Bid Comes in $1 million Over
The project management team overseeing the renovation of Big Sky Economic Development’s new headquarters and entrepreneurship center opened bids on April 6. While they had anticipated the possibility that bids may exceed the proposed budget they were still “taken back” that the one bid they received was a million dollars over budget.
But the county’s economic development agency remains confident that they will be able to move forward with the project to renovate the former Montana National Bank Building located at 201 N Broadway under Sky Point into what will be the agency’s new headquarters, as well as a new entrepreneurial business incubator for the Rock 31 Entrepreneur Program.
Big Sky EDA is currently located at Granite Towers at 222 North 32nd Street.
“We had one strong bid, from a good contract with very good subs,” said EDA Director Steve Arveschoug on a positive note. “The reason we didn’t get more bids, is the subcontractors are slammed right now. Their ability to take on projects is really constrained. It is going to take longer and it is going to be more costly because of a lack of trades,” said Arveschoug, who had been contacted prior to bid opening by contractors who had been interested in the project but said they would not be able to put in a bid because they could not find the subcontractors.
The problem is not unique to the EDA project – throughout the region reports are the same – construction projects are being put on hold because of a lack of construction workers, as well as because of a steep escalation in the price of building materials.
While EDA developed a budget for what was expected to cost about $3 million, the bid they received from TW Clark Construction was $4,075,000. TW Clark is a Spokane-based company with Billings’ offices at 609 Charles Street.
Arveschoug said that they will be looking for gap funding and doing some value engineering to make TW Clark’s bid work and to complete the project, which they hope to have built within one year. “We have a good project management team. Some of the leading contractors in the community,” said Arveschoug, noting, too, that the joint Big Sky EDA and EDC boards at a meeting last week urged that they move forward.
They must have a “game plan” within the next 30 days according to the parameters of the $2.1 million federal grant Big Sky EDA received from the U.S. Economic Development Administration in 2019 for the purchase of the building and renovation.
“We are going to look at American Rescue Funds that are coming to the state. They are designed to come to the rescue for economic recovery,” said Arveschoug, pointing out that their project qualifies on at least two fronts for COVID-impact funding. EDA’s mission is to assist businesses in economic recovery and the increased costs and limited labor they are encountering are a consequence of the pandemic.
Also, the U.S. Economic Development Administration is not surprised at the outcome of the bidding process. “The regional director for the Economic Development Administration said they have seen these issues with projects all across the region. All of the region’s re-development projects that they are funding are experiencing additional costs,” said Arveschoug.
From the beginning the federal grant has been matched by local funding. There are other options for additional grant funding, including Big Sky EDA reserves and those of its sister member organization Big Sky Economic Development Corporation (EDC). The two agencies provided $2 million in matching funds for the federal grant.
Also, Arveschoug reminded that they were able to buy the building because of what was essentially an over $700,000 grant from the building’s owners Chris and Mike Nelson. “They felt very strong about this mission,” said Arveschoug, “So they made their own grant to the project and reduced the cost to us before the EDA made their grant.”
When completed the first floor of the renovated building in downtown Billings will serve as a co-working space with a coffee shop where entrepreneurs can meet and connect. The basement will serve as a work area, and the second floor will be used as a training space. The third floor will house the Big Sky EDA offices.
Big Sky EDA is a county agency serving economic development in Yellowstone County. Through a number of various economic development organizations and programs it provides resources for business creation, retention, new business recruitment and community development.