that in a traditional construction contracting process, we should have gone to the Assembly initially and asked to amend the contract,” Wilber said.
“We did not do that,” he said.
Assembly leaders are saying Bronson officials almost certainly violated the city’s laws surrounding Assembly approval of contracts and changes on big-ticket projects.
The municipality is now obligated to pay for the roughly $4.9 million worth of work the general construction manager, Roger Hickel Contracting, has done so far — under a contract upgrade that hasn’t been approved — or else the city will face a lawsuit, city attorneys say.
Work on the project came to a full stop following the Sept. 13 Assembly meeting, when members postponed approving the $4.9 million change to Roger Hickel’s contract. A few members have suggested delaying construction until spring.
Meanwhile, the estimated cost to finish the project has jumped from a previous estimate of around $12 million to more than $15 million for the 150-person facility.
Assembly Chair Suzanne LaFrance said that while she has backed steps to advance the project in the past, now, she “does not feel confident” about whether it should be completed.
“It’s a big error,” LaFrance said. “And what’s to say we’re not going to continue to have errors? And what other kinds of errors are out there? Especially when we see the price balloon, and we have not yet seen an operations plan. This is a really big deal.”
Bronson officials told Assembly members the city will likely need to find $6.4 million more in funding to complete the shelter and navigation center, with utility fixtures, furnishings, equipment and other items needed for it to be functional. That would be on top of the $9 million the Assembly has already set aside for a shelter and navigation center.
Dwindling support for project
Bronson officials have not answered a series of questions on the issue from the Daily News. A spokesman for the mayor said the city’s departments “are working to get answers as fast as they can.” Executives for Roger Hickel Contracting have not returned phone calls from the Daily News.
At a meeting last Friday, Assembly Vice Chair Christopher Constant asked the administration for a comprehensive list of Roger Hickel Contracting’s subcontractors on the project.
A list “of all of the people who took on the risk of conducting work for the general, for the municipality, believing that there was a funding package available and that when they were authorized to proceed with work, there was money there,” Constant said.
“I would like to know who may be harmed in that process,” he said.
Many Assembly members were already balking at the expensive project and nearly shut it down last month, when the administration first brought its request for the $4.9 million contract amendment. Instead, they postponed their vote to Oct. 25.
Its future is now even more tenuous.
Bronson officials have argued that the members have been involved in decisions along the way and that they agreed to the expedited process for contracting and construction.
Under that expedited process, the contractor hired by the city for design and pre-construction work can be retained to finish the project, if the city chooses to amend the agreement. That means the city doesn’t solicit bids from other firms for the construction portion of the project. Instead, it negotiates the scope of the work with the original contractor and then gives them the go-ahead to begin.
But Assembly members say the expedited process they agreed to does not allow for the city to green-light millions in work on what was initially a $50,000 contract without first submitting to the Assembly a memorandum detailing the amended contract and requesting approval.
The director of Maintenance and Operations gave Roger Hickel Contracting the authorization to proceed with work, Wilber said. The director, Saxton Shearer, is also the navigation center and shelter project manager.
“We gave them permission to advance, and, in good faith, they did that. The other reason is we were also trying to get a project done ahead of winter and they were working with some long lead items,” Wilber said.
:quality(70)/cloudfront-us-east-1.images.arcpublishing.com/adn/5D6IOUEWHBFUZIZQFEGCXS7P5I.jpg)
Wilber also referred to previous Assembly legislation on the city’s homelessness plans, which have outlined the city’s intent to construct a shelter and navigation center, as reasons for the misstep.
In May, the Assembly narrowly passed a resolution setting aside $6.2 million to the city Maintenance and Operations Department “to be used for construction of an adult shelter and/or navigation center.” An accompanying memorandum from the administration also informed Assembly members of the unusual but faster contracting process officials have used.
The administration’s memorandum informed members that it had a $50,000 contract with Roger Hickel Contracting for construction management, an amount that did not yet need to be approved by the Assembly.
And at the time, the Assembly did not authorize a specific amendment to Roger Hickel’s contract using those millions, which is required in Title 7 of city code for spending amounts that large.
That resolution also made the funding contingent on a firm written commitment and good-faith effort from Bronson to convert the former city-owned Golden Lion Hotel into a substance misuse treatment center, conditions that several members say the administration has not met.
According to past interviews with Assembly member Felix Rivera, who chairs the Committee on Homelessness, the Assembly could kill this version of the project and move to find a different location for a navigation center and shelter.
‘We did not get that step’
LaFrance’s “yes” vote in May narrowly swung the $6.2 million funding approval on a one-vote margin of 6-5.
“I felt compelled to move forward because the navigation center was a piece of what came out of the facilitated process. And I supported the facilitated process. I believed — and I still believe — in the need for more emergency shelter.”
Setting aside funds for construction, on top of already-approved funds for the design work and for the structure, seemed like a reasonable step at the time, she said. But the Assembly chair expected a chance to take another look and review a construction contract before the city proceeded.
LaFrance said the administration skipped a key step in the city’s required processes — submitting to the Assembly a request to increase the construction contract amount before proceeding with the work — that’s meant to ensure the legislative body’s oversight of city spending on large projects and the responsible use of taxpayer dollars.
“Of course, we did not get that step and we learned after the fact that the administration had moved forward with the project in a very significant way, without public input, without Assembly notification and approval. And, frankly, that jeopardizes the entire project — obviously. So I really don’t know where it will go from here,” LaFrance said.
The East Anchorage shelter was initially conceived by Bronson last summer, who proposed an up-to-1,000-bed facility — a plan the Assembly quickly shot down.
Members later agreed to a much smaller version of the project at 150 beds, as one of five parts of a former city plan to stand down its COVID-19-era emergency mass care operations at Sullivan Arena and non-congregate shelters, and expand longer-term homelessness services in Anchorage. The Bronson administration has since closed all those facilities, save one shelter in a downtown hotel.
About $8 million of the $9 million already set aside for the project has been spent, according to Wilber, speaking during last week’s work session.
“We were asking the Assembly to tap into that fund that the Assembly set aside for the purposes of funding the navigation center to pay our contractor. That was our $4.9 million request,” Wilber said.
And the city will still need to find another $6 million or more to have it fully ready and furnished.
“I am just gagging on these numbers that I can’t wrap my head around,” Constant said.
While the city is building a purpose-built facility for homelessness services, and so the costs may be higher than a usual project, ”I am just at the point where I’m still struggling to understand how the cost of this is in excess of what we would spend if we were to build, brick and mortar new, like full-scale construction,” he said.
The Sprung Structures building is a temporary structure, with a 30-year warranty that shrinks yearly, he said.
And costs are still mounting.
The administration is urging the Assembly to amend the contract in order for construction to continue this winter. They argue delaying until spring would be more expensive than winter construction.
The structure, a temporary tensioned-fabric building, has already been purchased from Sprung Structures and is being stored at two separate locations out of state. That costs about $5,000 a month, Municipal Manager Amy Demboski said.
Also, Roger Hickel Contracting recently informed the administration that storage of materials it had already purchased for the build will cost $15,000 a month, she said.
“Frankly, the contractor has told us if we don’t continue and pour the foundation this year, we could see an additional cost of approximately a million dollars due to the work that will have to be done,” Demboski said. “There’s like a football field worth of rebar that has been laid.”
If the Assembly postpones construction until May, ”the building official will not sign off on it,” she said. “They’ll have to cut it out,” she said, referring to the rebar. “They’ll have to re-lay it.”
“The other item that we really do need to discuss is that the building has not been shipped yet,” Demboski said. “And in fact I would not authorize the shipment because it’s going to cost in the neighborhood of $200,000 to ship it, and we do not have authorization from the Assembly to do so.”
A continued need for shelter
At the end of this month, members of the Assembly will choose where it goes from here.
At an Oct. 25 meeting, members could choose to approve the construction contract and continue with work immediately, or simply pay the construction manager for the work that’s already been done but kill the project at the Tudor-Elmore site, or punt it to spring, Constant said.
“I personally fall into the camp — we should pay these folks — but that doesn’t mean that we should adopt the contract and move forward with the (navigation) center,” he said.
For the past few months, Anchorage has lacked any walk-in, low-barrier shelter. That changed when the city reopened Sullivan Arena as an emergency cold weather homeless shelter at the end of September. But that is a temporary measure, and both Bronson and Assembly members are seeking long-term solutions.
“With that initial approval, support was tenuous. And I took some heat for that, some flack,” LaFrance said of her May vote. “But again, I believed that moving forward with the navigation center was right for our community.”
The city has made progress on other aspects of its agreed-upon homelessness plan, she said.
Of those plans to date, a complex care facility for people with medical issues, disabilities and other needs is up and running in the former Sockeye Inn. A supportive and workforce housing project has opened in the former GuestHouse Inn.
With so much work already done and millions in funding already sunk into the East Anchorage shelter, members Randy Sulte and Kevin Cross are urging other members to press forward and vote yes later this month.
“This, we have a plan for. We understand that. You may or may not agree with that, but the navigation center is critical. I really hope that we can come to terms quickly to get this thing funded because I think when it’s done, it’ll be an attribute, not a detriment,” Cross said during the work session.
LaFrance said the Assembly is planning to hold another work session with the administration next week to delve further into aspects of the project and Bronson officials’ failure to follow the process outlined in city law to pay for the project.
“I want to know what happened. Was somebody tasked to do it? Who is overseeing these contracting requirements for this project? And was it just not on the list?” she said. “... Did they realize they needed to do it? Did someone just forget to do it? Did someone think someone else was doing it? Who’s in charge? And who’s making sure that the requirements for the project are being met? Because this makes me nervous. This makes me very, very nervous about other aspects of the project.”
Correction: A previous version of this story contained a typo, adding an extra zero to the amount of Roger Hickel Contracting’s original contract. The correct amount is $50,000.